Foot Locker Jumps After Nike Report, Analyst Comments

Shares of athletic shoes and apparel retailer Foot Locker (FL) jumped in morning trading after Nike (NKE) reported better than expected sales and earnings last night and raised its constant currency sales and gross margin guidance for the fiscal year. Pivotal Research analyst Mitch Kummetz said the "real story" is Nike's market share gains, especially as the company continues to scale its "best new and iconic franchises.

BUY FOOT LOCKER ON NIKE'S SALES REBOUND: Jefferies analyst Janine Stichter recommended buying Foot Locker on Nike's "resurging" North America business. Nike's "strong" fiscal Q2 last night pointed to top-line momentum continuing to build, most notably in North America, where 9% constant currency growth accelerated from 6% in Q1, Stichter told investors in a research note. Given the nearly 80% correlation between Nike North America sales and Foot Locker same-store-sales, the accelerating fundamentals are a "clear positive" for Foot Locker, said the analyst. Stichter maintained a Buy rating on Foot Locker with a $62 price target.

PRICE ACTION: Foot Locker is up 4.3% to $49.94 in morning trading, while Nike is up 8%. Additionally, Dick's Sporting Goods (DKS) is up nearly 1%, while Adidas (ADDYY) is up fractionally. 
 

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