Foot Locker in surprise sales miss amid COVID-related store closures

Foot Locker reported a mixed end to the year, with profit that expectations but sales that disappointed, including a 2.7% drop in same-store sales. 

The athletic footwear and accessories retailer’s fourth-quarter sales took a hit as more than 10% of its global store fleet was shuttered amid COVID-19 restrictions. Sales inched down 1.4% to $2.19 billion for the quarter ended Jan. 30, missing estimates of $2.29 billion. Same-store sales fell 2.7%.

Foot Locker’s net income fell to $123 million, or $1.17 a share, for the quarter ended Jan. 30, from $134 million, or $1.27 a share, in the year-ago period. Adjusted earnings came to $1.55 per share, above analysts’ estimates of $1.37. 

"Despite the challenging macro backdrop of COVID-related store closures and supply chain congestion, we delivered strong bottom-line results in the fourth quarter," said CEO Richard Johnson. "Our customers responded well to our solid product offering and exciting holiday campaign, which drove stronger margins and continued acceleration of our digital business." The company did not provide financial guidance given uncertainties resulting from the pandemic.

Earlier this month, Foot Locker said it is increasing its capital expenditures for 2021 to a pre-COVID level, with its board approving a $275 million capital expenditures program, compared to the approximately $155 million spent in 2020. The retailer also announced a 33% hike in its quarterly dividend to $0.20 per share from the previous dividend of $0.15.

In a statement, Lauren Peters, executive VP and CFO, noted that “these actions reflect our board's confidence in the company's strong financial position and ability to pursue our strategic initiatives while also returning more cash to shareholders."

At year’s end, Foot Locker’s cash and equivalents totaled $1.68 billion. The debt on its balance sheet amounted to $110 million

"Although over 10 percent of our store fleet is temporarily closed at present due to COVID-19 restrictions, the strength of our financial position leaves us well prepared to continue navigating the macro challenges, while protecting our bottom line and investing in our growth,” Peters said.

As of Jan. 30, Foot Locker operated 2,998 stores in 28 countries in North America, Europe, Asia, Australia, and New Zealand. In addition, 127 franchised Foot Locker stores were operating in the Middle East.