©Reuters.Telsey's Foot Locker (FL) reduction due to delay in recovery of operating profit margin
Telsey Advisory Group downgraded the company's stock in a note on Thursday. foot locker (NYSE:) We lower Market Perform from Outperform and lower price target from $38 to $28 per share.
The reason for the downgrade was that SG&A expenses in 2024 were higher than expected, and as a result, the pace of recovery in operating profit margin was slower than expected.
“This higher SG&A expense level provides a new basis for normalized incentive compensation and increased investments in store renewal, marketing and technology that are likely to continue into 2025,” the company wrote. ing.
“Therefore, further significant operating margin improvement towards the 8.5%-9.0% target would require sales growth of 5%-6%, versus the 2024 guidance (1%)-1%. needs to be accelerated,” the analyst added. .
Given that Foot Locker hasn't grown its revenue at such a strong pace since 2016 (with the exception of 2021 due to the pandemic boom), it's unlikely that Foot Locker will continue to do so in the near future until there is more evidence of accelerated growth and market share gains. Telsey says there will likely be deep-rooted skepticism. Possible.
“Overall, given the further weakening of the operating margin and EPS outlook for 2024, analysts find further evidence that an even stronger operating margin and EPS recovery can be achieved in 2025 and beyond. “We will remain on the sidelines until then,” they concluded.
