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Things You Need to Know Before Foot Locker's (FL) Q4 Earnings

Foot Locker, Inc.FL is scheduled to release fourth-quarter fiscal 2018 results on Mar 1. In the trailing four quarters, the company's bottom line has outperformed the Zacks Consensus Estimate by average of 6.8%. This retailer of athletic shoes and apparel delivered a positive earnings surprise of 3.3% in the las t report ed quarter.

The Zacks Consensus Estimate for the fourth quarter has increased by a penny in the past seven days and is now pegged at $1.37. This reflects an increase of roughly 8.7% from the year-ago period.

The Zacks Consensus Estimate of revenues for the quarter under review currently stands at $2,166 million, exhibiting year-over-year decrease of roughly 2.2%. This follows a marginal decline of 0.5% witnessed in the preceding quarter.

Let's analyze the factors influencing the company's performance.

Factors at Play

Foot Locker is trying to improve performance through operational and financial initiatives. The company is focusing on development of supply chain, improvement of mobile and web platforms, and expansion of data analytics capabilities. The company is also focusing on augmenting direct-to-consumer operations, margin expansion, tapping underpenetrated markets and testing new retail concept, Power Stores.

The company also intends to spend a major portion of the capital on its fleet of stores, including revamping and remodeling of the same. Further, it is exploring off-mall retail formats opportunities and executing shop-in-shop spaces in collaboration with vendors.

The aforementioned factors are most likely to influence the company's performance in the to-be-reported quarter.

We note that management had earlier guided comparable-store sales during the fourth quarter to be up in low to mid-single digits. On a 13-week comparative basis, gross margin is likely to improve 100-130 basis points during the final quarter. For fiscal 2018, management envisions comparable-store sales to be up in low-single digit. Further, management anticipates double-digit increase in earnings per share for the fiscal year.

In spite of these tailwinds, higher SG&A expenses remain a concern. Foot Locker had previously forecast SG&A expenses to increase as a percentage of sales by 100-120 basis points during the final quarter.

What the Zacks Model Unveils?

Our proven model shows that Foot Locker is likely to beat estimates this quarter. A stock needs to have both a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) and a positive Earnings ESP for this to happen. You can uncover the best stocks to buy or sell before they're reported with our Earnings ESP Filter .

Foot Locker has a Zacks Rank #2 and an Earnings ESP of +1.26%. This makes surprise prediction difficult. You can see the complete list of today's Zacks #1 Rank stocks here .

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Here are three other companies you may want to consider as our model shows that these too have the right combination of elements to pos t earnings beat.

Zumiez ZUMZ has an Earnings ESP of +0.45% and a Zacks Rank #1.

Abercrombie & Fitch ANF has an Earnings ESP of +2.28% and a Zacks Rank #2.

Costco COST has an Earnings ESP of +0.62% and a Zacks Rank #3.

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Zumiez Inc. (ZUMZ): Free Stock Analysis Report

Abercrombie & Fitch Company (ANF): Free Stock Analysis Report

Foot Locker, Inc. (FL): Free Stock Analysis Report

Costco Wholesale Corporation (COST): Free Stock Analysis Report

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.


The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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