Full cupboard The transformation is already starting to bear some fruit.
The sneaker giant’s first-quarter comparable sales fell 1.8%, far better than analysts’ expectations of 3.1%, according to StreetAccount.
The company also reiterated its fiscal year guidance, expecting sales to fall 1% to rise 1%, while analysts had forecast a 0.6% sales decline, according to LSEG.
Here’s how the company performed compared to Wall Street expectations, according to a survey of analysts by London Stock Exchange Group (LSEG):
- Earnings per share: Adjusted 22 cents, expected 12 cents
- income: $1.88 billion vs. $1.88 billion expected
Foot Locker reported net income of $8 million, or 9 cents a share, for the three months ended May 4, compared with $36 million, or 38 cents a share, a year earlier. Adjusting for one-time items including costs such as impairments related to certain store closures and restructuring, Foot Locker reported earnings of 22 cents per share.
Sales fell to $1.88 billion, down about 3% from $1.93 billion a year earlier.
Foot Locker expects full-year adjusted earnings per share to be in a range of $1.50 to $1.70, up from expectations of $1.57, according to LSEG.
The company forecast comparable sales growth of 1% to 3%, higher than analysts’ expectations of 1.5%, according to StreetAccount.
“We’re off to a strong start in the first quarter, which shows our Lace Up plan is working,” CEO Mary Dillon told CNBC. “The reason I’m confident is because we’re rolling out enhanced FLX rewards program so we have lots of opportunities to earn rewards and we’re launching a revamped mobile app that we know is a great way to drive customer engagement and commerce and we see growth opportunities throughout the year with all of our brand partners. , including a return to growth with Nike during the holiday quarter.
Dillon, former CEO ultimate beautyThere have been efforts to turn around Foot Locker, but those efforts are taking longer than expected.
Sales continue to decline as the retailer competes with lower-income consumers who feel the brunt of inflation more than other shoppers.
The company also competes with fickle brand partners, e.g. Nike, which has reduced the number of new products in Foot Locker stores. In April, Nike Chief Executive John Donahoe acknowledged that the brand had gone too far in excluding wholesalers for its own stores and website. Donahoe told CNBC that Nike is making “significant investments with our retail partners” in its own turnaround.
Foot Locker’s Champs Sports banner also weighed on the overall business, with comparable sales down 13.4% in the quarter and total revenue down nearly 19%.
Foot Locker has had to rely on promotions to drive sales and has lost the confidence of Wall Street, with its shares down about 28% this year as of Wednesday’s close.
However, things are starting to look up for the company.
While Foot Locker’s core consumers are still facing inflationary pressures, Dillon said the company’s average selling prices increased this quarter, demonstrating that its customers are willing to pay full price for the right product.
“Our consumers… this is a very important category to them. So when people have discretionary income, it may be limited, but you prioritize where you spend your money, right? Dillon said. “So they’re prioritizing, but I would say spending with purpose.”
Dillon has also been working on renovating Foot Locker stores, which still account for about 80 percent of its annual sales. She built new stores outside malls, closed underperforming stores and updated existing ones. With these changes, the plan is to entice brands to send their best products and entice consumers to choose Foot Locker instead of shopping directly with the brand or going to a competitor, e.g. dick’s sporting goods.
In April, the retailer launched its “Store of the Future,” which reinvented the old-school Foot Locker model and served as a model for updating its stores.
“This is not a shoe wall, but a brand house,” Dillon said. “I think it’s coming to fruition in a way that our brand partners are excited about. We’ve heard that from everyone.”
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