Time was that F.W. Woolworth Co. was as much a part of America as baseball and hot dogs. The company was so successful that founder Frank Woolworth paid for the construction of the Woolworth Building in New York City, once the tallest building in the world, in cash. Today, the brand is largely unknown by shoppers under age 30, who may hear about Woolworth's only when they learn in school about the famous sit-in at the store's location in Greensboro, N.C., during the Civil Rights era.

Woolworth's, which ceased operating in the U.S. in 1997, used to symbolize the U.S. in other parts of the world, too, but the brand is continuing to fade. Reports from the U.K. say the Woolworths chain (the Brits don't use the apostrophe), which has been separate from the American parent for 25 years, is closing because it had been unable to find a buyer. The 815-store chain has 385 million pounds in debt, according the Independent newspaper.

Customers seemed to like the fact that Woolies -- its nickname in the U.K. -- sold a bit of everything. That's what people liked about the U.S. stores as well, from what I remember. In today's specialized retail world, though, this huge selection represents a problem. "To an analyst, that looks like a terrible lack of focus," the Independent said. Wal-Mart Stores Inc. (NYSE: WMT), which perfected Frank Woolworth's discounting strategy and drove the company he founded out of business, is one of the few that can get away with that approach today.

Foot Locker (NYSE: FL - option chain) shares are soaring higher today after the company announced yesterday evening that it earned a second-quarter profit of $18 million, or 11 cents per share and well above estimates of 3 cents. Other retail earnings this morning were a mixed bag, as Gap (NYSE: GPS) and Jones Apparel (NYSE: JNY) are rising while Pacific Sunwear (NASDAQ: PSUN) is tanking. This makes me think that the retail sector may not trade as a block for the next few months, but rather on the individual merits of each stock. If you think that FL stock won't fall by too much in the coming months, then now could be a good time to look at a bullish hedged trade on the stock.

FL opened this morning at $16.40. So far today the stock has hit a low of $14.93 and a high of $16.50. As of 12:05, FL is trading at $15.57, up 0.29 (1.9%). The chart for FL looks neutral and S&P gives FL a neutral 3 STARS (out of 5) hold ranking.

For a bullish hedged play on this stock, I would consider a January bull-put credit spread below the $10 range. A bull-put credit spread is an options position that combines the purchase and sale of put options to hedge risk in case the stock doesn't do what you think but still leverage nice returns. For this particular trade, we will make an 8.7% return in five months as long as FL is above $10 at January expiration. Foot Locker would have to fall by more than 35% before we would start to lose money. Learn more about this type of trade here.

FL hasn't been below $9 at all and hasn't been below $10 for more than a few days in the past year. It has shown support around $14 recently.

Brent Archer is an options analyst and writer at Investors Observer.

DISCLOSURE: Mr. Archer owns and/or controls diversified portfolios of long and short stock and option positions that may include holdings in companies he writes about. At publication time, Brent neither owns nor controls positions in FL.

Collective Brands (NYSE: PSS), operator of Payless ShoeSource and owner of the Stride Rite brand, reported Q1 earnings on Wednesday. Revenues increased 28% to $932 million. Pretty cool increase. Adjusting earnings per share for a litigation charge and an inventory issue, net income came in at $0.71 per share versus the $0.59 per share booked a year ago.

That's decent growth, but there are a couple things to consider here. First, the top line wasn't fully organic, as it includes the Stride Rite acquisition (remember that Payless ShoeSource bought out Stride Rite and became Collective Brands). Second, same-store sales did not confirm any sort of underlying healthy trend. Comps declined a nasty 6.5%. So, even though earnings expectations were beat by a wide margin according to MarketWatch (analysts seemed to think the shoe concern would do about $0.56 per share), I'm not fully impressed.

And let's go back to that litigation thing. The earnings release discusses the risk involved with an unfavorable ruling vis-a-vis the retailer's battle with Adidas. That's another strike against the company for me. From a price-action perspective, Collective Brands' stock has been rather weak as of late, and it currently sits much closer to the 52-week low than it does to the 52-week high.

Foot Locker (NYSE: FL) shares are trading higher after the company reported yesterday evening that first-quarter profit fell 82% to $3 million, hurt by an impairment charge and nearly flat sales. The company posted adjusted earnings of 14 cents per share on sales of $1.31 billion, while analysts predicted profit of 14 cents per share on revenue of $1.28 billion. The athletic footwear retailer also reaffirmed its fiscal year outlook and in this time of uncertainty, investors applauded this normally mediocre result. If you think that the stock won't fall by too much in the coming months, then now could be a good time to look at a bullish hedged trade on FL.

