Foot Locker is on the up-and-up, but will it be long-term?
The apparel and shoe store saw its shares boost on Friday, after exceeding earnings expectations.
Moreover, Wall Street anticipated earnings per share of $1.25. Foot Locker eclipsed this figure by reporting a $1.45 EPS in the first quarter. It also reported $1.9 billion in sales, which also exceeded expectations. Because of these reports, Foot Locker (FL) shares rose 20% on Friday.
However, Foot Locker still isn’t thriving. Its Q1 revenue is 1.4% lower than 2017’s first quarter. Even after the Friday jump, Foot Locker shares are still down 25% since January 2017.
This decline is largely due to the continued growth of Amazon. The e-commerce giant continues to expand its online apparel catalog, and companies increasingly offer their products on the platform. Recently, Nike announced that it would sell some products on Amazon.
The expansion of online sales could hurt Foot Locker revenue significantly. In a 2017 UBS survey, 13% of consumers reported they would rather by a Nike product on Amazon than in Foot Locker, compared to just 9% who voted the opposite.
Gradually, consumers are becoming more and more digital, and it is hurting brick-and-mortar stores. The epidemic started with toys, putting Toys “R” Us out of business. It has recently spread into groceries, impacting stores like Walmart and Target. And now, apparel stores like Foot Locker are hurting because of the growth of e-commerce.
The growth of shoe sales because of recent design developments by Adidas and Nike has been instrumental in Foot Locker’s early 2018 successes. However, they may have to increase digital sales if they hope to compete with Amazon.
Featured image via Foot Locker