Foot Locker sees sales slump in challenging Q2; partners with Fanatics
Foot Locker Inc. met guidance in a difficult macroeconomic environment during the second quarter of fiscal 2022 and entered a new inventory partnership.
Second quarter comparable-store sales at the New York-based specialty athletic retailer decreased by 10.3% compared to record sales levels from the same quarter in fiscal 2021. Total sales decreased by 9.2%, to $2.06 billion, compared with sales of $2.27 billion in the second quarter of fiscal 2021. Excluding the effect of foreign exchange rate fluctuations, total sales for the second quarter decreased by 6.1%.
The company also reported net income of $94 million, or $0.99 per share, for the 13 weeks ended July 30, 2022, down 78% from net income of $430 million, or $4.09 per share, for the corresponding prior-year period. On a non-GAAP basis, the company earned $1.10 per share, compared with non-GAAP earnings of $2.09 per share in the prior-year period.
Foot Locker updated its guidance for the full fiscal year 2022, including a sales decline of 6-7%, an 8-9% decline in comparable store sales, and non-GAAP EPS in the range of $4.25-$4.45.
"Despite an increasingly challenging macroeconomic backdrop, we delivered a solid quarter against the favorable fiscal stimulus and promotional environment from last year," said Richard Johnson, chairman and CEO, Foot Locker. "Driven by strong execution from our team and ongoing progress against our key objectives, we grew our sales 16.4% above levels from 2019. Our strategy of diversifying our brand portfolio and offering more choice continues to resonate with consumers and is enabling us to expand our customer base. We are confident that our operational excellence, our improving ability to fuel our customer's desire for self-expression, and the secular trends driving our categories, put us in a strong position to navigate the expected ongoing macroeconomic headwinds in the back half of 2022."
During the second quarter, the company opened 34 new stores, remodeled or relocated 24 stores, and closed 50 stores.
Foot Locker partners with Fanatics
Foot Locker is also entering a connected inventory partnership with Fanatics designed to broaden the officially-licensed fan gear and merchandise assortment available online to Foot Locker shoppers. Through this new deal, Foot Locker will continue to power the front-end online and mobile customer experience across its portfolio of e-commerce brands, while orders will be fulfilled by Fanatics.
Beginning in fall 2022, shoppers visiting footlocker.com, kidsfootlocker.com, and champssports.com will have access to what Foot Locker terms a “significant” portion of Fanatics' industry-leading licensed sports merchandise assortment, featuring teams and players from the top leagues and sports properties, including the NFL, NBA, MLB, NHL, WNBA, and NCAA.
The collection, with inclusive sizing and options, includes apparel, jerseys, headwear, and hardgoods across a portfolio of brands such as Fanatics, Nike, Adidas, Mitchell & Ness, New Era, Pro Standard, and WEAR by Erin Andrews. Fanatics will also extend its hot market and championship collections as part of the deal.
"We are excited to partner with Fanatics as we continue to enrich our assortment, provide more choice to our consumer, and enhance our omnichannel positioning," said Andrew Gray, executive VP, Global Lockers and Champs Sports, Foot Locker Inc. "Pairing Foot Locker's leadership in sneaker culture with the sports fan and assortment power of Fanatics is a natural fit. Bringing together these two dynamic forces will drive and serve sport and sneaker culture in exciting ways."
"Fanatics is thrilled to partner with Foot Locker and bring a broad, tailored assortment from its leading product catalog to online shoppers," said Jack Boyle, Fanatics Commerce global co-president, direct-to-consumer. "Foot Locker, Kids Foot Locker, and Champs Sports are trusted, respected consumer brands and we're delighted to now offer Fanatics' customers an incredible selection of quality fan gear for all members of the family."
As of July 30, 2022, Foot Locker operated 2,799 stores in 28 countries in North America, Europe, Asia, Australia, and New Zealand. In addition, 148 franchised stores were operating in the Middle East and Asia.