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Stock Report | September 24, 2016 | NYS Symbol: FL | FL is in the S&P 500

Foot Locker Inc.


S&P Capital IQ
Recommendation
STRONG BUY ★★★★★ Price 12-Mo. Target Price
$67.07 (as of Sep 23, 2016 4:00 PM ET) $76.00
Report Currency
USD
Investment Style
Large-Cap Blend
S&P Capital IQ Equity Analyst T. Amobi, CPA, CFA

GICS Sector Consumer Discretionary Summary This company sells athletic footwear and apparel through over 3,500 stores in 23
Sub-Industry Apparel Retail countries.

Key Stock Statistics (Source S&P Capital IQ, Vickers, company reports)

52-Wk Range $76.00– 50.90 S&P Oper. EPS 2017E 4.75 Market Capitalization(B) $9.343 Beta 1.17
Trailing 12-Month EPS $4.02 S&P Oper. EPS 2018E 5.21 Yield (%) 1.64 S&P 3-Yr. Proj. EPS CAGR(%) 9
Trailing 12-Month P/E 16.7 P/E on S&P Oper. EPS 2017E 14.1 Dividend Rate/Share $1.10 S&P Quality Ranking B+
$10K Invested 5 Yrs Ago $34,961 Common Shares Outstg. (M) 139.3 Institutional Ownership (%) 95

Price Performance Analyst's Risk Assessment


30-Week Mov. Avg. 10-Week Mov. Avg. GAAP Earnings vs. Previous Year Volume Above Avg. STARS
LOW MEDIUM HIGH
12-Mo. Target Price Relative Strength Up Down No Change Below Avg.
Our risk assessment reflects our view that FL's
80 initiatives to strengthen merchandising and brand
60 marketing have begun to gain traction, offset by
intense competition we see in the athletic
Share Price

40 sub-segment of the footwear and apparel


30 specialty retail industry.

20
Revenue/Earnings Data
Revenue (Million $)
Volume(Mil.)

42
15
1Q 2Q 3Q 4Q Year
10 2017 1,987 1,780 -- -- --
5 2016 1,916 1,695 1,794 2,007 7,412
0
5 2015 1,868 1,641 1,731 1,911 7,151
5 3 4
2014 1,638 1,454 1,622 1,791 6,505
1 2013 1,578 1,367 1,524 1,713 6,182
OND J FMAM J J A SOND J FMAM J J A SOND J FMAM J J A SOND J FMAM J J A SOND J FMAM J J A SON 2012 1,452 1,275 1,394 1,502 5,623
2012 2013 2014 2015 2016
Earnings Per Share ($)
Past performance is not an indication of future performance and should not be relied upon as such.
2017 1.39 0.94 E1.12 E1.30 E4.75
Analysis prepared by Equity Analyst T. Amobi, CPA, CFA on Aug 19, 2016 03:16 PM, when the stock traded at $68.19. 2016 1.29 0.84 0.57 E1.11 3.84
Highlights Investment Rationale/Risk 2015 1.10 0.63 0.82 1.01 3.56
2014 0.90 0.44 0.70 0.81 2.85
➤ We project mid-single digit sales growth in FY ➤ We think a stronger-than-expected 5% in- 2013 0.83 0.39 0.69 0.68 2.58
17 (Jan.) on a similar growth in comparable- crease in Q2 comparable sales further reflected 2012 0.60 0.24 0.43 0.53 1.80
store sales -- consistent with management's broad strength across distribution channels, Fiscal year ended Jan. 31. Next earnings report expected: Late
guidance. We see relatively modest square geographic locations, banners and product cat- November. EPS Estimates based on S&P Capital IQ Operating
Earnings; historical GAAP earnings are as reported in Company
footage growth, on plans to add 50 to 60 new egories. We see FL increasingly executing its reports.
stores per year (net of other closures -- mostly medium-term strategic plan, with key growth
in Europe, Kids Foot Locker in the U.S. and pillars around its kids and women's businesses, Dividend Data
Footaction). We see strong consumer demand aggressive expansion in Europe (after the Run-
Amount Date Ex-Div. Stk. of Payment
on newness and innovation in the core product ners Point acquisition) as well as further pene- ($) Decl. Date Record Date
offerings -- including basketball, running, casu- tration of its (non-core) apparel offerings and 0.250 Nov 18 Jan 13 Jan 15 Jan 29 '16
al footwear -- and the secular trend of more growth of its digital upside. We note some trac- 0.275 Feb 17 Apr 13 Apr 15 Apr 29 '16
people leading an active lifestyle. Also, store tion in the direct-to-consumer business. 0.275 May 18 Jul 13 Jul 15 Jul 29 '16
remodels should provide a lift in sales produc- ➤ Risks to our recommendation and target price 0.275 Aug 17 Oct 12 Oct 14 Oct 28 '16
tivity. In FY 16, sales increased 3.6%, on 8.5% include relatively high exposure to Nike (which Dividends have been paid since 2003. Source: Company reports.
higher comp sales. recently supplied more than 70% of FL's mer- Past performance is not an indication of future performance and
➤ From about 12.7% in FY 16, we see operating chandise assortments); a sharp slowdown in should not be relied upon as such.
margins expanding to 13.0% in FY 17 and 13.3% consumer spending across the U.S., Canada
in FY 18. This should benefit from sales leverage and Europe; and significant adverse shifts in
on fixed expenses, enhanced productivity, con- consumer tastes and preferences.
trol of marketing expenses and increasingly ➤ Our 12-month target price is $76, on FY 17 P/E of
complementary apparel and accessories mar- 16.0X -- versus 9% projected long-term EPS
gins, partly offset by stores remodeling. growth -- seen attractive to retail peers and
➤ With some share repurchases under a current slightly below the 10-year average multiple of
$1 billion plan, we forecast EPS of $4.75 in FY 17 16.6X. Also, we note an implied recent yield of
-- consistent with FL's outlook for double digit 1.7% (after a 10% dividend hike in February
growth -- and $5.21 in FY 18. 2016), and almost $7 a share in cash.

