Foot Locker (FL) Stock Forecast & Price Target

Foot Locker Inc. has demonstrated notable financial improvement, with merchandise margins increasing by 300 basis points due to reduced promotional activities year-over-year, coupled with strong sales performance across various brands, including Adidas and New Balance. The company's refreshed stores have reported low-single-digit to mid-single-digit lifts in their first year and significant increases in profit dollars, highlighting the effectiveness of their investment in store renovations. Additionally, the company anticipates continued gross margin growth for FY26, supported by a resurgence of the Nike brand and robust performance from its non-Nike assortment, indicating a positive trajectory for revenue growth in the upcoming years.

Foot Locker Inc. is experiencing challenges that have significantly affected its financial outlook, including a shortfall in total sales attributed to 100 basis points of foreign exchange pressure and ongoing store closures. Operating margin guidance has been lowered to 2.6%-3.1%, coupled with expectations of flat year-over-year EPS in the first half of the fiscal year, marking a stark contrast to the previous performance levels seen in 2018-2019. Additionally, the anticipated recovery from its primary supplier, Nike, has not materialized, leading to modest revenue declines projected for FY26 and raising concerns over future earnings potential.