FL: Sales Upside Increasingly Likely

It’s becoming more apparent that our forecast of a 4.5% same store sales increase for Foot Locker’s 3Q may be conservative.  When we use our proprietary index of NPD and Sportscan weekly data to predict the trend, we now believe we could be understating the results by about 100 bps. 

 

The chart below speaks for itself. The yellow line is reported FL same store sales (global).  The White and Magenta lines are weekly trends we track via Sportscan and NPD.   White is a blended mix including an 88% weight of NPD footwear and 12% Sportscan athletic apparel.  Magenta is 100% domestic footwear.  Blue is 100% domestic athletic apparel.  We can’t explain with 100% confidence why the domestic scan data matches up so well with FL global comps, but it does.  Over the past 12 quarters, 50% of actual results have been within 100bps of the predicted outcome.  The remaining quarters have hovered between a 100-400bps range of actual results. 

 

With positive anecdotal evidence in addition to the chart below, it is becoming increasingly likely that we’re setting up for a 5-6% comp at FL.   We remain above the Street at $0.20 for the quarter but believe this could also be conservative given the relatively benign level of promotional activity we’ve observed.  In fact it appears that BOGO may have been wiped from the FL lexicon (at least for the near-term).   Foot Locker remains one of our favorite long ideas.

 

FL: Sales Upside Increasingly Likely - FL Q3 Comp read 10 25 10

 

*Note: Our index is compiled from weekly data reported on Wednesdays, based on a reporting period through the prior week ending on Sunday.  The chart above tracks trends through 10/17/10. 

 

Eric Levine

Director


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