Foot Locker beats Street amid progress in turnaround efforts; to enter India
Foot Locker reported better-than-expected third-quarter earnings and revenue and provided a slightly more upbeat sales outlook, citing progress in its turnaround initiatives and a strong Black Friday weekend.
Earlier this month, the athletic footwear and apparel retailer deepened its ties with the National Basketball Association, entering a multi-year partnership to become an official league marketing partner of the NBA in the U.S. The partnership is part of Foot Locker’s a broader “Lace Up” initiative to drive its next phase of growth. It includes closing underperforming stores, shifting to off-mall locations, opening new formats and expanding its sneaker culture.
As part of its efforts to pursue growth through license partners in newer markets, Foot Locker will enter India in 2024 via two long-term licensing agreements with two operators in India – Metro Brands Limited (MBL), one of India's largest footwear and accessories specialty retailers, and Nykaa Fashion, a fashion e-commerce destination.
Under the terms of the agreements, MBL is granted exclusive rights to own and operate Foot Locker stores within India and to sell authorized merchandise in Foot Locker stores. Nykaa Fashion will be the exclusive ecommerce partner and will operate the Foot Locker India website as well as retail authorized merchandise on a Foot Locker branded shop on the Nykaa platform.
For its third quarter, ended Oct. 28, Foot Locker’s net income fell to $28 million, or $.30 a share, down from $96 million, or $1.01 a share, in the same period a year ago. Adjusted earnings were $0.30 cents a share, ahead of analysts estimates of $.21 a share.
Total revenue fell 8.6% to $1.99 billion, beating estimates of $1.96 billion. Same-store sales fell 8.0%, driven by “ongoing consumer softness” and changing vendor mix. The decline was less than analysts expected.
"We delivered third quarter results that were ahead of our expectations as strong execution and early progress against our Lace Up plan improved conversion trends across channel,” stated CEO Mary Dillon. “Looking forward, we are updating our outlook to reflect the momentum we have in our strategic initiatives into the fourth quarter, which includes strong results over the Thanksgiving week period, against the backdrop of ongoing consumer uncertainty,”
“As such, we are narrowing our 2023 outlook and still expect to end the year with inventory levels flat to down slightly, as compared with the prior year,” she continued.
For fiscal 2023, Foot Locker updated its sales change outlook to a decline of 8.0% to 8.5% from a decline of 8.0% to 9.0% and improved its same-store sales change guidance to down 8.5% to 9.0% from down 9.0% to 10.0%
The company trimmed its adjusted EPS outlook to $1.30 to $1.40 from $1.30 to $1.5.
As of October 28, 2023, Foot Locker operated 2,607 stores in 26 countries in North America, Europe, Asia, Australia and New Zealand. In addition, 190 franchised stores were operating in the Middle East and Asia.