Foot Locker’s shares rebounded more than 15 percent in Friday morning trading after the retailer leapt past analyst expectations for its first-quarter earnings.
The company, which last quarter seemed to be on shaky ground amid increased competition, reported earnings of $1.45 per share on revenue of $2.03 billion, far surpassing consensus estimates of $1.24 a share on revenue of $1.96 billion.
While same-store sales dropped again in the first few months of the year to 2.8 percent, this was a less dramatic drop than Wall Street’s predicted 3.6 percent.
CEO Richard Johnson reiterated his expectations that this figure is on track for a turnaround, pointing to higher-quality product and partnerships with brands like Nike, which have drawn in customers with Sneakeasy pop-up shops and other brick-and-mortar experiences.
“The flow of premium product continues to improve, with increasing breadth and depth in the most sought-after styles from our key vendors,” Johnson said in a statement. “This led to first-quarter results which were above our expectations. With the strength of our strategic vendor partnerships and our central position in youth culture, we continue to believe that we are poised to inflect to positive comparable-store sales growth.”
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Analysts seem to be so-far vindicated in their assessment that the retailer’s planned 110 store closures for the year aren’t necessarily a worrisome sign of trouble ahead. In the first quarter, Foot Locker opened 11 new stores — largely in Europe and China — remodeled or relocated 43 stores, and closed 37 stores, mostly in North America.
Still, Amazon has been a looming threat since Nike signed on to sell on the site in June of last year. What’s more, Foot Locker is expected to face an ever-more-competitive market after JD Sports Fashion PLC said in March it will purchase Finish Line Inc.