Foot Locker posts first comparable sales growth in six quarters

28th Aug 2024 12:05

(Sharecast News) - Foot Locker reported its first comparable sales growth in six quarters on Wednesday, marking a milestone in its ongoing turnaround efforts.

The footwear retailer's same-store sales rose 2.6% in its second quarter, surpassing analyst expectations for a 0.7% increase.

That growth coincided with an expansion in its gross margin - the first in over two years.

Despite the positive results, its shares were well below the waterline in premarket trading.

Financially, Foot Locker posted an adjusted loss of five cents per share, better than the anticipated seven cents per share loss.

Revenue increased 2% to $1.9bn, exceeding expectations of $1.89bn.

The company maintained its full-year guidance, projecting sales to range from a 1% decline to 1% growth, and affirmed earnings guidance of $1.50 to $1.70 per share.

Chief executive officer Mary Dillon attributed the chain's improved performance to the success of its 'Lace Up Plan' - a strategy focussed on revitalising stores and enhancing customer experiences.

The plan also included the stabilisation of the Champs Sports banner, which saw a notable reduction in its sales decline compared to the prior year.

As part of its cost-cutting and streamlining efforts, Foot Locker announced plans to exit several international markets, including South Korea, Denmark, Norway, and Sweden, and to relocate its global headquarters from New York City to St Petersburg, Florida, by late next year.

The company said it would close or reassign operations for 30 of its 140 stores in the Asia-Pacific region, and 629 stores in Europe.

Under Dillon's leadership, Foot Locker was focussed on upgrading its store estate, with $275m earmarked for renovations this year, and repairing its relationship with key brand partner Nike.

At 0708 EDT (1208 BST), shares in Foot Locker were down 8.87% in premarket trading in New York, at $29.90.

They closed up 0.06% ahead of the results on Tuesday, at $32.81.

Reporting by Josh White for Sharecast.com.