Foot cabinet said Wednesday that comparable sales grew for the first time in six quarters as it works to update stores and improve customer experience. continue to bear fruit.
The troubled sneaker company’s fiscal second-quarter same-store sales grew 2.6%, far better than analysts’ expectations of 0.7%, according to StreetAccount. Its gross profit margin also expanded for the first time in more than two years.
Despite the positive trend, the company’s shares fell about 8% in premarket trading.
“The Lace Up program is working,” CEO Mary Dillon said in a press release of the company’s turnaround strategy. “As the quarter progressed, our revenue trends strengthened, including a strong start to the back-to-school season. We are also particularly pleased to stabilize the Champions Sports banner.”
Here’s how Foot Locker performed compared to Wall Street expectations, according to a survey of analysts by LSEG:
- Loss per share: Adjusted 5 cents, expected 7 cents
- income: $1.9 billion vs. $1.89 billion expected
Foot Locker lost $12 million, or 13 cents a share, in the three months ended Aug. 3, compared with a loss of $5 million, or 5 cents a share, a year earlier. Excluding one-time items, Foot Locker lost 5 cents per share.
Sales increased to US$1.9 billion, an increase of approximately 2% from US$1.86 billion in the same period last year.
For the current fiscal year, Foot Locker has largely maintained its guidance and continues to expect sales to fall 1% to grow 1% from the prior year, better than analysts’ expectations for a 0.4% decline, LSEG said.
Foot Locker also stuck to its adjusted earnings per share guidance. According to LSEG, the company expects earnings to be between $1.50 and $1.70, a range that is mostly above analysts’ expectations of $1.54.
since before ultimate beauty Owner Mary Dillon take the helm During her tenure at Foot Locker nearly two years ago, she worked to transform the company and ensure it remained relevant in a world of emerging brands. less dependent on At multi-brand retailers like in the past.
Dillon has been working to repair the company’s relationship with its largest brand partners, Nikeand is also taking a hard look at its large but aging store fleet, where the company does about 80% of its sales. The company plans to spend $275 million Upgrade its store This year, it expects to retrofit two-thirds of its fleet by the end of fiscal 2025.
In an interview with CNBC, Dillon said the store investment will increase conversion rates, basket size and profitability, and bring better results to Foot Locker’s women’s clothing business.
“The reason we do it is it’s good for us, both in terms of enhancing the customer experience and the associate (store employee) experience, but also in terms of financial returns,” Dillon said. “The performance exceeded our imagination.”
Foot Locker has opened a series of new large-format stores in hotspots such as New York and Paris, and the retailer is working with Nike to develop some parts of the stores.
“Working with Nike, which has been a priority of mine from day one, is truly a partnership that’s not just about how many pairs of shoes we sell, but how we think about leveraging consumer insights to grow our business together,” ” Dillon said. “For us and Nike, this is where we really connect.”
Dillon is also working to simplify Foot Locker fees. On Wednesday, the company reportedly said it would close stores and e-commerce operations in South Korea, Denmark, Norway and Sweden and would rely on third parties to operate in Greece and Romania, where it plans to expand operations. As part of the changes, 30 of Foot Locker’s 140 stores in the Asia-Pacific region and 629 stores in Europe will close or be managed by new operators.
Foot Locker’s Champs banner, which has been a drag on the company’s overall performance, is also showing some signs of improvement. For the quarter, comparable sales fell 3.9%, an improvement from the 25.3% decline in the same period last year.
Foot Locker also plans to move its global headquarters from New York City to St. Petersburg, Florida, by the end of 2025, and plans to maintain limited operations in New York going forward.
“The purpose of the relocation is to further solidify the company’s significant presence in St. Petersburg and enhance collaboration among cross-departmental and functional teams while reducing costs,” Foot Locker said in a news release.
Dillon told CNBC the move will improve profit margins by 0.2 percentage points by 2027, but the decision isn’t just about saving money.
“We already have a big center of gravity in St. Petersburg … a lot of our senior executives are there. A lot of our commercial team is there,” Dillon said. “We think it’s important to actually bring more people together to collaborate, and that’s part of it. It’s not just about saving money. It’s about how do we actually continue to build on this momentum?”
The company does not plan to relocate employees, and Chicago-based Dillon will not be forced to become an employee. super commuterany one.
“I would say 90 percent of the time I’m traveling, visiting our teams around the world, our brand partners, investor meetings and events,” Dillon said. “I spend a lot of time in New York, I spend a lot of time in St. Petersburg, I spend a lot of time in Amsterdam where we are headquartered and visiting our brand partners. So I plan to stay in my primary residence in Chicago, but I think that’s working really well, so we’ll continue to do that.
Even as its core consumers continue to feel the pressure of persistent inflation and high interest rates, Foot Locker has managed to drive sales as it improves its stores, products and customer experience online and in-store Dillon’s efforts are paying off.
“We don’t expect our customers to be less stressed or more stressed. We’re just saying this is the category they care about,” Dillon said. “How does Foot Locker best meet their needs? I think our results show it’s effective.”
As of Tuesday’s close, the company’s shares have risen more than 5% this year, while Nike’s shares have fallen more than 21% during the same period.
Demand across the retail industry has undoubtedly slowed, but consumers are still spending. They’re just more picky about who they spend money with – which makes execution even more important.
“As we look toward the remainder of the year, our strategy is gathering momentum,” Dillon said in a statement. “I continue to believe we are taking the right actions to help the company grow profitably for the next 50 years and create long-term shareholder value. “
