On Thursday, Evercore ISI adjusted its price target for Foot Locker shares (NYSE:FL), increasing it to $34 from the previous $32, while maintaining an In Line rating for the stock. This change follows Foot Locker's indication of stronger-than-expected sales trends.
The firm noted that Foot Locker's stock has experienced a significant uptick, attributed to the company's report of sequential sales growth through the first quarter. This performance comes even as Foot Locker began to scale back on markdowns, a strategy shift after two years of consistent discounting.
The analyst from Evercore ISI highlighted the encouraging sign of Foot Locker's comparable store sales (SSS) acceleration. This is particularly noteworthy as it coincides with the company's forecast for comps to stabilize or improve slightly in the first quarter. The positive outlook is set against the backdrop of Foot Locker's key growth initiatives, which are slated to commence in the second quarter.
Foot Locker's strategic move away from discounting had been a concern for the company entering the first quarter, as there was uncertainty regarding the impact on SSS. However, the reported acceleration in comps has provided a more optimistic view of the retailer's performance.
The company's guidance, suggesting comps turning flat or slightly positive, is seen as a reinforcement of the positive trend. This is especially significant considering that Foot Locker's major growth plans are yet to be launched, with these initiatives expected to begin in the second quarter.
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