Analysts were upbeat on Foot Locker Inc. after the firm beat the Street Friday when the company announced its sales and earnings for the third quarter.
Kate McShane, analyst at Citi Investment Research, noted “it was another impressive beat,” while Christopher Svezia, analyst at Susquehanna Financial, said, “They continue to execute, fill inventory properly, and the premium end of their business continues to outperform.”
Michael Binetti, analyst at UBS Investment Research, said, “Foot Locker has several growth drivers that can help support ongoing mid-single digit same store sales increases in 2013, including new unit growth in Europe, new NFL shop partnerships with Nike, a Champs store reimaging opportunity, and a new premium women’s concept SIX:02.”
In a conference call with analysts, Foot Locker Chairman and CEO Ken Hicks said the momentum of basketball and running categories are still driving sales.
“One [reason is] the athletic footwear trend,” he said. “More people are wearing sneakers now than a year ago. Next year, more people will be wearing them and that benefits us … because of what’s happening with health and wellness.”
Hicks added that new colors, technologies, and fashions were helping to drive the category forward.
“Players like Asics and Mizuno are really driving color,” he said. “Players like Under Armour are coming out with great new shoes like the Spine. Reebok is working very hard to make sure that they continue to maintain their relevance. Adidas is going to be a stronger player not just in basketball and the classics but [also] in running. There’s a lot of great product ahead of us.”
Hicks also outlined areas of focus for the coming quarters, which include investing in digital to drive sales growth and traffic, continuing to close unproductive stores, and getting ahead of the game to grow its market share in Europe.
“[We’re] making sure that we’re positioned properly in Europe when it comes back by being a player in team sports, and with the new [store] formats that we’re testing and looking at, so that we are positioned strongly in the near-term,” he said.
Shares of the New-York-based retail chain spiked 6.8 percent Friday morning to $34.02 as the firm reported third quarter net income of $106 million, or 69 cents a share, compared with $66 million, or 43 cents, a year ago.
Revenue grew 9.3 percent to $1.52 billion, from $1.39 billion, on the back of a 10.2 percent surge in comparable-store sales.
Analysts were expecting earnings per share to come in at 54 cents on revenue of $1.47 billion, as polled by Yahoo Finance.
At the end of the period, Foot Locker’s total cash position, net of debt, was $158 million higher than the same time last year, at $720 million.