In the third quarter of 2024, Foot Locker, Inc. (NYSE: FL) reported a slight decline in total sales, which fell 1.4% year-over-year to $1.95 billion from $1,98 billion in the same period of the previous year. This dip in sales was more pronounced when adjusted for foreign exchange rate fluctuations, showing a decrease of 2.2%. Despite the overall drop in sales, the company achieved a 2.4% increase in comparable sales, driven by growth in its global Foot Locker and Kids Foot Locker stores, which saw comparable sales rise by 2.8% and 3.2%, respectively.Other banners like Champs Sports and WSS also contributed to this growth, with positive comparable sales of 2.8% and 1.8%. Foot Locker’s gross margin improved significantly, expanding by 230 basis points compared to the previous year, primarily due to a reduction in markdown levels. This improvement in gross margin was a positive outcome, although the performance did not fully meet expectations due to a more aggressive promotional environment.However, the company’s selling, general, and administrative expenses as a percentage of sales increased by 210 basis points, reflecting investments in technology and brand-building, partially offset by savings from cost optimization efforts. The quarter ended with a net loss of $33 million, a significant shift from the net income of $28 million recorded in the corresponding period last year.On a non-GAAP basis, which excludes certain charges, the net income for the quarter was $31 million, slightly higher than the previous year’s $28 million. The non-GAAP earnings per share stood at $0.33, compared to $0.30 in the prior year, indicating some resilience in the company’s core operations despite the challenges faced.
Foot Locker Reports Slight Miss in the Third QuarterFoot Locker’s third-quarter performance fell short of market expectations. Analysts had anticipated earnings per share (EPS) of $0.4181 and revenue of $2.02 billion. However, the company reported non-GAAP EPS of $0.33, missing the expected target. Similarly, actual revenue came in at $1.958 billion, below the forecasted figure. This underperformance can be attributed to several factors, including a softer consumer spending environment following the peak back-to-school period and heightened promotional activities.The company’s leadership acknowledged these challenges, with CEO Mary Dillon highlighting the softer consumer demand and elevated promotional environment as key contributors to the below-expectation results.Despite these headwinds, Foot Locker managed to achieve positive comparable sales growth, a testament to its operational strategies and brand positioning. The company’s focus on basketball and sneaker culture, particularly through partnerships with Nike and Jordan Brand, played a role in sustaining consumer interest and driving foot traffic.While the company experienced a slowdown in early November, it witnessed a significant uptick in sales during the Thanksgiving week, especially in physical stores. This suggests that while consumer spending may be cautious, there are still periods of heightened activity that Foot Locker can capitalize on. Nevertheless, the company is taking a conservative stance moving forward, adjusting its full-year sales and earnings outlook to reflect the current market conditions.
Foot Locker Revises Full-Year 2024 Outlook, Reflecting More Cautious ApporachFoot Locker has revised its full-year 2024 outlook, reflecting a more cautious approach in light of ongoing market challenges. The company now expects sales to decline by 1.5% to 1.0%, compared to its previous guidance of a -1.0% to +1.0% range. This adjustment is attributed to the continued promotional pressure and softer consumer demand outside of key selling periods.In terms of earnings, Foot Locker has lowered its non-GAAP EPS guidance to a range of $1.20 to $1.30, down from the prior range of $1.50 to $1.70.The company anticipates a challenging environment in the fourth quarter, with projected sales changes ranging from -3.5% to -1.5% and gross margins expected to be between 29.0% and 29.2%. Despite these challenges, Foot Locker remains committed to its strategic initiatives, including the rollout of its new store concepts and digital enhancements.More By This Author:AI Drives Salesforce’s 29% Surge In Q3 Operating Cash Flow AT&T Plans $20B In Buybacks Over 3 Years; Projects $2.07 EPS By 2025PLTR Hits 52-Week High After FedRAMP Authorization, Opening New Doors For The Firm
