Foot Locker initiated at underweight at Morgan Stanley with a $44 price target

Foot Locker initiated at underweight at Morgan Stanley with a $44 price target

Foot Locker’s stock soars after profit and sales beat expectations

Shares of Foot Locker Inc. soared 12% in premarket trade Friday, after the specialty athletic retailer reported fiscal first-quarter profit and sales that beat expectations. Net income for the quarter to May 5 was $165 million, or $1.38 a share, compared with $180 million, or $1.36 a share, in the same period a year ago. Excluding non-recurring items, such as a $12 million charge related to pension litigation, adjusted earnings per share came to $1.45, above the FactSet consensus of $1.25. Revenue rose 1.2% to $2.03 billion, above the FactSet consensus of $1.96 billion, as the 2.8% decline in same-store sales beat expectations of a 3.9% decline. Gross margin rate was 32.9% compared with 34.0% last year and merchandise inventories declined 5.4% to $1.21 billion. “The flow of premium product continues to improve, with increasing breadth and depth in the most sought after styles from our key vendors,” said Chief Executive Richard Johnson. The stock had slipped 3.9% over the past three months through Thursday, while the SPDR S&P Retail ETF had gained 1.5% and the S&P 500 had eased 0.7%.

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