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Stock of Foot Locker Soars After Big Profit Beat Fueled by Lower Costs

May 30, 2024
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Shares of Foot Locker Inc. surged on Thursday after the athletic shoe and accessories retailer reported a fiscal first-quarter profit that significantly exceeded expectations, despite a slight miss in sales figures.

The company attributed the profit beat to stronger brand partnerships, store updates, and more disciplined expense management, which led to a reduction in the cost of sales.

Additionally, Foot Locker reaffirmed its full-year earnings outlook, further boosting investor confidence.

In premarket trading, the stock (FL) jumped 14.9%, setting it up to open at an eight-week high.

For the quarter ending May 4, net income dropped to $8 million, or 9 cents per share, compared to $36 million, or 38 cents per share, in the same period the previous year.

Excluding nonrecurring items like asset impairments, adjusted earnings per share were 22 cents, beating the FactSet consensus of 12 cents.

Total revenue fell 2.7% to $1.87 billion, slightly missing the FactSet consensus estimate of $1.89 billion.

Comparable sales, which measure sales at stores open for at least one year, declined 1.8%, but this was slightly better than the FactSet consensus of a 1.9% decline.

Foot Locker noted that the decline included a 2.2 percentage point impact from repositioning the Champs Sports banner. However, comparable sales for the company’s Global Foot Locker and Kids Foot Locker brands increased by 1.1%.

During the quarter, Foot Locker 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 at the end of the quarter decreased by 5.6% to $1.7 billion.

For fiscal 2024, Foot Locker reaffirmed its guidance ranges: adjusted EPS is expected to be between $1.50 and $1.70, net sales are projected to be down 1% to up 1%, and same-store sales are anticipated to rise 1% to 3%.

This compares to the current FactSet consensus, which forecasts EPS at $1.56, net sales down 0.6%, and same-store sales up 1.5%.

Year to date through Wednesday, Foot Locker's stock had dropped 27.7%, while the SPDR S&P Retail ETF (XRT) had gained 3.6%, and the S&P 500 index (SPX) had advanced 10.4%.

Adan Harris
Managing Editor
Eric Ng
John Liu
Editorial Board
Bryan Curtis
Adan Harris
Managing Editor
Cathy Hills
Associate Editor

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