We’re exiting our position in Foot Locker , selling 750 shares at roughly $25.64 each. Following Thursday’s trade, Jim Cramer’s Charitable Trust will no longer own a position in FL. In addition to making room for our new name in the Club portfolio, Nextracker , we have concerns about the potential for more material upside in the near term for Foot Locker. Here’s why. Alongside fiscal 2023 fourth-quarter earnings in March, management pushed out its 8.5% to 9% operating profit margin target by a full two years. That prompted us to downgrade Foot Locker shares to our 4 rating , which indicates no action will be taken on the stock until more information becomes available. That more information did, indeed, come and was positive. Fiscal 2024 first-quarter results, out last month, were indeed strong — enough so that we opted to upgrade to a 2 rating. While the stock surged more than 20% in the days following Q1 earnings, it has since given back about half those gains and never achieved the levels we saw before the guidance cut we got with the Q4 release. The give-back signals that investors aren’t going to give management credit for a turnaround any time soon. While the economy continues to chug along and the consumer has thus far remained rather resilient, we must acknowledge that consumers are putting an increased emphasis on value, which poses a risk to full-price retailers such as Foot Locker. This is why we continue to view TJX Companies , the off-price powerhouse behind T.J. Maxx, Marshalls, and HomeGoods — as the best way to play retail space. Remember, we bought Foot Locker originally as a turnaround being engineered by a CEO Mary Dillion with a record of doing the same at Ulta Beauty when she was the boss there. This Foot Locker turnaround is going to take time and won’t be linear. There’s a possibility of us revisiting the stock sometime down the road when we feel more confident that the business is on a stronger footing. FL YTD mountain Foot Locker YTD Thursday’s exit of Foot Locker is resulting in a loss of nearly 37%. That’s a tough pill to swallow — but it’s crucial to remember when it comes to investing that you don’t have to make money the same way you lost it. We think there are better opportunities out there — such as our new name Nextracker and other portfolio stocks — with more near-term upside and less reliance on the consumer remaining strong. The opportunity cost of sitting in Foot Locker is too high at the moment, and it’s time for us to move on. From a portfolio management perspective, there are better uses of our time and resources than to stick with a name that has such a small weighting — the smallest, in fact, at roughly 0.57%, less than half the weighting of our next smallest holding. (Jim Cramer’s Charitable Trust is long FL, NXT. See here for a full list of the stocks.) As a subscriber to the CNBC Investing Club with Jim Cramer, you will receive a trade alert before Jim makes a trade. Jim waits 45 minutes after sending a trade alert before buying or selling a stock in his charitable trust’s portfolio. If Jim has talked about a stock on CNBC TV, he waits 72 hours after issuing the trade alert before executing the trade. THE ABOVE INVESTING CLUB INFORMATION IS SUBJECT TO OUR TERMS AND CONDITIONS AND PRIVACY POLICY , TOGETHER WITH OUR DISCLAIMER . NO FIDUCIARY OBLIGATION OR DUTY EXISTS, OR IS CREATED, BY VIRTUE OF YOUR RECEIPT OF ANY INFORMATION PROVIDED IN CONNECTION WITH THE INVESTING CLUB. NO SPECIFIC OUTCOME OR PROFIT IS GUARANTEED.
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