Foot Locker Inc. blasted past estimates in the first quarter with the help of strong comps in its U.S. business, the firm said.
“First-quarter footwear comps were up [by] double digits in the U.S.,” said Ken Hicks, chairman and CEO of Foot Locker, in a conference call with analysts. “The positive footwear comps included gains in men’s, kid’s and even women’s, as gains in other categories of women footwear, especially lightweight running, more than offset the drag [in] the toning category.”
Sterne Agee analyst Sam Poser said, “The large amount of new product innovation combined with better systems, international store growth and strong e-commerce sales were likely the main drivers of the results.”
“We are more confident than we were before that management is establishing new corporate standards, [and with] the accelerating premium athletic footwear product cycle. The firm’s long-term objectives are well positioned to be achieved,” he added.
Foot Locker also managed to increase its gross margin by 200 basis points, thanks to effective leveraging of its predominately fixed buying and occupancy expenses.
“The merchandise margin improvement came mostly in apparel, as we continue to close the margin gap between footwear and apparel. Footwear margins are still higher than apparel margins in our domestic businesses, but we are making good progress,” said Hicks.
The New York-based specialty athletic retailer earned a net income of $94 million, or 60 cents a share, up 76 percent from a net income of $54 million, or 34 cents, last year. The firm crushed analysts’ estimates of 44 cents, and its shares shot up 11 percent in Friday morning trading.
For the period ended April 30, revenue advanced 13 percent to $1.5 billion, from $1.3 billion in the year-ago period. Comparable-store sales increased 12.8 percent.
Foot Locker ended the period with cash and cash equivalents of $799 million, up from $616 million a year earlier, and long-term debt of $136 million.