Foot Locker

FL · NYSE

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The case for and against

Updated Aug 21, 2025

Bull case

Foot Locker Inc. has demonstrated notable improvements in its financial metrics, with a 300 basis point increase in gross margin year-over-year attributed to reduced promotional activity and an enhanced merchandise margin. The company's refreshed stores are generating significant sales lifts, contributing to a projected revenue growth of mid-single digits in FY26, supported by a resurgence in the Nike brand and a strong performance from its non-Nike assortment. Additionally, Foot Locker's operating margin has expanded by 298 basis points, highlighting operational efficiency and a positive trajectory in profitability for the organization.

Bear case

Foot Locker Inc is experiencing a decline in total sales, with ongoing store closures and increasing selling, general, and administrative (SG&A) expenses, contributing to an expected operating margin of only 2.6%-3.1%. The company's reliance on Nike for a significant portion of its revenue is proving problematic, as anticipated recoveries from Nike have not materialized, leading to modest revenue declines projected for FY26 and a downturn in same-store sales. Overall, projections for FY25 indicate earnings per share (EPS) will remain substantially below historical levels, undermining investor confidence and highlighting continued operational challenges.

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