Please read the Required Disclosures and Analyst Certification on the last page of this report.
Redistribution or reproduction is prohibited without written permission.
This document is not intended to provide personal investment advice and it does not take into account the specific investment objectives, financial situation and the particular needs of any specific person who may receive this report. Investors should seek
independent financial advice regarding the suitability and/or appropriateness of making an investment or implementing the investment strategies discussed in this document and should understand that statements regarding future prospects may not be realized.
Investors should note that income from such investments, if any, may fluctuate and that the value of such investments may rise or fall. Accordingly, investors may receive back less than they originally invested. Investors should seek advice concerning any
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Unless otherwise indicated, there is no intention to update this document.
Stock Report | September 24, 2016 | NYS Symbol: FL

Foot Locker Inc.


Business Summary August 19, 2016 Corporate Information

Foot Locker, Inc. (FL) is a global retailer of athletic footwear and apparel. The company operates through Investor Contact
two segments, Athletic Stores and Direct-to-Customers. P.D. Brown (212-720-4254)

The Athletic Stores segment operates athletic footwear and apparel stores under various formats, includ-
ing Foot Locker, Lady Foot Locker, Kids Foot Locker, Champs Sports, Footaction and CCS, and has mall- Office
based stores in the U.S., Canada, Europe, Australia and New Zealand. 112 West 34th Street, New York, NY 10120.

Foot Locker offers athletic-inspired performance products, manufactured primarily by leading athletic Telephone
brands. The chain offers products for various activities, including basketball, running, and training. As of 212-720-3700.
January 30, 2016, its 1,796 stores were located in 23 countries, including 971 in the U.S. The domestic
stores have an average of 2,500 selling square feet and the international stores have an average of 1,500 Fax
selling square feet. 212-553-7026.

Lady Foot Locker is a U.S. retailer of athletic footwear, apparel and accessories for active women. Its Website
stores carry major athletic footwear and apparel brands, as well as casual wear and an assortment of ap- http://www.footlocker-inc.com
parel designed for various activities, including running, walking, toning, and fitness. In November 2012, FL
launched a new retail banner, SIX:02, that features top brands in fitness apparel and athletic footwear for
women. Lady Foot Locker's 156 stores and SIX:02's 30 stores have an average of 1,300 and 2,100 selling Officers
square feet, respectively.
Chrmn, CEO & Pres SVP & Chief Acctg
Kids Foot Locker is a national children's athletic retailer that offers a selection of brand-name athletic R.A. Johnson Officer
footwear, apparel and accessories for children. Its stores feature an environment geared to appeal to both G. Cipriano
parents and children. Kids Foot Locker's 374 stores have an average of 1,600 selling square feet. COO
R.W. McHugh SVP, Secy & General
Champs Sports is a mall-based specialty athletic footwear and apparel retailer in North America. Its prod- Counsel
uct categories include athletic footwear, apparel and accessories, and a focused assortment of equip- EVP & CFO S.M. Clarke
ment. Champs Sports' 550 stores have an average of 3,500 selling square feet. L.B. Peters

