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Justin Sullivan
Jefferies has downgraded its rating on Foot Locker (NYSE:FL) to hold off on buying due to general concerns that the retailer will be negatively affected by a slowdown in consumer spending.
Analyst Corey Tarlowe and his team noted that Foot Locker (FL) had witnessed two consecutive months of negative foot traffic, with three of the past four months seeing negative year-over-year declines in spending per trip, according to recent data reports.
“We believe that these negative competitiveness trends may continue to worsen, due to FL’s exposure to a younger/lower income demographic. Therefore, we believe that the resumption of student loan repayments a step further could lead to negative impacts on the company’s financial performance.”
Jefferies’ broad consumer read: A Jefferies survey of U.S. consumers with outstanding student loan debt for themselves or their children found that ~54% and ~46% of respondents plan to spend less on clothing/accessories and shoes, respectively, as a result of student loan payments Restart. Additionally, 51% plan to purchase fewer items or purchase clothing/accessories less often, while 48% of respondents feel the same about shoes.
Jefferies lowered its 2024 price target for Foot Locker (FL) from $1.40 to $1.20 and lowered its price target for the mall stock from $28 to $18.
Shares of Foot Locker (FL) fell 2.59% in premarket trading to $17.30.