Opinions
Jim Cramer - Mad Money
Foot Locker
FL-N
SELL
Mar 13, 2024
$23.180
Stock price when the opinion was issued
clothing stores
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BUY
It beat earnings and shares are rising today. She bought this in February when they announced horrible earnings, but were planning to buyback half their shares and raise their dividend. There was so much bad news, things could not get worse. They have potential upside. Expectations got some horrible, that it's easy to buy.
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BUY
She also owns American Eagle Outfitters and Ross in the retail space. Ross is actually up only 1% year to date, but up 40% in the past month. AEO is -40% YTD, up 50% in the last month, and Foot Locker is 15% YTD and 15% past month. The theme for all these--and why should bought them--was that the street punished these stocks so severely, expecting them to lay down and DIE and customers will never spend money again. Well, American consumers are very resilient and continue to spend. Yes, you should be in discount retailing, but this share has already shot up this month. The low-hanging fruit, the time to buy, was last summer--and people missed it. Forget 40% moves, but there will be some movement. She's holding onto Ross and Foot Locker, because there's still upside. Foot Locker remains cheap and still buying back shares. Do your homework in the retail space. Problem is that all the retail ships have risen in recent weeks and we won't see those gains again.
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DON'T BUY
2023 review
She had great faith in the new CEO whom he interviewed last March and bought a small position. The CEO came with a strong track record. He knew that turning around FL was a giant job, but it was impossible. He blew this call. FL was a flailing mall-based retailer. They reported ugly quarters in May and August, the latter reporting that sales sank 10% YOY and earnings -96% YOY. Lots of excess inventory. Awful. FL also halted their dividend, which is why many bought this stock. He was blinded by the CEO's great track record (and still believes in her), but the company had no chance for a turnaround. He should have known better.
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In late 2022, he believed too much in a CEO who couldn't turn around an awful company. The CEO had a great track record and warned the turnaround could take a long time. So, he was patient and bought a small position. A big mistake. His mistake. Hubris. A turnaround can take a very long time.