Foot cabinet The company said Wednesday that comparable sales grew for the first time in six quarters as its efforts to update stores and improve customer experience continue to bear fruit.
The troubled sneaker company’s fiscal second-quarter same-store sales grew 2.6%, far better than analysts’ expectations of 0.7%, according to StreetAccount. Its gross profit margin also expanded for the first time in more than two years.
Despite the positive trend, shares were down about 5% in premarket trading.
“The Lace Up program is working,” CEO Mary Dillon said in a press release of the company’s turnaround strategy. “As the quarter progressed, our revenue trends strengthened, including a strong start to the back-to-school season. We are also particularly pleased to stabilize the Champions Sports banner.”
Here’s how Foot Locker performed compared to Wall Street expectations, according to a survey of analysts by LSEG:
- Loss per share: Adjusted 5 cents, expected 7 cents
- income: $1.9 billion vs. $1.89 billion expected
Foot Locker lost $12 million, or 13 cents a share, in the three months ended Aug. 3, compared with a loss of $5 million, or 5 cents a share, a year earlier. Excluding one-time items, Foot Locker lost 5 cents per share.
Sales increased to US$1.9 billion, an increase of approximately 2% from US$1.86 billion in the same period last year.
For the current fiscal year, Foot Locker has largely maintained its guidance and continues to expect sales to fall 1% to grow 1% from the prior year, better than analysts’ expectations for a 0.4% decline, LSEG said.
Foot Locker also stuck to its adjusted earnings per share guidance. According to LSEG, the company expects earnings to be in the range of $1.50 to $1.70, a range that is mostly above analysts’ expectations of $1.54.
since before ultimate beauty Owner Mary Dillon took the reins of Foot Locker about two years ago and has worked to transform the company and ensure it remains relevant in a world where brands are no longer as dependent on multi-brand retailers as they were in the past.
Dillon has been working to repair the company’s relationship with its largest brand partners, Nikeand is also taking a hard look at its large but aging store fleet, where the company does about 80% of its sales. This year, the company plans to spend $275 million to upgrade its stores through updates and renovations. Foot Locker says the upgrades are working.
Dillon is also working to simplify Foot Locker fees. On Wednesday, the company said it would close stores and e-commerce operations in South Korea, Denmark, Norway and Sweden and would rely on third parties to operate in Greece and Romania. As part of the changes, 30 of Foot Locker’s 140 stores in Asia Pacific and 629 stores in Europe will close or be run by new operators.
Foot Locker also plans to move its global headquarters from New York City to St. Petersburg, Florida, by the end of 2025, and plans to maintain limited operations in New York going forward.
“The purpose of the relocation is to further solidify the company’s significant presence in St. Petersburg and enhance collaboration among cross-departmental and functional teams while reducing costs,” Foot Locker said in a news release.
Foot Locker’s Champs banner, which has been a drag on the company’s overall performance, is also showing some signs of improvement. For the quarter, comparable sales fell 3.9%, an improvement from the 25.3% decline in the same period last year.
While Foot Locker’s core consumers continue to feel the pressure of persistent inflation and high interest rates, Foot Locker has managed to drive sales as it improves its stores, products and customer experience online and in-store, a sign that Dillon’s efforts are paying off effect.
As of Tuesday’s close, the company’s shares have risen more than 5% this year, while Nike’s shares have fallen more than 21% during the same period.
Demand across the retail industry has undoubtedly slowed, but consumers are still spending. They’re just more picky about who they spend money with – which makes execution even more important.
“As we look toward the remainder of the year, our strategy is gathering momentum,” Dillon said in a statement. “I continue to believe we are taking the right actions to help the company grow profitably for the next 50 years and create long-term shareholder value. “
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