FL - Foot Locker Is Doing The Right Things But Needs To Improve Margins

2024-04-20 09:05:22 ET

Summary

• Foot Locker has been facing challenges due to limited access to trendy supply from Nike and high promotions eroding margins.
• The company replaced its management team in late 2022 and early 2023, but their priorities of investing before recovering margins are questionable.
• Market expectations for a small merchandise margin recovery are not supported by recent data and management comments, making it difficult to recommend Foot Locker.

Foot Locker ( FL ) is a leading US and international footwear retailer.

The company has been on a challenging path since early 2022 because of the combination of less access to trendy supply from Nike and high promotions eroding on margins.

The company replaced its management team in late 2022 and early 2023. I do not know if I agree with the team's priorities, which seem to be around investing before recovering margins....

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