Foot Locker, Inc. – Why Bother?

Big drop for Foot Locker, Inc. (NYSE:FL) falling 7% today due to a Q1 guidance reduction and same-store sales slipping 5.1%. Last night in after-hours trading shares of Foot Locker were down 10% and today they hit a new 52-week low.

I didn’t think people still went to Foot Locker? Which was a big name say 10 to 15 years ago and the decline in same-store sales validates that thought. Foot Locker has that RadioShack (RSH) feel to it, out-of-date yet still manages to hang on with all the increased competition of specialty and discount retailers. Now that consumers are not willing to throw around their cash like Paris Hilton due to higher gas prices, a cooling economy and everything else – how will a chain like Foot Locker survive?

What good ol’ Foot Locker needs to do is bring in the dream team of Eddie Lampert (CEO of Sears Holding (SHLD)) and Julian Day (CEO of RadioShack (RSH)) and perform the same miracle they did at their once dying retail chains (which appear to be still dying) by closing the weak stores, cutting costs, and getting rid of the all the unnecessary expenses.

Despite the bashing, Foot Locker does pay out a 13 cent quarterly dividend, they have 20% of the U.S. market share in athletic footwear, and last year they had a net income of $264 million on $5.6 billion in revenue. It’s probably not fair to compare them to dying retailers like Sears and RadioShack, but guys like Big 5 (BGFV), Finish-Line (FINL), Dick’s Sporting Goods (DKS), and others (not to mention the Costco’s (COST) and Wal-Mart’s (WMT) – big boys) all want to take away Foot Locker’s 20% market share. The same-store sales figure of a 5.1% decline is proof that other hungry companies are slowing taking away Foot Locker’s bread and butter.

Foot Locker, Inc has been around a long time, but that doesn’t mean Jack to Wall Street or the American consumer. They now compete with a ton of rivals, not to mention the online guys like Zappos.com or Overstock.com (OSTK). So if consumers aren’t buying from Foot Locker, why would you want to buy the company stock?

Plus, its time to update that Foot Locker uniform those employee’s have to wear. All you have to do is turn the stripes to side and they look like a Jail House uniform. Maybe Paris Hilton should try out that look, before she spends the next 45 days in the slammer. Dancing to the Jail House rock Paris?

Frank Lara Jr.

Frank Lara Jr. can be reached at [email protected]; he does not own securities in the companies he covers.