The Winner In The Battle Of The Sneaker Brands? Foot Locker

Susquehanna’s Sam Poser believes Foot Locker, Inc. (NYSE: FL) benefits the most among retailers from the battle for innovation among sneaker brands.

Poser maintains a Positive rating on the company, while raising the price target from $73 to $80.

Continuing to rate Foot Locker as one of Susquehanna’s Top Picks, the analyst mentioned that the Q2:16 results “further substantiate our view that Foot Locker is the place that kids go for cool shoes, and its success is not predicated solely on the basketball business.”

Management Knows Best

Poser also believes management knows its customers and business better than most investors, and the proof of that knowledge is the buyback of 3.35 million shares during Q2 at an average price of $56.12.

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In addition, store remodels, which are only 30 percent complete, have been driving above average results, a trend that is expected to continue.

Q2 Results

For Q2, Foot Locker reported its EPS at $0.94, with same-store sales of 4.7 percent on revenue of $1.78 billion, beating the consensus expectations across all three metrics.

Gross margins improved 40 bps to 33 percent. Same-store sales increased in basketball, running and classic footwear, as well as apparel.

The company maintains its FY16 guidance of same-store sales growth in the mid-single digits and EPS growth in the double digits.

“The health of the total business was highlighted in the increase in U.S. store traffic as well as the traffic on the banner.com websites,” the analyst added.

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