Foot Locker surged Thursday after its quarterly earnings report showed signs that CEO Mary Dillon’s turnaround plan is starting to pay off. The sneaker retailer isn’t out of the woods just yet, but we’re removing the stock from our penalty box and upgrading its rating. Revenue declined 2.7% year over year to $1.879 billion, slightly below Wall Street expectations of $1.883 billion, according to estimates compiled by LSEG. Adjusted earnings per share of 22 cents easily topped the 12-cent estimate, LSEG data showed. At its highs of the session Thursday, Foot Locker was up nearly 32% before giving up some of those gains. In midday trading, the stock was up about 20%. FL YTD mountain Foot Locker’s year-to-date stock performance. Bottom line Foot Locker is on better footing than people thought in the wake of its calamitous report in early March , when Dillon pushed out the timeline for its turnaround. At the very least, Thursday’s first-quarter release and conference call showed management is making progress toward those reset goals. That counts for something, especially when Foot Locker’s stock entered Thursday down nearly 35% since the session before the March disaster. The bar was low. But Foot Locker cleared it. “Mary Dillon, the CEO, is back on plan, making the turn,” Jim Cramer said Thursday during the Club’s Monthly Meeting. “She is going to make something of this mishmash after all. … This call today was terrific and if the stock weren’t up [nearly $5] I would tell you that it’s buyable right now. We have an ultra small position on and for the first time I can tell you I wish it were bigger.” In addition to the better-than-expected earnings and margins, some of the key highlights included month-to-month strengthening in comparable-store sales — a key metric in the retail industry — even as Foot Locker’s promotional activity moderated. It’s a sign customers are willing to pay up when they like the products available to buy. “You want to see that,” Dillon said in a CNBC interview. “We’ll watch the customer,” Dillon added later, referring to general amid concerns consumer spending. “But we think we have the right things at the right time for them.” Companywide, which includes Champs locations, Foot Locker’s comparable-store sales declined 1.8%, slightly better than the 1.9% drop Wall Street expected. Encouragingly, Dillon told CNBC that Foot Locker and Kids Foot Locker saw positive comp-store sales. “[We] feel really good about that. To me, these are just signs that our ‘Lace Up’ plan is working,” Dillon said, referring to the name of the company’s turnaround strategy. To be sure, Champs locations continue to be drag on the whole company, though management indicated on the call that its efforts to retool the brand are showing early signs of life. We’ll need to see more evidence of that in the coming quarters. A few more positives: Management said comps in the current quarter will be flat to slightly positive compared with the year-ago…
Read More: Foot Locker leaves our penalty box as CEO Mary Dillon’s revamp takes hold