Footaction focuses on marquee footwear and branded apparel. Its primary customers are young males
that seek street-inspired athletic styles. Footaction's 268 stores have an average of 3,000 selling square Board Members
feet. M. K. Clark N. P. DiPaolo
A. D. Feldman J. Gilbert, Jr.
CCS serves the needs of the 12- to 18-year-old skater while seeking to maintain credibility with core
R. A. Johnson G. G. Marmol
skaters of all ages. With the July 2013 closure of its 22 retail stores, CCS now operates as an online-only
business. M. M. McKenna S. T. Oakland
C. N. Turpin D. D. Young
In July 2013, FL acquired Runners Point Warenhandelsges mbH ("Runners Point Group," or RPG), a special-
ty athletic store and online retailer based in Recklinghausen, Germany, for 72 million euros in cash. As of
January 31, 2015, RPG operated 199 stores mainly under the Runners Point and Sidestep banners in Ger- Domicile
many, Austria, and the Netherlands. Through this acquisition, FL sees an opportunity to further diversify New York
and expand its European business, including accelerated e-commerce growth through RPG's online sub-
sidiary, Tredex. Founded
1879
In addition to company-owned retail stores, FL had 31 franchised Foot Locker stores in the Middle East and
20 in South Korea, as well as 27 franchised Runners Point and Sidestep stores in Germany and Switzerland Employees
as of January 31, 2015. 47,025

The Direct-to-Customers segment consists of websites aligned with the company's retail banners, CCS's Stockholders
catalog operations, and Eastbay, a leading direct marketer of athletic footwear, apparel, equipment, team 14,237
licensed and private-label merchandise to high school athletes.

The company's major supplier is Nike, Inc.

FL's strategic vision is to be the leading global retailer of athletically inspired shoes and apparel. The com-
pany sees a near-term opportunity to accelerate same-store sales growth and to improve profitability
through clearer differentiation of footwear and apparel offerings between its retail banners; development
of private label apparel that complements branded assortments; closer collaboration with vendor partners
on exclusive products; new merchandise displays that improve footwear and apparel adjacencies; cus-
tomer service enhancements; redesign of its e-commerce sites; and investments in mobile commerce and
social media.

FINANCIAL TRENDS. Through the period from FY 12 to FY 16, the company generated a compound annual
growth rate (CAGR) in revenue of 8.0% and operating income of 28.2%. Over the period, its operating mar-
gins steadily improved, reaching 12.7% in FY 16 (versus 5.4% in FY 11). Meanwhile, its return on equity
(ROE) also consistently improved, to 21.4% in FY 16 (versus 8.5% in FY 11).

Redistribution or reproduction is prohibited without written permission.


Stock Report | September 24, 2016 | NYS Symbol: FL

Foot Locker Inc.


Quantitative Evaluations Expanded Ratio Analysis

S&P Capital IQ 3+ 1 2 3 4 5 2016 2015 2014 2013


Fair Value LOWEST HIGHEST Price/Sales 1.27 1.33 1.30 1.03
Rank Based on S&P Capital IQ's proprietary quantitative model, stocks Price/EBITDA 8.66 10.00 10.50 8.62
are ranked from most overvalued (1) to most undervalued (5). Price/Pretax Income 11.28 11.75 12.75 10.51
P/E Ratio 17.46 18.28 19.71 16.07
Fair Value $65.70 Analysis of the stock's current worth, based on S&P Capital IQ's Avg. Diluted Shares Outstg (M) 140.8 146.0 150.5 154.0
proprietary quantitative model suggests that FL is slightly
Calculation overvalued by $1.37 or 2.0%. Figures based on calendar year-end price

Investability 97 Key Growth Rates and Averages


Quotient LOWEST = 1 HIGHEST = 100
Percentile FL scored higher than 97% of all companies for which an S&P Past Growth Rate (%) 1 Year 3 Years 5 Years 9 Years
Capital IQ Report is available.
Sales 3.65 6.60 7.99 3.78
Net Income 4.04 11.86 24.87 NM
Volatility LOW AVERAGE HIGH
Ratio Analysis (Annual Avg.)
Technical BULLISH Since July, 2016, the technical indicators for FL have been Net Margin (%) 7.30 7.06 6.51 4.02
BULLISH. % LT Debt to Capitalization 4.81 4.92 5.21 6.08
Evaluation
Return on Equity (%) 21.43 19.96 18.20 11.14
Insider Activity UNFAVORABLE NEUTRAL FAVORABLE

For further clarification on the terms used in this report, please visit www.spcapitaliq.com/stockreportguide

Company Financials Fiscal Year Ended Jan. 31

Per Share Data ($) 2016 2015 2014 2013 2012 2011 2010 2009 2008 2007
Tangible Book Value 17.26 16.34 15.71 14.75 12.76 11.87 11.27 11.42 12.73 12.54
Cash Flow 4.89 4.51 3.73 3.34 2.51 1.75 1.02 0.33 1.38 2.69
Earnings 3.84 3.56 2.85 2.58 1.80 1.07 0.30 -0.52 0.32 1.58
S&P Capital IQ Core Earnings NA 3.57 2.84 2.60 1.83 1.12 0.30 -0.02 0.13 1.45
Dividends 1.00 0.88 0.80 0.72 0.66 0.60 0.60 0.60 0.40 0.32
Payout Ratio 26% 25% 28% 28% 26% 33% NM NM 123% 20%
Calendar Year 2015 2014 2013 2012 2011 2010 2009 2008 2007 2006
Prices:High 77.25 59.19 41.63 37.65 25.50 19.96 12.95 18.19 24.78 28.00
Prices:Low 51.12 36.65 31.12 23.48 16.66 11.10 7.09 3.65 11.78 21.50
P/E Ratio:High 20 17 15 15 14 19 43 NM 77 18
P/E Ratio:Low 13 10 11 9 9 10 24 NM 37 14

