[ad_1]
Foot Locker is moving in the right direction under leadership, according to Citi. Analyst Paul Lejuez upgraded the retail stock to buy from neutral and raised his price target by $3 to $50. Lejuez’s new price target implies the stock could rally 25.4% from where it closed Monday. Despite reporting a slide in holiday-quarter earnings , Foot Locker leadership shared details about a renewed relationship with Nike . CEO Mary Dillon emphasized a focus on what she called “sneaker culture.” While beating Wall Street expectations for the quarter, Lejuez noted the company guided 2023 expectations down. This, he said, laid the groundwork for a cycle of the company beating its own earnings expectations and then raising its guidance for the following quarter over the course of the year. He also said to expect 2023 comparable-store sales performance to come in above guidance. Foot Locker shares gained 3.2% in premarket trading Tuesday coming off Monday’s investor day . The stock is up 5.5% this year. Lejuez also said the company’s relationship with Nike was better than expected, adding that Dillon is “doing the right things” by moving stores away from malls and focusing on loyalty, digital and kids offerings. He likened plans for the loyalty program to what is available at beauty retailer Ulta , while noting it has the potential for success. “New CEO Mary Dillon brings a successful track record of courting beauty brands in her previous role at ULTA, making her the right leader for this moment,” Lejuez said in a note to clients Tuesday. He also said there could be upside to the target price if management can execute its plan to grow sales. On the other hand, Lejuez said the plan to close 125 Champs stores this year is good given the brand’s challenges with a lack of differentiation. The company’s capital expenditure plans are below what Lejuez was previously expecting. With management noting mergers and acquisitions or minority investing is off the table, he said excess cash could be returned to shareholders through dividends or repurchase plans. The company’s stable cash flow can also help cushion any downside as the business’s “turnaround” plays out, he said. Lejuez wasn’t the only analyst impressed. Evercore ISI analyst Warren Cheng, who upgraded the stock to outperform from in line and raised his price target to $60 from $32, said the company was finally understanding how to differentiate itself from monobrands such as Nike or Under Armour and build a moat as a retailer. — CNBC’s Michael Bloom contributed to this report.
[ad_2]
Image and article originally from www.cnbc.com. Read the original article here.