Inc. shares rose on Wednesday morning after the retailer reported a sales beat in the third quarter.
Total sales for Q3 were $1.99 billion, down 8.6 percent over the prior year and ahead of the $1.96 billion expected by analysts, according to a survey of analysts by LSEG cited by CNBC. Foot Locker reported a net income of $28 million in the third quarter, compared with net income of $96 million in Q3 of last year. Non-GAAP earnings per share decreased to $0.30 per share, compared to $1.27 per share in Q3 of last year. This was ahead of analysts’ expectations of $0.21.
Foot Locker shares were up more than 8 percent before markets opened on Wednesday.
Comparable store sales dropped 8 percent in Q3. As in the prior quarter, Foot Locker attributed this drop to “ongoing consumer softness, changing vendor mix, and a 3 percent negative impact from the repositioning of Champs Sports.” Foot Locker said in March it would close 400 underperforming stores, including about 125 underperforming Champs locations.
Foot Locker president and CEO Mary Dillon said in a statement that the retailer saw strong results over Thanksgiving week, even “against the backdrop of ongoing consumer uncertainty.”
Turning to Q3, the exec said Foot Locker had delivered solid results that showed progress in the retailer’s “Lace Up” plan, which it rolled out in March. This multi-pronged strategy aims to increase market share and grow sales to $9.5 billion by 2026. It includes diversifying the brand portfolio, rolling out new store formats focused on an off-mall presence, maximizing the loyalty program and investing in technology.
Given the progress, Foot Locker narrowed its outlook for the fiscal year 2023 and now expects sales to be down between 8 percent and 8.5 percent, compared to a prior outlook of a decrease ranging from 8 percent to 9 percent. Non-GAAP EPS is expected to be between $1.30 and $1.40, compared with a prior expectation of between $1.30 and $1.50. Comp sales are expected to be down between 8.5 percent and 9 percent, compared to a prior guidance of down between 9 percent and 10 percent.
Fourth-quarter sales are expected to be down between 2 percent and 4 percent.
As the retailer outlined its financial progress, Foot Locker also highlighted recent initiatives in basketball, including its recently announced multiyear partnership with the National Basketball Association (NBA) and its basketball-focused holiday campaign featuring Kevin Durant with Nike, LaMelo Ball with Puma, Anthony Edwards with Adidas and Steph Curry with Under Armour. The campaign was the first to emerge from Foot Locker‘s newly created marketing platform, “The Heart of Sneakers,” which aims to get to the core of sneaker culture.
Foot Locker also touted its new “Home Court experience” in some U.S. locations, which engages customers with “elevated merchandising and storytelling” pertaining to basketball.
Dillon said in a statement that Foot Locker’s NBA partnership and Home Court experience will “drive deeper engagement with our customers and cement Foot Locker’s leadership at the center of basketball and sneaker culture.”
Moving ahead, Foot Locker said it would expand into India in 2024 via two operators in the region that have signed licensing agreements with the retailer: Metro Brands Limited (MBL) and Nykaa Fashion.
“These agreements will enable Foot Locker to efficiently access the large and growing sneaker market in India, consistent with the Company’s efforts to strategically pursue growth opportunities in new markets, expand sneaker culture globally and bring Foot Locker’s elevated, multi-brand experiences and strong vendor partnerships to even more people around the world,” the company said in a release.
