Foot Locker (FL, Financial) shares jumped significantly following the release of its fiscal fourth-quarter 2024 results. The stock enjoyed an 8.38% increase in value, reflecting positive market sentiment driven by strong quarterly performance and strategic plans for future growth.
Foot Locker (FL, Financial) reported a nearly 3% year-over-year increase in Q4 same-store sales and noted a notable improvement in gross margin. This success came despite a competitive and promotional retail environment. The company managed to boost sales without heavy reliance on discounts, which helped protect its margins.
Looking forward to fiscal 2025, Foot Locker (FL, Financial) is optimistic, anticipating same-store sales growth of 1% to 2.5%. The company also expects gross margin to improve to between 29.3% and 29.7%, slightly above the 29% recorded in 2024. This growth forecast indicates a strong momentum in a challenging market.
The strategic closure of underperforming stores has been part of Foot Locker's (FL, Financial) recent success, with 47 locations closed in Q4 2024 alone. The company plans to reduce its store count by an additional 4%, or close to 100 locations, in 2025, to further streamline operations.
From a valuation standpoint, Foot Locker (FL, Financial) has been assessed as "Significantly Undervalued" by the GF Value metric, with a GF Value estimate of $28.63. This suggests that the current stock price of $18.825 offers a potential upside. Foot Locker's price-to-book (PB) ratio is at a near 1-year low of 0.62, reinforcing its undervalued status. Additionally, its price-to-sales (PS) ratio is close to a 10-year low, further indicating attractive pricing for potential investors.
While there are financial challenges, such as a declining operating margin and a lower Altman Z-score indicating some financial stress, the company also shows strengths. Foot Locker (FL, Financial) has a healthy cash conversion ratio and a Beneish M-Score that suggests it is an unlikely manipulator.
Institutional ownership metrics reveal a notable interest from institutional investors and insiders, despite recent insider selling activity. The stock's correlation with earnings and cash flow is positive, and the company's future store optimization strategy could strengthen its financial standing.
