Foot Locker Inc. shares are soaring after the company reported financial results for the third quarter.
The footwear retailer reported better-than-expected earnings results for Q2, with net income of $94 million, or 99 cents per share. Total sales dropped by 9.2% to $2.07 billion. The company cut its fiscal 2022 outlook and now expects total sales to fall between 6% and 7% for the year.
Foot Locker also announced on Friday that Dick Johnson will retire from his role as CEO, effective Sept. 1. Former executive chair and CEO of Ulta Beauty Mary Dillon has been named to the company’s top role.
Despite the downgraded outlook, Foot Locker’s shares surged in premarket trading and when markets opened on Friday.
Despite a general slowdown in consumer spending, Foot Locker said it expects to benefit from the back-to-school shopping season, which will be mostly reflected in its Q3 earnings report.
On a call with investors today, Johnson noted the power of Foot Locker’s product assortment, which has increasingly included fast-growing brands such as Hoka, On, Brooks and Asics since the retailer shared that the amount of Nike product in its stores would be significantly less than before. As Nike has reduced its wholesale business, Foot Locker has invested more heavily in other brands and in May announced an expanded partnership with Adidas.
Crocs, for instance, was a strong performer at Foot Locker in Q2, with sales up 50%. Johnson described the brand’s business as “explosive” for the retail chain.
“We operate as a validator of trends and brands in the sneaker community, which is an important part of our value proposition to both consumers and to brands,” Johnson said.
Foot Locker is also appealing to more consumers by leaning into its apparel business via new product launches and connected launches with footwear.
“We know that when consumers have a multi-unit basket, that over 40% of those trips have multiple brands as well,” said COO Franklin Bracken. “[That’s] very much in service of our apparel growth strategy, as well as delivering against our vision of being a true house of brands.”