After hitting a one-year high of $23.60 in July, the stock hit a one-year low of $9.05 in January. FL opened this morning at $12.81. So far today the stock has hit a low of $12.81 and a high of $13.71. As of 12:05, FL is trading at $13.39, up $1.31 (10.8%). The chart for FL looks bullish and steady while S&P gives FL a neutral 3 STARS (out of 5) hold rating.

For a bullish hedged play on this stock, I would consider a November bull-put credit spread below the $10 range. A bull-put credit spread is an options position that combines the purchase and sale of put options to hedge risk in case the stock doesn't do what you think but still leverage nice returns. For this particular trade, we will make a 13.6% return in just six months as long as FL is above $10 at November expiration. Foot Locker would have to fall by more than 24% before we would start to lose money. Learn more about this type of trade here.

FL hasn't been below $9 at all in the past year and has shown support around $11 recently. This trade could be risky if the economic malaise continues in the US, but even if that happens, that position could be protected by support the stock might find just above $10, where it bottomed out three times in the past few months.

Brent Archer is an options analyst and writer at Investors Observer.

DISCLOSURE: Mr. Archer owns and/or controls diversified portfolios of long and short stock and option positions that may include holdings in companies he writes about. At publication time, Brent neither owns nor controls positions in FL.

With recession fears, housing market worries and credit concerns, retailers have been facing tough times over the past few months. But on the heels of these worries, shares of world's largest athletic shoemaker, Nike Inc. (NYSE: NKE), have been climbing today the most in almost nine months after announcing last night stronger-than-expected third-quarter profit.

The company said its quarterly profit surged 32% to $463.8 million, compared with $350.8 million a year earlier boosted by strong gains in Europe and Asia. The company posted earnings 92 cents a share, exceeding analysts' forecast for a quarterly profit of 80 cents a share.

The company's quarterly revenue grew by a respectable 16% to $4.54 billion. For this period, the athletic shoemaker counted strong sales for products lifted by the weak U.S. dollar. Analysts, on average, expected Nike's sales to be $4.36 billion, according to FactSet.

Monday, March 10

• Google Inc. (NASDAQ: GOOG) and InterActive Corp. (NASDAQ: IACI) to present at Bear Stearns Media Conference.
• Texas Instruments Inc. (NYSE: TXN) to hold mid-quarter update conference call at 5:00 pm.

Tuesday, March 11

• Foot Locker Inc. (NYSE: FL) to report Q4 earnings; conference call at 9:00 am.
• Chevron Corp. (NYSE: CVX) to hold analyst meeting at 9:00 am.
• Kroger Co. (NYSE: KR) to report Q4 earnings; conference call at 10 am.

Wednesday, March 12

• FDA Oncologic Drugs Advisory Committee Meeting on Schering-Plough Corp.'s (NYSE: SGP) sBLA for Pegintronfor treatment of melanoma at 8:00 am.
• Freddie Mac (NYSE: FRE) to host analyst/investor meeting at 8:30 am.
• Hot Topic (NASDAQ: HOTT) to report Q4 earnings; conference call at 4:30 pm.

With numerous retail stocks hitting multi-year lows and daily headlines about weak consumer spending, something is interesting is happening: The people who should know the most about these companies, the insiders, are buying their own stock at an unprecedented clip, reports Bloomberg.

Executives at Limited Brands (NYSE: LTD) and Dillards (NYSE: DDS) have been scooping up their own beaten-down stock. Executives at Foot Locker (NYSE: FL) and Chico's (NYSE: CHS) have also been significant buyers.

Is this a bullish signal? Perhaps. After all, it's been said that while CEOs sell their shares for all kinds of reasons, they only buy stock for one reason: they think it's going up. That's a pretty good maxim, but it can lead you astray in some cases.

Back in August, I wrote about all the beaten-down shoe stocks currently on the market: companies like Rocky Brands (NASDAQ: RCKY), Finish Line (NASDAQ: FINL), Phoenix Footwear Group (AMEX: PXG), and Shoe Pavilion (NASDAQ: SHOE).

Basically, selling shoes without a strong brand name is a tough business. Companies like Phoenix and Rocky are seeing their margins crushed by competitive forces, and retailers like Finish Line, Shoe Pavilion, and Genesco (NYSE: GCO), owner of stores like Journeys, are having a hard time making any money.

Innovation is they key to success in the industry, and there have been a few stories recently about companies looking to do just that. Nike (NYSE: NKE) and Foot Locker (NYSE: FL) have teamed up to launch House of Hoops, which aims to be a "destination" for basketball consumers.

