Foot Locker on Wednesday said comparable sales grew for the first time in six quarters as its efforts to refresh its stores and improve the customer experience continue to bear fruit.
The beleaguered sneaker company’s same-store sales grew 2.6% during its fiscal second quarter, far better than the 0.7% uptick that analysts had expected, according to StreetAccount. Its gross margin also expanded for the first time in more than two years.
Despite the positive trends, the company’s shares closed more than 10% lower.
“The Lace Up Plan is working,” CEO Mary Dillon said in a press release, referencing the company’s turnaround strategy. “Our top line trends strengthened as we moved through the quarter, including a solid start to Back-to-School. We were also particularly pleased to deliver stabilization in our Champs Sports banner.”
Here’s how Foot Locker did compared with what Wall Street was anticipating, based on a survey of analysts by LSEG:
- Loss per share: 5 cents adjusted vs. 7 cents expected
- Revenue: $1.90 billion vs. $1.89 billion expected
In the three-month period that ended Aug. 3, Foot Locker had a loss of $12 million, or 13 cents per share, compared with a loss of $5 million, or 5 cents per share, a year earlier. Excluding one-time items, Foot Locker posted a loss of 5 cents per share.
Sales rose to $1.90 billion, up about 2% from $1.86 billion a year earlier.
For the current fiscal year, Foot Locker largely maintained its guidance and continues to expect sales to be in a range of a 1% decline to 1% growth from the prior year – better than the 0.4% decline that analysts had expected, according to LSEG.
Foot Locker also stood by its adjusted earnings per share guidance. It expects earnings to be between $1.50 and $1.70 – much of that range ahead of the $1.54 that analysts had expected, according to LSEG.
Since former Ulta Beauty boss Mary Dillon took the helm of Foot Locker about two years ago, she has worked to transform the company and ensure that it stays relevant in a world where brands aren’t as reliant on multibrand retailers as they were in the past.
Dillon has worked to repair the company’s relationship with its biggest brand partner, Nike, and has also taken a hard look at its sprawling, but aging, store fleet, where the company does about 80% of its sales. The company plans to spend $275 million upgrading its stores this year, and it expects to have two-thirds of its fleet remodeled by the end of fiscal 2025.
In an interview with CNBC, Dillon said the store investments are leading to increased conversion, basket size and profitability, and better performance for Foot Locker’s women’s business.
“The reason that we’re doing it is that it is working for us, both in terms of enhancing a customer experience and a striper [store employee] experience, but also the financial returns,” said Dillon. “The performance is ahead of what we thought.”
In a series of new megastores Foot Locker is building in hotspots like New York City…
Read More: Foot Locker (FL) earnings Q2 2024
