Foot Locker (FL) shares gained 28% on Friday, their largest single-day percentage gain ever, following the announcement of better than expected Q3 financials. The market responded overwhelmingly positive, despite a drop in YOY revenue (-.08% to $1.87 billion), same-store sales (-3.7%) and earnings per share. CEO Dick Johnson said the company will focus on its digital efforts to reenergize the business, believing that speeding up customer access to inventory is a way to maintain market share. FL is also banking on a NKE rebound, saying that company is “on the verge of a major breakthrough in terms of product innovation and customer engagement.”
Howie Long-Short: The best single day in shareholder history seems to indicate the company’s turnaround is nearly complete, but the financials don’t reflect that. FL says that basketball is on the rebound, kids’ sales are positively trending and the company is experiencing growth within its apparel line; but I’m not sure that news warrants the gains experienced. The company remains a middle man placing their eggs in NKE’s basket; a company that foresees their future in DTC business. Shares remain down 43% YTD. It’s worth noting that Finish Line (FINL) shares popped 7% following FL’s earnings beat.
Fan Marino: NKE is promoting a shoe that can make the wearer 4% more efficient when running. The Zoom Vaporfly 4% uses a light-weight foam found in airplane insulation and a small carbon fiber plate, shaped like a spoon (propels the runner forward), to provide the optimal balance of performance and weight. Does it work? Runners World tested the shoe and gave it “the highest values ever assigned in our lab”, but George Wu, a researcher at the University of Chicago Booth School of Business ran a study indicating the shoes decreased finishing times. I’m going to need more convincing before I spend $250 to shave 4% off my 12-minute mile.
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