Foot Locker (FL): MVP of the Mall - UBS

UBS analyst, Michael Binetti, sees upside to 2016 Consensus EPS Estimates for Foot Locker (NYSE: FL). He met with management on Tuesday and thinks that "FL sounds much better than nearly any other mall retailer". He believes the company will be able to navigate the cyclical volatility between basketball and running to drive upside to 2016 EPS through margin expansion. Therefore EPS estimates and the price target went up to $4.77 and $77 (from $75).

He is slightly raising FY16 GM expectations to +25bp YOY from +15bp previously, based on: 1) less labor deleverage (or even labor leverage, depending on SSS) as retail peers struggle with rising min wages in '16; and 2) new inventory order planning systems launching in 1H16.

He raised '16E EPS to $4.77 (+12% YOY) from $4.72 (Street: $4.74) based on better GM expansion. FY16E EPS is based on: 1) total revs +5.2% YOY (5.5% ex-FX); 2) global SSS +4.2%; 3) GMs +25bp YOY; 4) favorable SG&A leverage of 20bp YOY; 5) 13.0% EBIT margins (+35bp YOY—above FL's 2020 target of 12.5%).

For an analyst ratings summary and ratings history on Foot Locker click here. For more ratings news on Foot Locker click here.

Shares of Foot Locker closed at $65.68 yesterday.

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