Taylor Blaney

 Overview ◦ Sporting goods stores sell sporting equipment typically from outside goods manufacturers ◦ Goods in the industry range from camping equipment to basketball hoops to shoes ◦ Annual Revenue for the sporting goods industry is over $42 billion and annual growth is steady around 2.5%-3.5% however the number of companies is slowly declining

 Global retailer of athletic shoes and apparel  Located primarily in North America, Europe, Australia, and New Zealand  Largest retailer of athletic shoes in the U.S.  Nearly $6.2 billion in sales in 2012 (73% within U.S.)  Develops few products, mostly supplied by a few top-end product manufacturers  Operate in two ways: ◦ Athletic Stores ◦ Direct to Customers

 Market share-11.2%  No threat of acquisition  Consumer confidence leading to growth in shoe sales  Exclusive Contracts  Growing Online Retail  New Technology  Adolescent Demographic ◦ Largest buyer of basketball shoes in U.S.

 Current stock price: $37.47  Market Cap: 5.5 billion  Shares outstanding: 166,909,000  Last Years Sales: $6,182,000,000  Last Year Net Income: $397,000,000

Information needed to compute multiples: Foot LockerHibbet SportsCabelasFinish Line Enterprise Value $ 2,847,193, $ 7,922,578, Equity Value $ 2,268,508, $ 4,697,063, EPAT $ 400,150, $ 72,688, $ 179,084, Net Income $ 397,000, $ 72,582, $ 173,513, $ 69,181, NFL $ 671,360, $ ( 578,685,000.00) $ (3,225,515,640.00) $ 198,114, Common Shares Outstanding 166,909,000 37,846,321 70,053,144 48,193,000 Sales $ 6,182,000, $ 818,700, $ 2,778,903, $ 1,443,365,000.00

 NFL is the amount of financial assets less the financial liabilities that a company has in a given year, Foot Locker, Inc. and Finish Line have NFA’s  Foot Locker, Inc.’s NFL: Accounts Assets Cash and Cash Equivalents Short-Term Investments4800 Liabilities Long-Term Debt TOTAL (Assets-Liabilities)

Market multiple derived using Net Enterprise Assets Multiple values stock at nearly 3 times current market price

Market multiple derived using enterprise profits after tax Multiple values stock at more than 3 times current market price

Market multiple derived using net income Multiple values stock at slightly less than 2 times market price Net incomes and equity values for comparable companies varied significantly

Market multiple derived using sales multiple As retailers we believed that sales was a good industry specific multiple Most sporting good stores have few assets and liabilities, sales tie directly to inventory which is the only other industry specific indicator Multiple values stock at nearly 3 times current market price

 Multiples indicate that Foot Locker, Inc. stock is significantly under valued  Recommend buying stock in Foot Locker, inc.  Issues: ◦ Companies may not have been comparable due to size differences ◦ Unlikely that the market would be so far off on share price when all financial data is available to the public ◦ Many issues with using market multiples to value companies