The New York-based footwear retailer announced on Monday that it will be added to the S&P 500 on April 1.
Foot Locker's inclusion in the index may lead to a short-term pop in the stock price. When a stock is added to the benchmark index, many index funds and other investments leveraged to the S&P 500 are required by their fund rules to buy the stock. Shares have already risen 0.8% by midday trading on Tuesday.
To be considered for the S&P 500, a company has to meet some basic requirements, such as having a market capitalization of at least $5.3 billion and show four straight quarters of positive earnings.
Based on Foot Locker's performance over the past year and the fact it now has an $8.3 billion market cap, the addition to the S&P 500 shouldn't come as a shocker.
Helped by footwear innovation from the likes of Nike (NKE) - Get Report , Under Armour (UA) - Get Report and Adidas (ADDYY) , Foot Locker's total sales last year increased 3.6% to $7.4 billion, the highest sales ever recorded by the company. Comparable-store sales increased by a blistering 8.5% in 2015, crushing the 1.8% gain seen at mall rival Finish Line (FINL) . Foot Locker also notched its fifth straight year of record earnings.
Shares have gained 6.2% in the past 12 months, outperforming the S&P 500's 0.65% drop.
And Foot Locker has shown Wall Street that it may not yet be done hitting financial records.
The company's U.S. online business saw sales spike 20% in the fourth quarter, with even faster growth outside the U.S., executives said on a Feb. 26 call with analysts. Online sales now represent about 12.7% of Foot Locker's business, or over $940 million in annual sales. Same-store sales in January were up by a low-single-digit percentage. The company noted that sales had been trending stronger, but were hurt in part by severe winter storms across the country late in January.
Foot Locker has also made sizable progress in sprucing up its stores. The company has remodeled approximately 30% of its over 1,015 U.S. Foot Locker and Champs Sports stores, and just under 20% of its 272 Footaction stores. This year, Foot Locker plans to spend a whopping $200 million on store remodeling.
For 2016, Foot Locker expects same-store sales to increase by a mid-single-digit percentage. It also sees another double digit percentage increase in earnings per share.