Footwear numbers definitely look sufficiently beared-up for FL this week. Total footwear dollars were down 6% for the week – marking the fifth consecutive deceleration in top-line on a trailing 3-week basis. We usually delineate between performance and non-performance, but even these numbers are ugly, with the weakest Performance sales trends since April. The spread between Performance and Non-Performance is also at its lowest range since September.
These numbers matter given that December accounts for about 12% of annual sales for Foot Locker and ~50% of Q4. It’s going to take a lot more than this for us to turn the yellow flag to red, as inventories – at least for the time being – are very clean. But given the pervasive view that the ‘sneaker cycle’ is going against us, this data is hardly comforting to the bull case.
We think that ultimately in this space ‘the tail wags the dog’ and that that the R&D cycle will fuel earnings upside. But we need to continue to see this in weekly sales results to be proved correct.
