On Friday, Foot Locker (NYSE:FL) released its earnings report and promptly shot a hole in the foot of its stock so pronounced that even Nike (NYSE:NKE) felt it. The damage kept right on rolling into Monday afternoon’s trading, where Foot Locker—down notably—received two separate downgrades.
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The first came from Citi’s Paul Lejuez, who dropped from Buy to Neutral and cut his price target from $48 to $30. Lejuez noted that the full-year forecast Foot Locker offered isn’t doing it any favors and that given the macroeconomic conditions currently in play, Foot Locker should have stuck with a more conservative approach.
Meanwhile, Sam Poser at Williams Trading also shifted, dropping Foot Locker to a Sell and cutting his price target from $35 to $25. Poser did something similar out at Nike, but he cited Foot Locker as a potential concern. With Nike flagging, Foot Locker may lose support from one of its key brands.
There’s significant trouble at Foot Locker already; it recently added a $6.99 surcharge for returned shoes, a point that likely won’t endear it to customers. That’s particularly true for those who are shopping online and thus can’t try on their shoes without buying them. But, those who return shoes bought online to a store can bypass the fee. With Sam Poser also pointing out unusually high inventory levels at Foot Locker as well, it’s clear Foot Locker has to do more to get products off shelves and keep them from coming back.
Analysts are split on Foot Locker’s overall trajectory. With eight Buys, nine Holds, and one Sell rating, analyst consensus calls Foot Locker a Moderate Buy. Those who dare to buy Foot Locker stock could be in for a big win: Foot Locker stock offers investors 71.36% upside potential thanks to its average price target of $47.69.
