Foot Locker stumbles in the third quarter
The US-based sports retailer has stumbled again in the third quarter of its fiscal year, as total sales fell after the peak of the back-to-school season amid a heightened promotional environment
“Our team’s continued focus on execution drove positive comparable sales trends and meaningful gross margin expansion in the quarter. However, our third quarter top- and bottom-line performance fell short of our expectations. Consumer spending trends softened following the peak Back-to-School period in August, and the promotional environment was more elevated than anticipated”, commented Mary Dillon, President and Chief Executive Officer.
Third Quarter Results
While the company’s third quarter comparable sales increased by 2.4%, as compared to the same period of last fiscal year, total sales decreased by 1.4%, or 2.2% at constant exchange rates, to 1.96 billion euros.During the third quarter, Foot Locker opened 10 new stores and closed 24 stores. In addition, 20 stores were remodelled or relocated, and 167 stores were updated with new design standards.
The company's gross margin widened by 230 basis points in the third quarter of the year, on a comparable basis to the period of the prior year, as a result of lower markdowns in an increased promotional environment.
In the three months to the 2nd of November, the retailer’s net loss was 33 million US dollars, or a loss of 0.34 US dollars per share, as compared to a net income of 28 million US dollars, or earnings of 0.30 US dollars per share, in a similar period a year ago.
On a non-GAAP basis, the company’s net income was 31 million US dollars, or a loss of 0.33 US dollars per share, as compared to a net income of 28 million US dollars, or earnings of 0.33 US dollars per share, in the third quarter of fiscal 2023.
Full Year Outlook
Foot Locker is taking a more cautious view and has lowered its full year sales and earning guidance, mainly “due to a more promotional environment and softer consumer demand outside of key selling periods”, Mary Dillon added.The company now expects sales for the full year to decline by 1.5% to 1.0%, compared to previous guidance of a decline of 1.0% to an increase of 1.0%. Full year non-GAAP earnings per share are now expected in the range of 1.20 to 1.30 US dollars, as compared to the previous range of 1.50 to 1.70 US dollars.
“We remain focused on unlocking opportunities through our new Reimagined stores and refresh program, revamped digital experience, including the recent launch of our new mobile app, and stronger customer engagement through our enhanced FLX Rewards Program. We are confident that our strategies will drive sustainable shareholder value creation as we progress towards our 8.5-9% EBIT margin target by 2028”, she concluded.
Image Credits: stores.footlocker.com
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