 Good day fellow investors. Today no visuals as I'm in holiday mode, but nevertheless I really have something interesting to discuss and We will learn something about Foot Locker. Let's first see what happened to the company So the stock price went from 76 a few months ago to the current 32 now. It's up a bit to the 35 has it bottomed. I'll show you something how I see the company that There can be much more downside. So it's a high-risk situation. Let's first see what happened Foot Locker missed earnings, but those 28 cents are more of a pension Charge so it's not that they really missed earnings per share. What they missed is revenue growth and they missed By 4.5% plus in addition comparable sales So the sales from the same stores decreased 6% That's terrible for every company, especially in retailer means huge trouble ahead Just to look at year-to-date results Everything declined Decline in earnings per share 15% the increase in the same period from 2016 Sales not so significant decline, but especially the last quarter was very Terrible with comparable sales down 6% On a year basis for the first half of year 2.6%. So That trend is very negative. Something is happening and people are buying shoes somewhere else Nevertheless the financial position Is very good inventories, which I will discuss later are 1.2 billion 1.3 billion almost They have more than 1 billion in cash, which is also very interesting and practically no debt They bought some shares, but not so important Now I want to discuss these inventories if I see it here on their balance sheet is 1.3 billion cash is 1 billion So when you compare it to the liabilities the total stockholders equity is 2.7 billion So of the 2.7 billion 50% of that is inventories as they sell shoes You know, what's going on the inventories are 50% in shoes So if you are a value investor and you see that value there Do are you sure that having 1.3 billion in shoes and 6% Comparable sales decline is really value. What happens with last year's shoes? They can sell it. They can sell it only at a discount. So Perhaps we can even if things go really bad, we can expect an impairment of inventories, which can devastate the stock further on the downside eat up margins And really make footlocker not a profitable company This is a problem that Will often come in the future as really companies don't have Tangible real book value anymore. Everything is based on high valuations If we take a look at the revenue, especially the margins, you can see that the gross margin in 2009 When earnings per share were negative was 27.9. Now when earnings per share are extremely high at almost $5 It's 33% Put in declining comparable sales of 6% and you quickly come to the margin of 27 Which means an operating income loss and a net income loss This means that Footlocker is very very Risky as net margins can easily be eaten up So be very careful before investing book value per share is $21 still very high As 50% of that is in shoes that we don't know to whom will be and when will be sold So be very careful there Just my take on the stock It's not really like a value bargain with a high margin of safety. The margin of safety in shoes is not really value Apologize for less visuals, but thank you for watching. Hope it adds some value to your Investigations, especially if you're interested in footlocker Please click like if you like this better or click dislike if you don't like this without visuals I'll try to put up the visuals as soon as possible, but as I'm traveling it's a bit difficult Thank you for watching and I'll see you in the next video