Income Statement Analysis (Million $)


Revenue 7,412 7,151 6,505 6,182 5,623 5,049 4,854 5,237 5,437 5,750
Operating Income 1,090 950 805 740 551 377 233 211 242 574
Depreciation 148 139 133 118 110 106 112 130 166 175
Interest Expense 11.0 11.0 11.0 11.0 13.0 9.00 10.0 16.0 21.0 23.0
Pretax Income 837 809 663 607 435 257 73.0 -100 -50.0 392
Effective Tax Rate 35.4% 35.7% 35.3% 34.6% 36.1% 34.2% 35.6% NM NM 37.0%
Net Income 541 520 429 397 278 169 47.0 -80.0 49.0 247
S&P Capital IQ Core Earnings NA 521 428 401 283 176 46.4 -2.30 19.1 227

Balance Sheet & Other Financial Data (Million $)


Cash 1,021 967 867 928 851 696 589 408 493 484
Current Assets 2,606 2,456 2,350 2,363 2,079 1,934 1,772 1,764 2,064 2,034
Total Assets 3,775 3,577 3,487 3,367 3,050 2,896 2,816 2,858 3,248 3,249
Current Liabilities 700 696 626 636 548 489 433 418 501 516
Long Term Debt 129 130 131 133 135 137 138 142 221 220
Common Equity 2,553 2,496 2,496 2,377 2,110 2,025 1,948 1,907 2,271 2,295
Total Capital 2,682 2,626 2,627 2,510 2,245 2,162 2,086 2,066 2,507 2,536
Capital Expenditures 228 190 206 163 152 97.0 89.0 146 148 165
Cash Flow 689 659 562 515 388 275 159 51.0 215 422
Current Ratio 3.7 3.5 3.8 3.7 3.8 4.0 4.1 4.2 4.1 3.9
% Long Term Debt of Capitalization 4.8 5.0 5.0 5.3 6.0 6.3 6.6 6.9 8.8 8.8
% Net Income of Revenue 7.3 7.3 6.6 6.4 4.9 3.4 1.0 NM 0.9 4.3
% Return on Assets 14.7 14.7 12.5 12.4 9.4 5.9 1.7 NM 1.5 7.5
% Return on Equity 21.4 20.8 17.6 17.7 13.5 8.5 2.4 NM 2.2 11.4

Data as originally reported in Company reports.; bef. results of disc opers/spec. items. Per share data adj. for stk. divs.; EPS diluted. E-Estimated. NA-Not Available. NM-Not Meaningful. NR-Not Ranked. UR-Under
Review.

Redistribution or reproduction is prohibited without written permission.


Stock Report | September 24, 2016 | NYS Symbol: FL

Foot Locker Inc.


Sub-Industry Outlook Industry Performance
Our fundamental outlook for apparel retailers is relatively promotional retail environment amid some GICS Sector: Consumer Discretionary
neutral. According to the U.S. Census Bureau, sales lingering weakness in customer traffic through the Sub-Industry: Apparel Retail
at clothing and clothing accessories stores edged back-to-school and upcoming holiday selling
up 1.7% in 2015, to $255.0 billion, versus 0.8%, 3.8% seasons, we expect companies to plan inventories Based on S&P 1500 Indexes
and 5.5% gains in 2014, 2013 and 2012, respectively. cautiously to limit their markdown exposure. We Five-Year market price performance through
Through the 2016 first half, sales were essentially also look for apparel retailers to maintain expense Sep 24, 2016
flat at $127.4 billion. While consumer spending has discipline in support of higher earnings.
benefited from sharply lower gasoline prices, we S&P 1500 Sector Sub-Industry
believe a shift in spending from nondurables to Year to date in 2016 through August 12, the S&P 160%
durables (e.g., cars and household goods) and, to Apparel Retail Index was up 5.5%, versus a 7.3%
some extent luxury goods, has negatively impacted advance for the S&P 1500 Composite Index. In 2015,
apparel sales. We also see increasing competition the sub-industry index dipped 1.8%, versus a 1.0%
for share of customer wallet from international decline for the broader market benchmark. 110%
retailers expanding in the U.S.
--Tuna N. Amobi, CFA, CPA

% Change
We look for growth in apparel sales to stagnate in
2016 -- through the crucial back-to-school and 60%

holiday selling seasons -- amid some persisting


promotional activity and despite a constant influx of
new fashion assortments. We believe off-price
retailers are best positioned to gain market share in 10%

