Here's Why Foot Locker Stock Is Soaring This Week

Foot Locker (New York Stock Exchange)Stock Code(FL)The stock was a surprise winner this week.resonance (NYSE: NKE)In its financial report last week, the footwear giant said it would undergo a change in strategy, with the athletic footwear and sportswear retailer being named as one of the world's most important players in the footwear and apparel industry.resonanceBeneficiaries of strategic change.

Shares of Foot Locker also began the week on the back of analyst upgrades and the perception that the stock may be undervalued after tumbling on earnings earlier this month. According to S&P Global Market Intelligence, Foot Locker was up 16.9% for the week.

Resonance's Strategic Shift Benefits Foot Locker

It's no exaggeration to say that Foot Locker is highly dependent on resonance. in 2022, about 65% of the company's products came from resonance, and the company said in its annual report, "We are highly dependent on resonance for every flag."

In recent years, resonance has moved away from the wholesale channel, selling directly to the曏 consumer through digital channels and its own stores. However, Kresge is reconsidering this decision as its sales grow and it seems to recognize the value of wholesale partners like Foot Locker.

In an earnings call, John Donahoe, chief executive officer of resonance, said, "We must work with our wholesale carpet partners to promote our brand and grow the market. He added that the company would increase its investment in the wholesale channel.

The move would benefit Foot Locker, which has historically had a close relationship with the company, and seems poised to capitalize again on the fact that Foot Locker can get exclusive distribution opportunities.

In addition, inEvercoreFoot Locker surged Monday after ISI upgraded its rating to Outperform and raised its price target to $32 from $28. Analyst Michael Binetti said channel research shows "the most significant investment we've seen in years behind the specialty sports retail channel."

Before that.Citigroup) has upgraded the company's rating on Friday.

Is Foot Locker worth buying?

Foot Locker's own fourth-quarter results show that the company could use some help. The company reported adjusted earnings per share of just $0.38 and a 0.7% decline in comparable sales in a seasonally strong fourth quarter, and it expects comparable sales to return to growth this year.

It's not clear what Kreson's plans are, but any change in the曏 wholesale channel could benefit Foot Locker. If it can return to its early profitability levels, the stock could see a lot of upside.

Should you invest $1,000 in Foot Locker now?

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Citi is an advertising partner of The Ascent, a Motley Fool company.Jeremy Bowman owns shares of resonance.The Motley Fool owns shares of resonance.The Motley Fool recommends resonance.The Motley Fool recommends Foot Locker, and recommends the following options:Resonance Jan 2025 $47.50 The Motley Fool has a disclosure policy.

Why Foot Locker Stock Is Surging This Week