Foot Locker Inc.’s shares continue to gain as investors react to the athlete specialty retailer’s better-than-expected Q2 performance, posted before the opening bell Friday.
As of 10:10 a.m. ET, the company’s shares had advanced 9 percent, to $67.26.
Foot Locker said it second quarter net income climbed 7 percent year-over-year, to $127 million, or 94 cents per diluted share, topping analysts’ expectations for diluted earnings per share of 90 cents. Revenues increased 5 percent year-over-year, to $1.78 billion, also beating forecasts for revenues of $1.76 billion. Comps also topped estimates, gaining 4.7 percent.
Foot Locker chairman and CEO Dick Johnson said the company was successful in driving comparable sales gains across basketball, running and classic footwear, as well as apparel.
“We are leaders in understanding what our customers want and how and when do they want it,” Johnson said during the firm’s conference call. “We spent a tremendous amount of time identifying the key characteristics of the core customers in each of our banners and what makes them want to engage and transact with us.”
Johnson said store traffic remained up in the U.S. during the quarter while Europe store traffic tapered slightly.
Foot Locker Canada continued to lead the company’s store divisions in comp growth followed closely by Champs Sports, both with low double digit gains, according to Foot Locker EVP and CFO Lauren Peters.
Foot Locker U.S. was one of several store divisions that produced comp gains in the mid-single-digit range in the quarter despite the temporary closure of its flagship Foot Locker store on 34th St. [in New York], Peters added.
“We’ve been hard at work creating what I believe will be the leading destination for the best in athletic footwear athletic and accessories in Midtown Manhattan,” Johnson said of the New York location, which had been closed for renovations. “Our flagship store on 34th St. is slated to reopen in a matter of days and we couldn’t be more excited about it. The space will include not just pinnacle footwear experiences but also new and exciting presence for Six:02 here in the city as well as partnership spaces with multiple banners.”
Foot Locker’s women’s business remains challenged as Six:02 struggled in the quarter, posting a comp decline in the low mid-single digits and breaking its two-year streak of comp gains.
Germany-based banners Runners Point and Sidestep continued to see double digit declines, pressured by slow traffic, Peters said.
“Traffic was also down in our Foot Locker stores in Germany,” Peters added. “Foot Locker sales were softer there than in most other markets.”
Eastbay also struggled with sales declining high single digits.
“The shift away from performance continue to challenge this very sports-focused banner, as did the heightened sport and sporting goods liquidation activity that went on during the quarter,” Peters said.
Looking ahead to Q3, Peters told investors that quarter-to-date comps are up mid-single digits, in line with the firm’s expectations for comparable sales to be up mid-single digits for the full quarter.