2014, given their attractive value pricing, frequent


in-flow of new merchandise, and ability to quickly
move in and out of product categories based on
customer demand. -40%

With a likely continued acceleration in


direct-to-consumer sales on e-commerce
development and a a focus on omni-channel -90%

initiatives, we believe those companies that use 2011 2012 2013 2014 2015 2016

customer feedback from social media sites as a tool NOTE: All Sector & Sub-Industry information is based on the
to improve their products and services will gain a Global Industry Classification Standard (GICS)
competitive edge. We also expect apparel retailers
to focus their expansion on outlet centers in order to Past performance is not an indication of future performance
reach cost-conscious consumers who might and should not be relied upon as such.
otherwise not shop their brands and to raise brand
awareness among international shoppers.

Given a relatively soft but gradually improving


outlook for consumer spending, as well as a

Sub-Industry : Apparel Retail Peer Group*: Footwear-related Specialty Retail


Stk.Mkt. Recent 52 Fair S&P Return on LTD to
Stock Cap. Stock Week Yield P/E Value Quality IQ Revenue Cap
Peer Group Symbol (Mil. $) Price($) High/Low($) Beta (%) Ratio Calc.($) Ranking %ile (%) (%)
Foot Locker FL 9,343 67.07 76.00/50.90 1.17 1.6 17 65.70 B+ 97 7.3 4.8
Finish Line 'A' FINL 943 22.75 24.52/15.37 0.84 1.8 57 25.40 B 88 1.2 NA
Genesco Inc GCO 1,303 53.35 74.21/47.66 1.11 Nil 11 NA B 95 3.2 9.2
Shoe Carnival SCVL 543 27.22 30.13/17.36 1.45 1.0 19 NA B+ 91 2.9 NA

NA-Not Available NM-Not Meaningful NR-Not Rated. *For Peer Groups with more than 15 companies or stocks, selection of issues is based on market capitalization.

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Stock Report | September 24, 2016 | NYS Symbol: FL

Foot Locker Inc.


S&P Capital IQ Analyst Research Notes and other Company News
With FL on track with its medium-term growth and capital allocation initiatives,
we keep our 12-month target price of $82 (1.4% yield), on P/E of 18.1x our FY 17
August 19, 2016
estimate, a modest premium to peers, and vs. 10-year average of 16.4x. /T. Amobi,
11:04 am ET ... S&P GLOBAL KEEPS STRONG BUY OPINION ON SHARES OF FOOT
CPA, CFA
LOCKER, INC. (FL 66.68*****): We raise our 12-month target price by $8 to $76
(1.7% yield), on FY 17 (Jan.) P/E of 16X, seen an attractive multiple vs. peers and
slightly below recent historical averages, with nearly $7 a share in cash. We keep July 31, 2015
FY 17 EPS estimate of $4.75 and trim FY 18's by $0.02 to $5.21. Jul-Q EPS of $0.94 Foot Locker, Inc. namedPawan Verma as Senior Vice President and Chief
vs. $0.84, was $0.04 above Capital IQ consensus. Sales rose 5%, and comp sales Information Officer, effective August 10, 2015. #
also rose a relatively healthy 5%, we infer on continued broad gains across
product categories, as well as distribution channels, geographic locations and
July 15, 2015
store banners. EBIT margins gained 20 basis points. /T. Amobi, CPA, CFA
02:19 pm ET ... S&P CAPITAL IQ KEEPS STRONG BUY OPINION ON SHARES OF
FOOT LOCKER INC. (FL 69.8*****): We raise our 12-month target price by $7 to
May 31, 2016 $82, with a P/E of 18.5x our FY 17 (Jan.) estimate, a modest premium to peers, and
Foot Locker, Inc. announced the appointment of Scott Martin as Senior Vice vs. FL's 10-year average of 16.5x. We raise FY 16 and FY 17 EPS estimates by $0.05
President # Real Estate, effective June 13. Martin succeeds Jeffrey Berk, who and $0.09 to $4.00 and $4.44. We see FL increasingly executing its medium-term
retired in April after almost 20 years with the company. Martin will be responsible strategic plan, with key growth pillars around its kids and women's businesses,
for the development and implementation of the company's global real estate aggressive expansion in Europe, as well as further penetration of (non-core)
strategy. Martin joins Foot Locker, Inc. from Gap, Inc., where he has worked apparel lines and digital upside. Also, we see ongoling capital allocation for
since 2014 as Vice President, Store Development, Asia Pacific. stores expansion, share buybacks and dividends (1.4% yield). /T. Amobi, CPA, CFA

