Foot Locker Reveals Capital Spending Plan Before Q4 Earnings

With just a few days to go for Foot Locker, Inc.’s (NYSE:FL) fourth-quarter fiscal 2018 earnings release, the company has ramped up its capital spending plans. The company is slated to announce financial results on Mar 1. This New York-based company has rewarded shareholders with a hike of 10% in quarterly dividend to 38 cents. This marks the company’s ninth successive quarter of dividend hike in double digits.

Foot Locker revealed a capital expenditure program of $275 million for fiscal 2019, an increase from $200 million assigned for the prior year’s program. The company plans to spend the capital strategically, with primary focus on developing digital competencies. Also, it is on track to enhance supply chain and spend on other infrastructural activities.

Apart from these, the company plans to spend part of the capital on its fleet of stores across its existing regions including Asia. Further, this Zacks Rank #2 (Buy) company’s board announced a new 3-year share buyback program worth $1.2 billion.

Bottom Line

Certainly, the aforementioned capital allocation plans raise optimism. Notably, shares of the company have rallied 15.2% in the past six months, against the industry’s decline of 25.9%. Foot Locker is trying to improve its performance through its operational and financial initiatives. Management is of the opinion that the company will benefit by continually capitalizing on opportunities like shop-in-shop expansion in collaboration with its vendors, store refurbishment and enhancement of assortments. The company has taken initiatives like better price, enhancement of omni-channel capabilities and addition of unique products to the portfolio to stay competitive.

The company is effectively managing inventory, investing in digital platforms and improving supply-chain efficiencies. The company’s digital endeavors comprise improvement of mobile and web platforms, implementation of new point-of-sale software worldwide, and expansion of data analytics capabilities.

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