Foot Locker Inc.’s shares surged after the sneaker retailer’s turnaround plan got back on track.
Profit, excluding some items, was 22 cents a share, almost doubling the average analyst estimate. Comparable store sales, a key retail metric, fell 1.8 percent for the quarter ended May 4. That was slightly better than Wall Street’s expectation of a 1.9 percent drop.
“Its business is stabilising as turnaround efforts begin to pay off,” said Bloomberg Intelligence analyst Abigail Gilmartin.
Foot Locker’s turnaround lost momentum in March when executives delayed their growth plan to hit $9.5 billion in annual sales by two years to 2028. That left investors worried about the retailer’s progress, and its shares sank about 30 percent. But now it appears on more solid footing as it reaffirmed its sales and profit outlook for this year.
Its stock gained as much as 32 percent on Thursday morning in New York. The shares had been down nearly 28 percent this year through Wednesday’s close.
Chief executive officer Mary Dillon is looking to diversify the retailer’s brand offerings, expand loyalty programmes and open new store formats. Foot Locker unveiled a new retail store concept in New Jersey in April, with hopes that revitalised shops will attract more shoppers. It plans to roll out the design in New York, Paris, Melbourne and Delhi later this year.
“There’s still pressure on the consumer for us – exposure to inflation, interest rates and reduced savings,” Dillon said in an interview. “But it’s discretionary for a reason. They decide where to spend it.”
Foot Locker is not alone in posting uneven results. The athletic-gear sector has mostly struggled this year. Nike Inc. is cutting $2 billion in costs and laying off 2 percent of its workforce, Lululemon Athletica Inc. reported a slowdown in its US business and Under Armour Inc.’s weak sales have led to a restructuring. One outlier is Dick’s Sporting Goods Inc., which raised its outlook this week as it continued to steal market share with its broad selection.
By Kim Bhasin
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Foot Locker Pushes Back Long-Term Sales Growth Plan; Shares Fall
Foot Locker Inc. pushed back a plan to expand its sales to $9.5 billion by two years and now looks to hit that goal by 2028.