May 20, 2016 May 22, 2015


10:52 am ET ... S&P GLOBAL KEEPS STRONG BUY OPINION ON SHARES OF FOOT 10:26 am ET ... S&P CAPITAL IQ RAISES OPINION ON SHARES OF FOOT LOCKER
LOCKER, INC. (FL 54.58*****): We cut our 12-month target price by $8 to $68 (2.0% TO STRONG BUY FROM BUY (FL 64.99*****): With broad-based momentum
yield), on FY 17 (Jan.) P/E of 14.3X, near peers and vs. 10-year average of 16.6X. across distribution channels, geographic locations, banners and product
We keep FY 17 EPS estimate of $4.75 and trim FY 18's by $0.04 to $5.23. We note categories, we raise our 12-month target by $10 to $75 (noting a 1.5% yield), on a
recent concerns with a challenging retail climate, even as FL seems on track with FY 16 (Jan.) P/E of 19.0X (with 11% projected long-term EPS growth), in line with
its medium-term growth plan. Apr-Q EPS of $1.40 (before $0.01 costs) vs. $1.29, peers and above the 10-year average of 16.4X. We raise our FY 16 and FY 17 EPS
was $0.01 above Capital IQ consensus. Net sales and comp sales each rose 4%, estimates by $0.14 and $0.17 to $3.95 and $4.35. Apr-Q EPS of $1.29 vs. $1.11, was
with likely gains across distribution channels, geographic areas, banners and $0.08 above our estimate. Apr-Q sales rose 3% (8% with constant forex), with a
product categories. Adjusted EBIT margins were flat. /T. Amobi, CPA, CFA 8% comp sales increase. Apr-Q EBIT rose 12% as margins widened 140 basis
points. /T. Amobi, CPA, CFA
February 26, 2016
11:26 am ET ... S&P CAPITAL IQ KEEPS STRONG BUY OPINION ON SHARES OF May 21, 2015
FOOT LOCKER, INC. (FL 65.22*****): We cut our 12-month target price by $6 to $76 Foot Locker, Inc. announced that its board of directors has elected Nicholas
(1.7% yield on 10% dividend hike), on FY 17 (Jan.) P/E of 16.6X, closer to peers and DiPaolo, previously its lead director, to the position of non-executive chairman of
vs. 10-year average of 16.6X. Still, we raise our FY 17 (Jan.) EPS estimate by $0.07 the board, effective May 20, 2015. He succeeds Ken C. Hicks who, as previously
to $4.75, noting FL's target for a mid-single digit increase in comp sales, and announced, retired from the company and the board of directors after annual
double-digit EPS growth. We set FY 18 EPS at $5.27. Jan-Q EPS of $1.16 (before meeting of shareholders. Nicholas DiPaolo, age 73, retired vice chairman of
$0.02 costs) vs. $1.00, was $0.05 above our estimate. Sales rose 5% (up 9% Bernard Chaus, Inc., has been lead director of Foot Locker, Inc. since May, 2012
ex-forex), with comps up a solid 8% on momentum across channels, markets, and a director since 2002. Mr. DiPaolo has previously served as a director of
banners and products. EBIT margins widened 100 basis points. /T. Amobi, CPA, Bernard Chaus, Inc. (to June 2005), JPS Industries, Inc. (to April 2013), and R.G.
CFA Barry Corporation (to September 2014).

November 20, 2015


10:43 am ET ... S&P CAPITAL IQ KEEPS STRONG BUY OPINION ON SHARES OF
FOOT LOCKER, INC. (FL 65.65*****): We raise our FY 16 (Jan.) and FY 17 EPS
estimates by $0.09 and $0.16 to $4.24 and $4.68. Oct-Q EPS of $1.00 (before $0.43
litigation charge) vs. $0.83, was $0.08 above our estimate. Net sales rose 4% (up
9% ex-forex), with comps up a solid 9%, with momentum across channels,
markets, banners and products. With more operating leverage, EBIT rose 15% as
margins widened 140 basis points. Noting FL's results-oriented retail execution
on track with its medium-term strategic growth plan, we keep our 12-month
target price of $82 (1.5% yield), on premium P/E of 17.5X our FY 17 estimate. /T.
Amobi, CPA, CFA

October 23, 2015


11:26 am ET ... S&P CAPITAL IQ ADDS FOOT LOCKER TO ITS TOP-10 PORTFOLIO
(FL 65.19*****): We see strong consumer demand for basketball, lightweight and
technical running shoes along with further expansion into accessories helping
drive FL's mid-single-digit increase in comparable sales. With margin expansion
coupled with share repurchases, we expect double-digit EPS growth for the next
two fiscal years. We see shares as undervalued on P/E-growth basis. FL replaces
Rowan (RDC 20 *****) in our top-10 portfolio. /Todd Rosenbluth

August 21, 2015


09:36 am ET ... S&P CAPITAL IQ KEEPS STRONG BUY OPINION ON SHARES OF
FOOT LOCKER, INC. (FL 71.72*****): We raise FY 16 (Jan.) and FY 17 EPS
estimates by $0.15 and $0.08 to $4.15 and $4.54. Jul-Q EPS of $0.84 vs. $0.64, was
$0.15 above our estimate. Sales rose 3% (up 10% ex-forex) with comps up a solid
10%, on broad momentum across channels, markets, banners and products. With
more operating leverage, EBIT rose 22% as margins widened 200 basis points.

