Changes in management for Foot Locker

The departure of the very successful CEO, Ken Hicks, at the helm of Foot Locker has seen the shares wobble.

Foot Locker store
Source: Bloomberg

The markets are expecting the adjusted earnings per share to improve from 64 cents up to 78.8 cents. Sales are also set to improve from $1.641 billion up to $1.72 billion. Pre-tax profits are called at $180 million, an improvement from $144 million.

At the beginning of November, Mr Hicks announced that he was stepping down from this role and the COO Richard Johnson would be replacing him. Markets have reacted to this, having held Ken Hicks in high esteem following his well-timed changes to the company’s structure and focus. In 17 of the last 18 quarters he has been able to oversee expectation beating earnings.

In recent interviews and press releases it appears that the working relationship between Hicks and Johnson has been very productive and there has been a number of occasions where cost-cutting measures have been brought about by actions instigated by both of them.

Year-to-date the share price in Foot Locker is up by over 34% but that is still well off the year highs. Undoubtedly the market will want to gauge how well the new CEO runs the company and a period of stagnation could well follow. The current $55.66 price is flirting with the 50-day moving average and only a break below the 100-DMA would cause us to question the current bullish trend.

The information on this page does not contain a record of our trading prices, or an offer of, or solicitation for, a transaction in any financial instrument. IG Bank S.A. accepts no responsibility for any use that may be made of these comments and for any consequences that result. No representation or warranty is given as to the accuracy or completeness of this information. Consequently any person acting on it does so entirely at their own risk. Any research provided does not have regard to the specific investment objectives, financial situation and needs of any specific person who may receive it and as such is considered to be a marketing communication.