What Happened?
Shares of footwear and apparel retailer Foot Locker (NYSE:FL) fell 7.3% in the pre-market session after the major indices tumbled (Nasdaq down 1.9%, S&P 500 down 1.7%), marking a volatile ending to an otherwise good year for stocks. This marks the second straight day of broad-based declines with similar downturns (Nasdaq down 1.5%, S&P 500 down 1.1%) recorded on the previous trading day, Friday, December 27, 2024. This suggests that perhaps investors are locking in gains and positioning portfolios for 2025.
The stock market overreacts to news, and big price drops can present good opportunities to buy high-quality stocks. Is now the time to buy Foot Locker? Access our full analysis report here, it’s free.
What The Market Is Telling Us
Foot Locker’s shares are extremely volatile and have had 30 moves greater than 5% over the last year. In that context, today’s move indicates the market considers this news meaningful but not something that would fundamentally change its perception of the business.
The previous big move we wrote about was 26 days ago when the stock dropped 17.3% on the news that the company reported disappointing third-quarter results: Revenue and EPS in the quarter fell below Wall Street's expectations. The company observed softer consumer spending trends following the peak Back-to-School period in August. Compounding the issue, a more aggressive promotional environment likely weakened its pricing power, adding pressure to margins. Its full-year EPS guidance also missed significantly. Overall, this was a weaker quarter.
Foot Locker is down 29% since the beginning of the year, and at $21.90 per share, it is trading 37.7% below its 52-week high of $35.15 from February 2024. Investors who bought $1,000 worth of Foot Locker’s shares 5 years ago would now be looking at an investment worth $561.23.
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