Upcoming AWS Coverage on SKECHERS USA Post-Earnings Results
LONDON, UK / ACCESSWIRE / April 21, 2017 / Active Wall St. blog coverage looks at the headline from the New York-based specialty athletic retailer, Foot Locker, Inc. (NYSE: FL) as the Company announced updated its Q1 FY17 and full-year FY17 outlook on April 20, 2017. The Company currently expects earnings in Q1 FY17 ending April 29, to be equal or slightly below last year’s record earnings, or $1.36 and $1.39 per share. Register with us now for your free membership and blog access at: http://www.activewallst.com/register/.
One of Foot Locker’s competitors within the Textile – Apparel Footwear & Accessories space, SKECHERS USA, Inc. (NYSE: SKX), released its Q1 2017 financial results after market close on Thursday, April 20, 2017. AWS will be initiating a research report on SKECHERS USA in the coming days.
Foot Locker witnessed first quarter sales being ‘significantly’ impacted by delays its shoppers are seeing in getting back their income tax refund this year. The Company stated that Q1 FY17 would be challenging based on the slower than usual start in the US.
The Company attributed the decline in profits to the delay in the issuance of the vast majority of income tax refund checks until after the NBA All-Star Game. This delay adversely affected the February comparable store sales, which were down low-double digits. The March sales rebounded well after the tax refunds but a considerably weak Q1 compelled Company into revising its outlook of double-digit growth it had projected back in February 2017.
The US Internal Revenue Service has been closely monitoring tax returns, including earned income tax credit claims in FY17, which has resulted in longer than usual delay in tax refunds. According to an estimate, about 13 million low-to-moderate income Americans claimed the credit in 2012.
The Guidance Cut
This announced guidance cut is ironical to Foot Locker’s Q4 FY16 results, ending January 28, 2017, when it shares hit an all-time high of $79.43 in December 2016. Foot Locker has effectively scaled up its retail sector presence owing to the robust demand for high-end basketball and running shoes. However, this tax refund case has adversely affected its growth prospects, and subsequently, the effect has been reflected in Q1 FY17 and full-year FY17 earnings.
The Company expects a strong Easter selling period with April comparable sales, likely up low double digits, which is seen as a confirmation that the product assortments from the Company are still in demand. The Company outlined its full-year FY17 guidance where mid-single digit percentage comparable store sales growth and double-digit earnings per share increase is expected.
The guidance includes little operating leverage this fiscal year owing to multiple reasons outlined in the earnings call. The Company expects some operating deleverage in Q1 FY17 after comparable sales fell short of a mid-single digit percentage increase. The Company anticipates that it would maintain its guidance for the subsequent quarters and expects to produce strong performance over the remainder of FY17 as was previously outlined.
Foot Locker Growth Strategy
The Company recently announced three capital allocation initiatives on February 15, 2017, in an attempt to meaningfully enhance shareholder returns, while sustaining a strong level of investment in the business to achieve long-term financial goals. The announcement was as follows:
1) A quarterly cash dividend of $0.31 per share for Q1 FY17, payable on April 28, 2017;
2) A $1.2 billion common share repurchase program extending through January 2020;
3) A $277 million common share repurchase program extending through January 2020.
Foot Locker currently operates about 3,363 stores in 23 countries in North America, Australia, and New Zealand and is the leading provider of athletic footwear and apparel. Foot Locker reported its Q4 FY16 results on February 24, 2017, where the net income for the quarter was $189 million, or $1.42 per share, compared with net income of $158 million, or $1.14 per share for Q4 FY15. Store sales in Q4 FY16 increased 5.0% while total sales observed a 5.3% increase to $2,113 million, against $2,007 million for Q4 FY15. Coupled with $9 million reductions in tax expense related to foreign currency translation gains and losses of foreign businesses operated as branches, the tax benefit resulted in GAAP earnings increase by seven cents per share.
At the close of trading session on Thursday, April 20, 2017, Foot Locker’s share price finished yesterday’s trading session at $76.55, jumping 5.37%. A total volume of 6.48 million shares exchanged hands, which was higher than the 3 months average volume of 1.85 million shares. The stock has advanced 13.68% and 26.97% in the last six months and past twelve months, respectively. Furthermore, since the start of the year, shares of the Company have gained 8.87%. The stock is trading at a PE ratio of 15.56 and has a dividend yield of 1.62%. At Thursday’s closing price, the stock’s net capitalization stands at $10.05 billion.
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