Foot Locker makes strides as Q3 tops estimates

 

Foot Locker's quest to regain momentum got a boost in the third quarter as the chain reported better than expected revenue and earnings.
Net income totaled $102 million, or $0.81 per share, for the quarter ended October 28, compared with $157 million, or $1.17 per share in the year-ago period. Excluding charges, Foot Locker earned adjusted earnings of $.87 per share, more than analysts had expected.

Total sales decreased 0.8%, to $1.87 billion, also better than expected. Same-store sales fell 3.7%.

The company's gross margin rate decreased to 31.0% of sales from 33.9% a year ago, and its selling, general, and administrative expense rate increased 30 basis points to 19.7% of sales. Foot Locker said it incurred $7 million of hurricane-related costs, the majority of which related to damaged or lost inventory.

"The reduction and reorganization of our corporate and division staff during the quarter, while a difficult decision, was a critical step in positioning us for success as we navigate through the tremendous disruption affecting our customers and the retail industry in general," said Richard Johnson, chairman and CEO. "We are adjusting our course proactively, including creating new initiatives with key vendors and making critical investments in our digital platforms and supply chain, to ensure that Foot Locker will continue to thrive at the center of sneaker culture and, more broadly, youth culture."

Foot Locker and other sporting goods retailers have been plauged with sluggish sales, which they have credited partially to a lack of new styles in the athletic shoe market. But Johnson sounded an optimistic note

"Despite the highly promotional environment we still see in the marketplace, the availability of premium product is gradually improving compared to the first half of the year, and we believe we can achieve, and perhaps modestly exceed, the top- and bottom-line guidance we gave for the fourth quarter back in August," Johnson said.

As of October 28, the company operated 3,349 stores in 23 countries in North America, Europe, Australia, and New Zealand.  In addition, 83 franchised Foot Locker stores were operating in the Middle East, as well as 14 franchised Runners Point stores in Germany.