Foot Locker's stock having best day in nearly 2 years after a big profit beat
By Tomi Kilgore
Revenue fell a little more than expected, while same-store sales were a little better than forecast
Shares of Foot Locker Inc. were headed sharply higher Thursday, after the athletic shoe and accessories retailer reported fiscal first-quarter profit that beat expectations by a wide margin, while sales fell a little bit short.
Helping fuel the profit beat were strengthened brand partnerships, with sneaker makers like Nike Inc., store refreshes and a more disciplined management of expenses, as the cost of sales declined.
The company also affirmed its full-year earnings outlook.
The stock (FL) ran up 18.8% in afternoon trading, but pared earlier gains of as much as 32%. The stock was headed for the biggest one-day gain since it soared 20% on Aug. 19, 2022.
For the quarter to May 4, net income fell to $8 million, or 9 cents a share, from $36 million, or 38 cents a share, in the same period a year ago.
Excluding nonrecurring items, such as asset impairments, adjusted earnings per share of 22 cents were well above the FactSet consensus of 12 cents.
Total revenue was down 2.7% to $1.87 billion, just below the FactSet consensus of $1.89 billion.
Chief Executive Mary Dillon said on the post-earnings call with analysts that 40% of sales were generated outside of its top brand, Nike (NKE). And she expects to "return to growth" with Nike later this year.
"Longer-term, we believe we are well positioned to benefit as Nike refocuses on the wholesale channel as we continue to emphasize our sharp pillars with them of basketball, kids, and sneaker culture," Snee said, according to an AlphaSense transcript.
Comparable sales, or sales of stores open at least one year, fell 1.8%, to beat the FactSet consensus of a 1.9% decline.
The company said the decline included a 2.2 percentage point impact from the repositioning of the Champs Sports banner. Comparable sales of the company's Global Foot Locker and Kids Foot Locker brands increased 1.1%.
CEO Dillon said comparable sales improved each month during the quarter, boosted by sales of spring assortments.
"Our average unit retail prices were nicely positive and gross margins were also in line with our expectations," Snee said. "We delivered improvements in our markdown levels compared to the fourth quarter."
During the quarter, Foot Locker said it closed 37 stores, opened four new stores, remodeled or relocated 16 stores and updated 13 stores. As of May 4, the company operated 2,490 stores in 26 countries, down from 2,692 stores in 29 countries a year ago.
The value of merchandise inventories held at quarter end was down 5.6% to $1.7 billion.
For fiscal 2024, the company affirmed its guidance ranges for adjusted EPS of $1.50 to $1.70, for net sales to be down 1% to up 1% and for same-store sales to be up 1% to up 3%.
That compares with the current FactSet consensus for EPS of $1.56, for net sales to be down 0.6% and for same-store sales to be up 1.5%.
The stock has still lost 14.1% year to date, while SPDR S&P Retail ETF XRT has gained 5.2% and the S&P 500 index SPX has advanced 10.2%.
-Tomi Kilgore
This content was created by MarketWatch, which is operated by Dow Jones & Co. MarketWatch is published independently from Dow Jones Newswires and The Wall Street Journal.
(END) Dow Jones Newswires
05-30-24 1417ET
Copyright (c) 2024 Dow Jones & Company, Inc.-
What’s the Difference Between the CPI and PCE Indexes?
-
Micron Earnings: Great Guidance but Stock Now Looks Fairly Valued
-
August PCE Report Forecasts Show More Good News on Inflation
-
AI Stocks May Be Down, but Don’t Count Them Out
-
4 Stocks to Buy as the Fed Cuts Interest Rates
-
Markets Brief: The Uncertain Path to Neutral Interest Rates
-
What’s Happening in the Markets This Week
-
Where Top Stock Fund Managers Are Looking Next After the Fed Rate Cut
-
Our Top Pick for Investing in US Renewable Energy
-
Undervalued by 25% and Yielding 5%, This Stock Is a Buy
-
Can AI Predict Future Stock Returns?
-
The Best Energy Stocks to Buy Now
-
10 Undervalued Wide-Moat Stocks
-
Obesity Drugs: Can New Firms Take Market Share From Eli Lilly and Novo Nordisk?
-
New 4-Star Stocks
-
Intel Fair Value Left Unchanged Despite Qualcomm Takeover Talk