Redistribution or reproduction is prohibited without written permission.


Stock Report | September 24, 2016 | NYS Symbol: FL

Foot Locker Inc.


Analysts' Recommendations Wall Street Consensus Opinion

Monthly Average Trend Buy Buy/Hold Hold Weak Hold Sell No Opinion FL Trend BUY/HOLD
B BH H WH S

Wall Street Average Companies Offering Coverage


B
Argus Research Company
BH
B. Riley & Co.
H
Barclays
WH
BofA Merrill Lynch
S
Brean Capital
Number of Analysts Following Stock Buckingham Research Group Inc.
Canaccord Genuity
30 Citigroup Inc
Cowen and Company
20
Credit Suisse
10 Deutsche Bank
Evercore ISI
FBR Capital Markets & Co.
Stock Price ($ 000)
JP Morgan
1000
Jefferies LLC
Morgan Stanley
1000
Piper Jaffray Companies
Robert W. Baird & Co.
1000
Susquehanna Financial Group, LLLP
Telsey Advisory Group LLC
1000
O N D J F M A M J J A S O N D J F M A M J J A S
UBS Investment Bank
Wells Fargo Securities, LLC
2014 2015 2016

Of the total 22 companies following FL, 22 analysts currently publish recommendations.

No. of % of Total 1 Mo. Prior 3 Mos. Prior


Recommendations
Buy 13 59 13 14
Buy/Hold 3 14 3 3
Hold 6 27 6 7
Weak Hold 0 0 0 0
Sell 0 0 0 0
No Opinion 0 0 0 0
Total 22 100 22 24
Wall Street Consensus Estimates Wall Street Consensus vs. Performance

For fiscal year 2017, analysts estimate that FL will


Estimates 2016 2017 2018 2016 Actual $3.84 earn US$ 4.76. For the 2nd quarter of fiscal year
6 2017, FL announced earnings per share of US$
0.94, representing 20% of the total annual
5 estimate. For fiscal year 2018, analysts estimate
that FL's earnings per share will grow by 10% to
4 US$ 5.24.

3 M J J A S O N D J F M A M J J A S

2015 2016

Fiscal Years Avg Est. High Est. Low Est. # of Est. Est. P/E
2018 5.24 5.39 5.07 22 12.8
2017 4.76 4.83 4.70 20 14.1
2018 vs. 2017 10% 12% 8% 10% -9%

Q3'18 1.21 1.25 1.17 12 55.4


Q3'17 1.10 1.15 1.08 21 61.0
Q3'18 vs. Q3'17 10% 9% 8% -43% -9%

A company's earnings outlook plays a major part in any investment decision. S&P Capital IQ organizes the earnings estimates of over 2,300
Wall Street analysts, and provides their consensus of earnings over the next two years, as well as how those earnings estimates have
changed over time. Note that the information provided in relation to consensus estimates is not intended to predict actual results and should
not be taken as a reliable indicator of future performance.

Redistribution or reproduction is prohibited without written permission.


Stock Report | September 24, 2016 | NYS Symbol: FL

Foot Locker Inc.

