Foot Locker: Canaccord cuts target, sees M&A ahead

(CercleFinance.com) - Canaccord Genuity maintains its "buy" rating on American sportswear and footwear retailer Foot Locker, but has trimmed its target price from 82 dollars to 81 dollars, saying that M&A deals coud be ahead.


After the shoe and clothing chain reported quarterly results last week, the CFO's explanation on lower-than-planned buyback activity due to "strategic, financial, and legal" constraints makes the Canadian broker think that the company could be in active M&A discussions.

Online lifestyle retailer DTLR could be an option, it adds, pointing out that DTLR bought Villa in 2017 to create a store network of over 230 stores in more than 38 states with combined sales of around 500 million dollars.

However, relative to Foot Locker's business, this acquisition might only add 50 millions dollars to operating profit (EBIT), and thus not move the needle dramatically, Canaccord says.

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