At its Nike stores as well, the leading basketball footwear company is realizing that, to differentiate itself and expand margins, it will have to provide customers with more than just a nice shoe: they need a unique shopping experience.

MOST NOTEWORTHY: AmeriCredit (ACF), LTX Corp (LTX) and Foot Locker (FL) were today's noteworthy downgrades:

• Goldman cut AmeriCredit (NYSE: ACF) shares to Sell from Neutral to reflect the challenging rate and credit environment.

• Friedman Billings has concerns about LTX Corp's (NYSE: LTX) largest customer, Texas Instruments (TXN), losing market share in the handset baseband market, which has already impacted Texas' equipment test orders from LTX. Friedman Billings cut LTX Corp to Market Perform from Outperform.

• Foot Locker (NYSE: FL) was downgraded to Neutral from Overweight at JP Morgan, citing the disappointing Q2 results...

OTHER DOWNGRADES:

• Genesco (NYSE: GCO) was cut to Neutral from Positive at Susquehanna.

• Soleil downgraded Sonic Solutions (NASDAQ: SNIC) to Hold from Buy.

• Raymond James downgraded New York & Co (NYSE: NWY) to Underperform from Sell.

Analyst summaries provided by TheFlyOnTheWall.com (subscription required).

MOST NOTEWORTHY: VMware (VMW), Bed, Bath & Beyond (BBBY), Williams-Sonoma (WSM), Landstar System (LSTR) and Acadia Pharmaceuticals (ACAD) were the noteworthy initiations:

• Robert W. Baird initiated coverage on VMware (NYSE: VMW) with a Neutral rating citing valuation.

• Citigroup started Bed Bath & Beyond (NASDAQ: BBBY) with a Hold rating, and cited the increasing competitive environment, slowing square footage growth and the weak housing market.

• Citigroup started Williams-Sonoma (NYSE: WSM) with a Sell rating and said the company has an inventory glut that could lead to markdown risk, there is raw material price inflation, and the weak housing market remains a material risk.

• Wachovia is cautious on Landstar System's (NASDAQ: LSTR) near-term growth rates and difficult end markets, starting shares with a Market Perform rating.

• Deutsche is positive on the potential of Acadia Pharmaceutical's (NASDAQ: ACAD) ACP-103 in schizophrenia, starting shares with a Buy rating...

OTHER INITIATIONS:

• Cowen initiated Theravance (NASDAQ: THRX) with an Outperform rating and Cubist Pharmaceuticals (NASDAQ: CBST) with a Neutral rating.

• Raymond James initiated Akamai (NASDAQ: AKAM) with an Outperform and resumed coverage of McAfee (NYSE: MFE) with an Outperform rating.

• Goldman reinstated Foot Locker (NYSE: FL) with a Neutral rating.

Analyst summaries provided by TheFlyOnTheWall.com (subscription required).

Gap Inc. (NYSE: GPS) -- September volatility elevated into August 23 EPS and outlook. Gap, the San Francisco based parent company of 3,200 Gap, Old Navy & Banana Republic stores, is expected to report EPS of 19 cents, according to Thomson First Call. GPS September option implied volatility of 40 is above its 26-week average of 29 according to Track Data, suggesting larger price fluctuations.

Foot Locker Inc. (NYSE: FL) -- implied volatility elevated into EPS and outlook. FL, a footwear & apparel operator of 3,950 retail stores, closed at $15.28. FL has a market cap of $2.4 billion with $220 million in long-term debt. FL is expected to announce EPS after the close on August 22. FL over all option implied volatility of 58 is above its 26-week average of 32 according to Track Data, suggesting larger price risks.

Daily options Update is provided by Stock Specialist Paul Foster of theflyonthewall.com.

MAJOR PAPERS:

• The IRS is looking at derivatives trades of Citigroup Inc (NYSE: C) and Lehman Brothers Holdings (NYSE: LEH) to see if trades made on behalf of hedge funds and other clients, including those offshore, were to avoid paying taxes on U.S. stock dividends, reported the Wall Street Journal (subscription required).
  
• The Financial Times (subscription required) reported that Telecom Italia (NYSE: TI) is expected to sell its stake in Brasil Telecom (NYSE: BTM).

