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Foot Locker reports slight improvement in sales as year ends

Mar 13, 2024 United States
Foot Locker reports slight improvement in sales as year ends
The US-based sportswear retailer reported better-than-expected fourth-quarter results, with sales up by 2.0% on a comparable basis to the same period of 2022
“We are pleased to report fourth quarter results ahead of our expectations, including meaningfully accelerated sales trends relative to the third quarter, earnings per share that exceeded our guidance range, and improvements across multiple KPIs. As we continued to deliver on the strategic imperatives of our Lace Up Plan, we built significant momentum through the holiday season, driven by full-price selling in addition to compelling promotions. We also proactively reinvested in markdowns to end the year with leaner inventory levels compared to our expectations”, commented Mary Dillon, President and Chief Executive Officer of Foot Locker.


Fourth Quarter Results

In the quarter that ended on the 3rd of February, the company’s total sales rose by 2.0%, reaching 2.38 million US dollars, on a comparable basis to the same period of the previous year. Excluding the effect of foreign exchange rate fluctuations, total sales increased by 1.5% year-over-year.

Foot Locker also reported a comparable sales decline of 0.7% in the fourth quarter of its financial 2023, “driven by a 210 basis-point impact from repositioning the Champs Sports banner, consumer softness, and changing vendor mix”. However – it added –, comparable sales increased by 5.2% in the Foot Locker and Kids Foot Locker North American banners.

In the last quarter of fiscal 2023, the company’s gross margin contracted by 350 basis points, as compared to the previous year, mainly because of “higher markdowns, partially offset by occupancy leverage”.

The US-based retailer recorded a fourth quarter net loss of 389 million US dollars, or diluted loss per share of 4.13 US dollars, on a comparable basis to a net income of 19 million US dollars, or earnings per share of 0.20 US dollars, in a similar quarter of fiscal 2022.

On a non-GAAP basis, Foot Locker’s net income for the period was 36 million US dollars, or earnings per share of 0.38 US dollars, as compared to a net income of 92 million US dollars, or earnings per share of 0.97 US dollars, in the fourth quarter of the prior fiscal year.


Store Base Update

During the fourth quarter, the company opened 29 new stores, remodeled or relocated 66 stores, and closed 113 stores. As a result, at the end of the period, the company operated 2 523 stores in 26 countries in North America, Europe, Asia, Australia and New Zealand. In addition, there were 202 licensed stores in the Middle East and Asia.

Fiscal 2024 Outlook

“We maintain conviction in the longer-term earnings potential that our Lace Up plan will generate and reiterate the 8.5-9% EBIT margin target communicated at our March 2023 Investor Day”, said Mike Baughn, Executive Vice President and Chief Financial Officer. However, “given our lower starting point exiting 2023, we expect a two-year delay in achieving that goal and now see reaching that target by 2028”, he warned.

“As our margins and cash flows improve, we will continue to prioritize investing in our business, and enhancing financial flexibility to continue to support our strategic objectives.  In that context, 2024 will serve as a cash rebuilding year, and we, therefore, are not resuming a dividend at this time”, Baughn concluded.  For the full year 2024, the company expects sales to be between minus 1% and 1% below the previous year and comparable sales to be between 1% and 3% above the previous year.


Image Credits: wsj.com

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