Is this the start of Foot Locker‘s comeback story?
The struggling sneaker company said Wednesday that comparable sales rose for the primary time in six quarters as its efforts to refresh its stores and improve the client experience proceed to bear fruit.
Foot Locker’s sales rose 2.6 percent within the second quarter, which, in response to StreetAccount, is well above the 0.7 percent increase expected by analysts. The gross margin also increased for the primary time in over two years.
“The Lace Up Plan is working,” CEO Mary Dillon said in a press release, referring to the corporate’s turnaround strategy. “Our sales trends improved throughout the quarter, including a solid start to the back-to-school season. We are also particularly pleased with the stabilization of our Champs Sports banner.”
Here’s how Foot Locker performed in comparison with Wall Street expectations, based on an analyst survey conducted by LSEG:
- Loss per share: 5 cents adjusted in comparison with 7 cents expected
- Revenue: $1.90 billion in comparison with expected $1.89 billion
For the three months ended Aug. 3, Foot Locker lost $12 million, or 13 cents per share, compared with a lack of $5 million, or 5 cents per share, a yr earlier. Excluding one-time items, Foot Locker posted a lack of 5 cents per share.
Revenue increased to $1.90 billion, a rise of about 2% from $1.86 billion within the previous yr.
For the present fiscal yr, Foot Locker largely maintained its forecast and continues to expect sales to be in a variety between a decline and growth of 1 percent in comparison with the previous yr. This is best than the decline of 0.4 percent that analysts had expected, in response to LSEG.
Foot Locker also stuck to its forecast for adjusted earnings per share. The company expects earnings between $1.50 and $1.70 – significantly greater than the $1.54 expected by analysts, in response to LSEG.
Since the previous Ulta Beauty Since taking the helm at Foot Locker about two years ago, CEO Mary Dillon has worked to rework the corporate and ensure it stays relevant in a world where brands are not any longer as depending on multi-brand retailers as they once were.
Dillon has worked to repair the corporate’s relationship with its largest brand partner, Nikeand has also taken an in depth have a look at its sprawling but aging store fleet, where the corporate generates about 80 percent of its sales. This yr, the corporate plans to take a position $275 million in modernizing and remodeling its stores. Foot Locker has said the modernization is working.
Dillon has also worked to chop costs at Foot Locker. On Wednesday, the corporate announced it might close its stores and e-commerce operations in South Korea, Denmark, Norway and Sweden, and depend on a third-party vendor to operate in Greece and Romania. In total, 30 of Foot Locker’s 140 stores in Asia Pacific and 629 in Europe might be closed or transferred to a brand new operator as a part of the changes.
Foot Locker also plans to maneuver its global headquarters from New York City to St. Petersburg, Florida, at the top of 2025 and can maintain only a limited presence within the Big Apple going forward.
“The intent behind the move is to further expand the company’s significant presence in St. Petersburg and enable increased collaboration between teams across different divisions and functions while reducing costs,” Foot Locker said in a press release.
Foot Locker’s Champs banner, which has been dragging down the corporate’s overall performance, can also be showing some signs of improvement. During the quarter, comparable sales declined 3.9%, an improvement from the 25.3% decline within the year-ago period.
By improving stores, products and the client experience online and in-store, Foot Locker is managing to extend sales at the same time as its core customers proceed to feel the pressure of constant inflation and high rates of interest, showing that Dillon’s efforts are working.
At the close of trading on Tuesday, the corporate’s shares had risen by greater than 5 percent this yr. By comparison, Nike shares lost greater than 21 percent in the identical period.
Retail demand has undoubtedly dropped, but consumers are still spending money. They’re just far more selective about what they decide to buy – which makes execution all of the more necessary.
“Our strategies are gaining momentum as we look ahead to the remainder of the year,” Dillon said in an announcement. “I remain confident that we are taking the right actions to position the company for the next 50 years of profitable growth and create long-term shareholder value.”
