Foot Locker knows cool sneakers, and that's why stocks are rallying: Analyst

Key Points
  • Foot Locker is the spot to find all the cool shoes, says footwear and apparel analyst Sam Poser.
  • Despite being more than 20 percent down for the year, the shoe retailer's stock rallies on Friday after a blowout earnings report.
  • Poser says the company is turning around because of its ability to tell consumers what's cool.
Foot Locker: How high can it go?

Foot Locker knows which shoes are cool, and this might be why the stock rallied on Friday, Susquehanna Financial Group footwear and apparel analyst Sam Poser told CNBC.

"The customer wants to go where all the coolest sneakers are," Poser said on "Power Lunch" Friday. "If you know what you want, you may go to Nike or Adidas or Under Armour's website. But, if you're going, 'I want the coolest sneaker, who's going to tell me about that?' A lot of people in the States, a lot of people all over the place, go to Foot Locker, saying, 'They always have the best new stuff.'"

Foot Locker's stock surged on Friday after the shoe retailer beat Wall Street's earnings estimates. The company posted revenue of $2.03 billion, causing the shares to jump 16 percent.

The news is a bright spot in the apparel sector where companies have become increasingly fearful of e-commerce giant Amazon and brands such as Nike and Adidas are trying to cash in on the direct-to-consumer trend by selling products on their websites.

Foot Locker has not been spared in the changing landscape. Company shares are down more than 22 percent in the last year.

A 2017 UBS survey found more consumers prefer to buy Nike products on Amazon rather than at Foot Locker.

Still, with the proliferation of options available both online and in-store, Poser said, "You want someone else to tell you this is important."

A customer browses Nike sneakers for sale inside a Foot Locker store on the Third Street Promenade in Santa Monica, California.
Patrick T. Fallon | Bloomberg | Getty Images

The analyst also pointed out that Foot Locker has a good relationship with its customers and the North America business is strong. The company has also cleaned up its inventory, is coming out with better products and has set a "reasonable" guidance for the remainder of the year, he said.

His firm gave the stock a positive rating and set a price target of $57.

"The problem that's happened in the past is, recently, is that they weren't changing quite as fast as the consumer," Poser said. "And the key to the ongoing success is for that all to match up significantly better than it has been. And we're starting to see little bits of that right now."