Foot Locker (FL) earnings Q1 2024

Foot Locker’s turnaround is starting to bear some fruit. 

The sneaker giant saw comparable sales decline 1.8% during its fiscal first quarter, far better than the 3.1% drop-off that analysts expected, according to StreetAccount. 

The company also reaffirmed its fiscal year guidance, which projects sales to be between a 1% decline and a 1% gain, compared with a decline of 0.6% that analysts had forecast, according to LSEG. 

Shares of Foot Locker surged 15% Thursday.

Here’s how the company did compared with what Wall Street was anticipating, based on a survey of analysts by LSEG:

• Earnings per share: 22 cents adjusted vs. 12 cents expected 
• Revenue: $1.88 billion vs. $1.88 billion expected

Foot Locker’s reported net income for the three-month period that ended May 4 was $8 million, or 9 cents per share, compared with $36 million, or 38 cents per share, a year earlier. Adjusting for one-time items, including impairments associated with certain store closures and restructuring, among other costs, Foot Locker reported earnings of 22 cents per share.

Sales dropped to $1.88 billion, down about 3% from $1.93 billion a year earlier. 

For the full year, Foot Locker expects adjusted earnings per share to be between $1.50 and $1.70, ahead of estimates of $1.57, according to LSEG. 

The company is expecting comparable sales growth of between 1% and 3%, ahead of the 1.5% growth that analysts had expected, according to StreetAccount. 

“We had a solid start to the year in the first quarter, which demonstrates that our Lace Up Plan is working,” CEO Mary Dillon told CNBC in an interview. “The reason I feel confident — we’re launching an enhanced FLX rewards program, so we have a lot of opportunity with rewards. We’re launching a revamped mobile app, which we know is a great way to drive customer engagement and commerce and we see growth opportunities … with all of our brand partners throughout the year, including returning to growth with Nike in the holiday quarter.” 

Dillon, the former CEO of Ulta Beauty, has been working to turn Foot Locker around, but those efforts have taken longer than expected. 

Sales have consistently fallen as the retailer contends with a low-income consumer who has felt the brunt of inflation more acutely than other shoppers.

The company is also contending with mercurial brand partners, such as Nike, which has pulled back on the number of new releases to Foot Locker’s stores. In April, Nike CEO John Donahoe acknowledged that the brand went too far when it iced out wholesalers in favor of its own stores and website. Donahoe told CNBC that Nike is “investing heavily with our retail partners” as it goes through its own turnaround effort. 

Foot Locker’s Champs Sports banner has also been weighing down the overall business, with comparable sales down a staggering 13.4% during the quarter and overall revenue down almost 19%.

Foot Locker had to rely on promotions to drive sales. However, things are starting to look up for the company. 

While…