Foot Locker Inc. bounced into the black in the third quarter and earned twice what analysts had expected.
For the period ended Oct. 30, the New York-based retailer earned $52 million, or 33 cents a share, reversing its net loss of $6 million, or 4 cents, in the year-ago period.
Analysts polled by Yahoo Finance were looking for earnings of 17 cents a share as polled by Yahoo Finance. Foot Locker’s stock opened 10 percent higher at $18.17 on Friday, the morning after the results were released.
Net sales in the quarter increased 5 percent to $1.28 billion, backed by an 8.1 percent increase in comparable-store sales in the period, while gross margin rose 320 basis points to 30.3 percent.
“The strong early back-to-school results that we [saw]… turned out to be a good indicator of how our business would perform for the third quarter,” said Foot Locker’s chairman, president and CEO, on a call with analysts.
“We benefited from more regular price sales and lower markdowns as our inventory position was better aligned with consumer demand. A third factor contributing to our merchandise margin rate improvement was reduced inventory shortages in our stores,” said Robert McHugh, Foot Locker’s CFO and EVP.
McHugh added that comp store sales in the firm’s U.S. stores rose in the double-digits during September and October, which allowed the firm to reduce the number of promotional events in stores.
Meanwhile, Foot Locker Europe’s comps increased mid- to high-single digits, Foot Locker Canada rose low- to mid-single digits and Foot Locker Asia Pacific was essentially flat, the firm said.
During the quarter, the company repurchased 1.14 million shares of its common stock for $16.2 million under its $250 million share repurchase program.
As at Oct. 30, 2010, Foot Locker had $541 million in cash and cash equivalents, up from $438 million on Oct. 31, 2009. Long-term debt stood at $137 million.