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Cramer: It's a marathon, not a sprint, for Foot Locker investors

When it came to footwear, Foot Locker used to be best of breed. Even when the shopping at malls began to decline, Foot Locker still rallied 15 percent in 2015. But ever since 2016 began, the stock has dramatically lagged the S&P 500, leading Jim Cramer to wonder what the heck went wrong.

Foot Locker's stock was hit hard when the company reported suboptimal results in May. It has traded sideways ever since.

"It is worth noting that even if some investors didn't see these disappointing results coming, the stock market certainly did," the "Mad Money" host said.

The first sign that there was a problem was when the company reported the quarter at the end of February. While management delivered a top and bottom line beat, the stock fell more than 4 percent on the news that management had seen low-single digit same-store sales growth, which wasn't included in the printed numbers.

Sure enough, when the company reported, it delivered only in-line earnings and weaker revenue.

A shopper looks at sneakers at the House Of Hoops by Foot Locker retail store at the Beverly Center in Los Angeles.
Patrick T. Fallon | Bloomberg | Getty Images
A shopper looks at sneakers at the House Of Hoops by Foot Locker retail store at the Beverly Center in Los Angeles.

The main area of concern was the basketball category, as Foot Locker indicated it was down. The company attributed this as the primary reason that quarterly comp gains came in lower than expected.

The company also had difficulty in Germany with lower volumes. Accompanied by the fact that most Foot Lockers are in the mall and mall traffic is in free fall, it created a very difficult environment.

But Cramer won't give up on Foot Locker.

"Given the company's fabulous long-term track record, I think it is worth listening to what Foot Locker has to say about each of these negatives," Cramer said.

Foot Locker remained adamant that the weakness in basketball wasn't as bad as everyone thinks, and isn't permanent because there wasn't a total slowdown in all basketball shoes.

Aside from basketball, Cramer found that Foot Locker is actually doing pretty well, with strength in running and lifestyle shoes areas.

Moreover, Cramer thinks that if the company's shopping mall presence was really a problem, then the traffic and the company's stores should be down huge. Instead, Foot Locker's traffic was up low-single digits.

"One bad quarter does not a downfall make. I am not saying that Foot Locker will bounce back the next time it reports — it might take a bit longer than that — but I do think the stock is insanely cheap down here," Cramer said.

For those who are willing to embrace patience as a long term investor, Cramer found this stock could be a steal.

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