OTHER PAPERS:

• The New York Times reported that Ford Motor Company (NYSE: F) is expected to receive opening bids today for its Jaguar and Land Rover units. A variety of companies, including private equity firms and possibly other automakers, are expected to bid for the two divisions, said people with direct knowledge of the situation.
• Retail shoe store chain Foot Locker Inc (NYSE: FL) is reportedly considering putting itself up for sale again, after disappointing sales by its U.S. shoe stores and its failed attempt to acquire rival Genesco Inc (NYSE: GCO), reported the New York Post.
• The Telegraph reported that Wal-Mart Stores Inc (NYSE: WMT) is examining a deal to invest in Beijing Hualian, one of China's biggest retail groups.

MOST NOTEWORTHY: Chittenden Corp (CHZ), Digital River (DRIV), Image Entertainment (DISK) and Foot Locker (FL) were today's noteworthy downgrades:

• Chittenden Corp (NYSE: CHZ) was downgraded to Sell from Hold at AG Edwards based on the buyout news from People's United Financial (PBCT).

• Digital River (NASDAQ: DRIV) was downgraded to Hold from Buy, and its target was cut to $44, at Jeffries based on the weak Microsoft (MSFT) ramp and weakness in the Symantec (SYMC) transition.

• SMH Capital downgraded shares of Image Entertainment (NASDAQ: DISK) to Sell from Neutral and recommends investors take profits on the upside and sell shares.

• Foot Locker (NYSE: FL) was downgraded to Hold from Buy at Matrix, as the firm believes fundamentals trends are turning negative; the firm sees limited upside from current levels.

OTHER DOWNGRADES:

• Bed Bath & Beyond (NASDAQ: BBBY) was downgraded to Market Perform from Outperform at Raymond James.

• Johnson & Johnson (NYSE: JNJ) was removed from Goldman Sachs' Americas Conviction Buy List.

• Web.com (NASDAQ: WWWW) was downgraded to Hold from Buy at Roth Capital Partners.

• Andrew Corp (NASDAQ: ANDW) was downgraded to Neutral from Buy at Oppenheimer.

• JP Morgan downgraded shares of SkyWest (NASDAQ: SKYW) to Underweight from Overweight and shares of Republic Airways Holdings (NASDAQ: RJET) to Neutral from Overweight.

Analyst summaries provided by TheFlyOnTheWall.com (subscription required).

MOST NOTEWORTHY: Nike Inc (NYSE: NKE), Foot Locker Inc (NYSE: FL), Tellabs Inc (NASDAQ: TLAB), ADTRAN, Inc (NASDAQ: ADTN) and Bookham, Inc (NASDAQ: BKHM) were today's noteworthy downgrades:

• Banc of America downgraded shares of both Nike and Foot Locker to Neutral from Buy, as the firm believes industry pressures in the U.S. could more than offset the potential turn in Europe and benefit from the 2008 Olympics.
• Cowen downgraded shares of ADTRAN, Bookham and Tellabs to Neutral from Outperform.
• Goldman Sachs also downgraded shares of Tellabs, to Sell from Neutral, as the firm believes the stock fully discounts the expected sales and margin improvement.

OTHER DOWNGRADES:

• Allergan Inc (NYSE: AGN) was downgraded to Equal Weight from Overweight at Morgan Stanley citing limited upside.
• Friedman Billings removed The Cheesecake Factory Incorporated (NASDAQ: CAKE) from its Top Picks and maintained its Outperform rating.
• Lehman downgraded shares of The First American Corporation (NYSE: FAF) to Equal-Weight from Overweight on increasing risk to the company's title margin and regulatory concerns.
• Matrix USA downgraded shares of Lowe's Companies Inc (NYSE: LOW) to Buy from Strong Buy on valuation.

Nike Inc. (NYSE: NKE) and Foot Locker Inc. (NYSE: FL) are teaming up to launch a chain of stores called "House of Hoops by Foot Locker." The first location will open in Harlem in early 2008, and the company hopes to open up to 50 stores across the country over the next three years. The stores will offer only Nike products, which include the Converse and Jordan brands.

Basketball shoe sales have been slipping in recent years as many people are shifting away from them towards less clunky, more casual shoes. I don't know if this will help to revive the category. In fact, I doubt that it will. But it could spell disaster for Reebok and other athletic footwear companies, as the biggest specialty footwear retailer is teaming up with the biggest supplier.

One thing I don't think will help is the name. Isn't "House of Hoops" a little corny? It sounds a lot like the "House of Blues," another cynical attempt to commercialize urban culture. But hey, that's worked out pretty well, so who knows.

But this isn't even the most exciting news in the footwear sector today, as Payless ShoeSource Inc. (NYSE: PPS) agreed to acquire Stride Rite Corp. (NYSE: SRR).