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Nike
Last week, the company announced a strong quarter, which has sent its stock skyrocketing.
Foot Locker is a retailer that sells shoes.
According to a Jefferies analyst, the stock could continue to gain from its alliance with the garment behemoth.
Nike’s top and bottom lines beat forecasts, thanks to strong results in North America and elsewhere across the world, which helped to offset deterioration in China. Analyst Janine Stichter restated a Buy rating and $80 price target on Foot Locker (ticker: FL) on Thursday, based on that research and recent conversations with the company’s management. She says she’s “sure that Foot Locker is primed to gain from a cleaner industry backdrop…while we see growth opportunity in women’s and clothing” after talking with CEO Dick Johnson and CFO Andrew Page. In recent trade, Foot Locker stock was up 1.7 percent to $62.66. Even while Nike (NKE) continues to streamline its distribution and eliminate retail accounts that sell its products, she says Foot Locker’s relationship with Nike (NKE) is strong. Foot Locker stock should benefit from a less congested market. Furthermore, while Nike has always been important to Foot Locker, the latter has been expanding its brand portfolio. She points out that the shoe shop is having success with brands that aren’t in its core athletic area, such as Converse.
Crocs
Birkenstock, (CROX),
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Ugg, and Ugg, and Ugg, and Ugg, and Ugg, and Ugg, and U
VF Corporation’s
Vans Football Club (VFC).
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Foot Locker’s apparel possibility is also expanding, according to Stichter, thanks to stronger merchandising and the macro trend of more casual wearing. She goes on to say that, even as the pandemic draws to an end in the United States thanks to widespread vaccinations, management expects comfort to remain a top concern. According to her, these initiatives should result in a more normalized back-to-school shopping season, and the return of team sports could be another impetus for Foot Locker. Furthermore, she believes that, while there may be some additional promotional activity in the second half of the year, discounting will not return to pre-pandemic levels. The “industry has been broadly reset,” according to Foot Locker, with footwear retailers learning to operate with less inventory than in the past. Foot Locker’s stock has risen about 55 percent this year and has more than doubled in the last year. Teresa Rivas may be reached at teresa.rivas@barrons.com./n
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