The last two times we spoke about Foot Locker, the stock wasn’t faring well. Inventory and other costs weighed on earnings while the company struggled to spur demand in a weaker consumer environment. And shares were plummeting. 😬
Well, the stock is back in the news today, but for a good reason. Its adjusted earnings per share of $0.30 on revenues of $1.99 billion topped expectations of $0.21 and $1.96 billion.
Same-store sales fell 8% YoY, reflecting ongoing consumer softness, a changing mix of vendors, and a 3% impact due to closing some Champs stores. Despite all that, the metric came in better than the 9.7% decline analysts expected. Digital sales fell 5.6% YoY, though excluding Eastbay, which wound down last year, digital sales were actually up 0.4%. 🔺
Inventory remains an issue for the company, with it rising 10.5% YoY, though executives said about half that was strategic as it stocks up for the holiday season. Gross margins remained under pressure due to higher promotional activity and shrink. To spur demand, it signed a multiyear deal with the NBA to gain on-court and social media exposure and will expand to India next year. 👀
Overall, many of the company’s headwinds remain in place, but it’s having slightly more success in addressing them. “Not as bad” results were enough to get the beaten-down stock going, with $FL shares rising 16% on the day to 6-month highs. 👍
