Foot Locker Inc. logged a solid start to the fiscal year as it works to reposition its brick-and-mortar fleet and shut down the majority of stores under its Footaction banner.
In the first quarter, the retailer logged comps that surged 80.3%. It announced, in tandem with the financial report, that it plans to convert roughly a third of its Footaction stores into “other existing banner concepts” over the course of the year to “focus growth on its iconic banners.”
As part of the move, Foot Locker intends to permanently shut down the majority of remaining Footaction stores as their leases expire over the next two years. The company “believes this strategic decision will enable it to better serve its consumers in a post-COVID marketplace.”
Over the course of the quarter, the New York-based chain opened 12 new stores, remodeled or relocated 15 outposts and closed 58 units. At the start of May, it operated 2,952 locations in 27 countries in North America, Europe, Asia, Australia and New Zealand. In addition, it has 131 franchised stores in the Middle East.
Today, Foot Locker reported adjusted earnings of $1.96 per share for the three months ended May 1, compared with a loss of 67 cents per share in the same period last year. Wall Street had predicted earnings of $1.09 per share. Revenues advanced 83.1% to $2.15 billion, versus market watchers’ projections of $1.88 billion.
In a statement, chairman and CEO Dick Johnson said that he was “extremely pleased” with the first-quarter performance — relative to not only the COVID-19-impacted quarter in 2020, but also the same period in 2019.
“Against the ongoing challenges of pandemic-related store closures in Europe and Canada and U.S. ports congestion, our top- and bottom-line results were nothing short of exemplary,” he added. “Our merchandise offering resonated very well with our customers, driving strength in our stores and continued momentum in our digital business. With strong product tailwinds, we remain optimistic about our category and our ability to drive long-term growth, profitability and shareholder value.”
Foot Locker, which did not provide guidance for the full year, ended the period with cash and equivalents that totaled $1.96 billion, while the debt on its balance sheet was $109 million. It shared that it invested $51 million in its store fleet, digital platforms, supply chain and logistics capabilities, as well as other infrastructure.
“The freshness of our inventory, coupled with robust demand across our assortment, resulted in significantly less promotional activity during the first quarter, driving gross margin expansion and improved inventory turns,” added EVP and CFO Andrew Page. “At the same time, we continued to exercise discipline with expense management while strategically investing in our business. Importantly, the underlying health of our business and financial position are strong, enabling us to continue advancing our strategic initiatives.”