Sporting goods operators reporting second-quarter results proved the pressures of weak demand and the absence of stimulus checks were hardly exclusive to apparel retailers.
In the three months ended Aug. 1, earnings at Foot Locker Inc. were flat, equaling last year’s profits of $18 million, or 11 cents a diluted share. By contrast, sales fell 15.6 percent to $1.09 billion from $1.30 billion in the 2008 quarter.
On a conference call, the New York-based retailer’s chairman, Matthew Serra, said the sales environment presented challenges to all facets of its business, not only footwear.
“Our apparel business in the U.S. continued to be tough, even as we continue to gain some traction from the introduction of some new branded assortments,” Serra said. “Clearly, we believe that improving our apparel business over time will prove out to be significantly important to the profitability of our company.”
Serra said both athletic apparel and footwear suffered double-digit comparable-store declines in the U.S. in the quarter and the company’s private label business had been off dramatically.
“I think — I’m trying to be as honest as I can — I think it’s going to be very, very challenging over the next six months,” Serra said of Foot Locker’s apparel sales.
For the first half of the fiscal year, the firm’s profits were up 47.6 percent to $31 million, or 20 cents a share, from $21 million, or 13 cents a share, a year ago. Sales in the six months fell 11.3 percent to $2.31 billion from $2.61 billion.
Despite a decline in quarterly sales, Dick’s Sporting Goods Inc. provided one of the sector’s lone bright spots. The Pittsburgh-based firm saw improved revenues and said it had grown its market share. In the three months, the retailer recorded a 2.5 percent slide in net income to $38.9 million, or 33 cents a share, from $39.9 million, or 34 cents a share, in 2008. Sales in the period grew 3.7 percent to $1.13 billion from $1.09 billion.
Chairman and chief executive officer Edward Stack attributed his firm’s sales gains to small steps forward in consumer confidence.
“I won’t say they’re feeling great, but I think the consumer’s feeling a little bit better,” Stack said. “I think we’ve done a good job with our marketing programs, and the merchandising assortments that we brought into the stores, and I think we’ve taken some market share.”
Dick’s ceo added that apparel sales had been slightly negative, but better than the firm had anticipated.
In the first half, Dick’s posted a 17.5 percent decline in net income to $49.1 million, or 42 cents a share, from $59.5 million, or 51 cents a share, in the comparable period. Sales in the first half grew 4.4 percent to $2.09 billion, from $2 billion a year ago.
Hibbett Sports Inc., a smaller player in the sector, saw profits fall 76.9 percent to $1.1 million, or 4 cents a share, in the second quarter. A year ago its quarterly earnings totaled $4.8 million, or 17 cents a share. Sales in the quarter ended Aug. 1 slid 5.5 percent to $123.1 million from $130.3 million.
The company said while activewear sales fell in the low-single digits overall, women’s and children’s apparel both comped up in the period.
“We believe the consumer is absolutely buying closer to need,” said Michael Newsome, chairman and ceo. “Several states including Arkansas, North Carolina and parts of Florida have moved school start dates back one to two weeks. This negatively affects comps in the first part of August and helps in the last part of August.”
For the first six months of 2009, the Birmingham, Ala.-based firm’s profits dropped 15.1 percent to $12 million, or 41 cents a share, from $14.2 million, or 49 cents a share in 2008. Revenues grew 1.7 percent in the half to $280.8 million from $276.1 million.
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