5/18/2012
By David Urani, Research Analyst

Let's forget about social networking for a minute and talk about something else. Shoes. Lace up, because we got a three-bagger of blowout earnings today from Foot Locker (FL), Brown Shoe (BWS), and Shoe Carnival (SCVL).

Foot Locker kicked Street EPS expectations by $0.09 while also reporting an 8.7% increase in revenue year over year, along with a 1.1% decrease in inventory that foreshadowed a 130 bps increase in gross margin. It's up more than 10% today.

Brown Shoe wasn't quite as impressive, posting just a 1.1% increase in sales (same-store up 2.5%) along with markdowns that dented gross margin. However, like Foot Locker, it noted a strong growth in running shoes, along with sandals. In either case, the results stomped consensus estimates, with EPS coming in $0.14 above expectations. It's up more than 18% today.

Shoe Carnival beat by $0.03 on the bottom line, driven by a 12.2% increase in revenue year over year. Once again, similar to what the other two companies said, athletic and spring footwear drove sales. It's up more than 8% today.

For both Foot Locker and Shoe Carnival, these were the highest quarterly earnings in their history. Meanwhile, all three stocks look like they could shake off all the European drama of this month and retake their year-to-date highs.

Considering the emphasis on athleticwear, maybe it's no surprise that Finish Line (FINL) is piggybacking the rally (up more than 6%). Nike (NKE) is also seeing a decent bid, up almost 3% with high volume. Also keep an eye on athletics-oriented Under Armour (UA) and Lululemon (LULU) as sleepers today.

                  Black - FL     Green - BWS    Orange - SCVL

David Urani
Wall Street Strategies