Foot Locker (FL) earnings Q2 2024

Foot Locker on Wednesday said comparable sales grew for the first time in six quarters as its efforts to refresh its stores and improve the customer experience continue to bear fruit. 

The beleaguered sneaker company’s same-store sales grew 2.6% during its fiscal second quarter, far better than the 0.7% uptick that analysts had expected, according to StreetAccount. Its gross margin also expanded for the first time in more than two years. 

Despite the positive trends, shares dropped about 5% in premarket trading.

“The Lace Up Plan is working,” CEO Mary Dillon said in a press release, referencing the company’s turnaround strategy. “Our top line trends strengthened as we moved through the quarter, including a solid start to Back-to-School. We were also particularly pleased to deliver stabilization in our Champs Sports banner.” 

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

• Loss per share: 5 cents adjusted vs. 7 cents expected 
• Revenue: $1.90 billion vs. $1.89 billion expected

In the three-month period that ended Aug. 3, Foot Locker lost $12 million, or 13 cents per share, compared with a loss of $5 million, or 5 cents per share, a year earlier. Excluding one-time items, Foot Locker posted a loss of 5 cents per share. 

Sales rose to $1.90 billion, up about 2% from $1.86 billion a year earlier. 

For the current fiscal year, Foot Locker largely maintained its guidance and continues to expect sales to be in a range of a 1% decline to 1% growth from the prior year – better than the 0.4% decline that analysts had expected, according to LSEG. 

Foot Locker also stood by its adjusted earnings per share guidance. It expects earnings to be between $1.50 and $1.70 – much of that range ahead of the $1.54 that analysts had expected, according to LSEG. 

Since former Ulta Beauty boss Mary Dillon took the helm of Foot Locker about two years ago, she has worked to transform the company and ensure that it stays relevant in a world where brands aren’t as reliant on multi-brand retailers as they were in the past. 

Dillon has worked to repair the company’s relationship with its biggest brand partner, Nike, and has also taken a hard look at its sprawling, but aging, store fleet, where the company does about 80% of its sales. This year, the company plans to spend $275 million upgrading its stores through refreshes and remodels. Foot Locker has said the upgrades are working. 

Dillon has also worked to streamline costs at Foot Locker. On Wednesday, the company said it was closing its stores and e-commerce operations in South Korea, Denmark, Norway and Sweden and will rely on a third-party for operations in Greece and Romania. In all, 30 of Foot Locker’s 140 stores in the Asia Pacific region and 629 in Europe will be closed or go under a new operator as part of the changes. 

Foot Locker is also planning to move its global headquarters from New York City to St. Petersburg, Florida in late 2025 and plans…