Glossary EBIT - Earnings Before Interest and Taxes


EBITDA - Earnings Before Interest, Taxes, Depreciation and Amortization
EPS - Earnings Per Share
S&P Capital IQ STARS EV - Enterprise Value
Since January 1, 1987, S&P Capital IQ Equity Research has ranked a universe of U.S. FCF - Free Cash Flow
common stocks, ADRs (American Depositary Receipts), and ADSs (American FFO - Funds From Operations
Depositary Shares) based on a given equity's potential for future performance. FY - Fiscal Year
Similarly, S&P Capital IQ Equity Research has ranked Asian and European equities P/E - Price/Earnings
since June 30, 2002. Under proprietary STARS (STock Appreciation Ranking System), P/NAV - Price to Net Asset Value
S&P Capital IQ equity analysts rank equities according to their individual forecast of an PEG Ratio - P/E-to-Growth Ratio
equity's future total return potential versus the expected total return of a relevant PV - Present Value
benchmark (e.g., a regional index (S&P Asia 50 Index, S&P Europe 350® Index or R&D - Research & Development
S&P 500® Index)), based on a 12-month time horizon. STARS was designed to meet ROCE - Return on Capital Employed
the needs of investors looking to put their investment decisions in perspective. Data ROE - Return on Equity
used to assist in determining the STARS ranking may be the result of the analyst's ROI - Return on Investment
own models as well as internal proprietary models resulting from dynamic data inputs. ROIC - Return on Invested Capital
ROA - Return on Assets
S&P Capital IQ Quality Ranking SG&A - Selling, General & Administrative Expenses
(also known as S&P Capital IQ Earnings & Dividend Rankings) - Growth and SOTP - Sum-of-The-Parts
stability of earnings and dividends are deemed key elements in establishing S&P WACC - Weighted Average Cost of Capital
Capital IQ's earnings and dividend rankings for common stocks, which are designed to
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deemed desirable in establishing such rankings. The final score for each stock is origin).
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representative sample of stocks. The range of scores in the array of this sample has
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or the risk of a firm's ability to continue as an ongoing concern. The S&P Capital IQ
A High B- Lower
Qualitative Risk Assessment is a relative ranking to the S&P U.S. STARS universe,
A- Above Average C Lowest
and should be reflective of risk factors related to a company's operations, as opposed
B+ Average D In Reorganization
to risk and volatility measures associated with share prices. For an ETF this reflects on
NR Not Ranked
a capitalization-weighted basis, the average qualitative risk assessment assigned to
holdings of the fund.
S&P Capital IQ EPS Estimates
S&P Capital IQ earnings per share (EPS) estimates reflect analyst projections of future
EPS from continuing operations, and generally exclude various items that are viewed
STARS Ranking system and definition:
as special, non-recurring, or extraordinary. Also, S&P Capital IQ EPS estimates reflect
★★★★★ 5-STARS (Strong Buy):
Total return is expected to outperform the total return of a relevant benchmark, by a
either forecasts of S&P Capital IQ equity analysts; or, the consensus (average) EPS
wide margin over the coming 12 months, with shares rising in price on an absolute
estimate, which are independently compiled by Capital IQ, a data provider to S&P
basis.
Capital IQ Equity Research. Among the items typically excluded from EPS estimates
are asset sale gains; impairment, restructuring or merger-related charges; legal and
★★★★★ 4-STARS (Buy):
Total return is expected to outperform the total return of a relevant benchmark over the
insurance settlements; in process research and development expenses; gains or
coming 12 months, with shares rising in price on an absolute basis.
losses on the extinguishment of debt; the cumulative effect of accounting changes;
and earnings related to operations that have been classified by the company as
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Total return is expected to closely approximate the total return of a relevant
discontinued. The inclusion of some items, such as stock option expense and
benchmark over the coming 12 months, with shares generally rising in price on an
recurring types of other charges, may vary, and depend on such factors as industry
absolute basis.
practice, analyst judgment, and the extent to which some types of data is disclosed by
companies.
★★★★★ 2-STARS (Sell):
Total return is expected to underperform the total return of a relevant benchmark over
the coming 12 months, and the share price not anticipated to show a gain.
S&P Capital IQ Core Earnings ★★★★★1-STAR (Strong Sell):
S&P Capital IQ Core Earnings is a uniform methodology for adjusting operating Total return is expected to underperform the total return of a relevant benchmark by a
earnings by focusing on a company's after-tax earnings generated from its principal wide margin over the coming 12 months, with shares falling in price on an absolute
businesses. Included in the S&P Capital IQ definition are employee stock option grant basis.
expenses, pension costs, restructuring charges from ongoing operations, write-downs
of depreciable or amortizable operating assets, purchased research and development,
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Relevant benchmarks:
In North America, the relevant benchmark is the S&P 500 Index, in Europe and in
from the definition are pension gains, impairment of goodwill charges, gains or losses
Asia, the relevant benchmarks are the S&P Europe 350 Index and the S&P Asia 50
from asset sales, reversal of prior-year charges and provision from litigation or
Index, respectively.
insurance settlements.

S&P Capital IQ 12-Month Target Price


The S&P Capital IQ equity analyst's projection of the market price a given security will
command 12 months hence, based on a combination of intrinsic, relative, and private
market valuation metrics, including S&P Capital IQ Fair Value.

S&P Capital IQ Equity Research


S&P Capital IQ Equity Research U.S. includes Standard & Poor's Investment Advisory
Services LLC; Standard & Poor's Equity Research Services Europe includes
McGraw-Hill Financial Research Europe Limited trading as S&P Capital IQ; Standard
& Poor's Equity Research Services Asia includes: McGraw-Hill Financial Singapore
Pte. Limited, Standard & Poor's Investment Advisory Services (HK) Limited, Standard
& Poor's Malaysia Sdn Bhd, and Standard & Poor's Information Services (Australia)
Pty Ltd.

Abbreviations Used in S&P Capital IQ Equity Research Reports


CAGR - Compound Annual Growth Rate
CAPEX - Capital Expenditures
CY - Calendar Year
DCF - Discounted Cash Flow
DDM - Dividend Discount Model
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Stock Report | September 24, 2016 | NYS Symbol: FL

Foot Locker Inc.

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Stock Report | September 24, 2016 | NYS Symbol: FL

Foot Locker Inc.

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Stock Report | September 24, 2016 | NYS Symbol: FL

Foot Locker Inc.

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