Foot Locker Inc. stock is popping over 9 percent to $67.67 after the specialty athletic chain delivered strong sales in the second quarter that included apparel gains in Canada and Champs Sports.
Net income for the quarter rose to $127 million, or 94 cents a diluted share, up from $119 million, or 84 cents, a year ago. This beat the FactSet estimate for earnings of 90 cents per share.
Total sales for the three months ending July 30 increased 5 percent to $1.78 billion from $1.69 billion a year earlier. This was also better than the FactSet estimate for sales of $1.76 billion. Comparable store sales increased 4.7 percent.
Chief executive officer Richard Johnson said, “Within the second quarter, we drove comparable sales gains across basketball, running and classic footwear, as well as apparel. We also posted gains in all regions and channels in which we operate, reflecting the success of our strategic initiatives to build our company to be an enduring retail leader with strengths across many dimensions.”
Foot Locker Canada saw double-digit gains in apparel and Champs Sports also posted gains in apparel. That didn’t carry over to Lady Foot Locker, which saw its apparel sales fall in the double digits.
Chief financial officer Lauren Peters said, “Lifestyle apparel pulled well. We didn’t keep pace with the rapid shift out of performance styles by our female customer.” Overall, apparel average selling prices were up, but units were down reflecting a shift to premium apparel assortments.
Johnson noted that women are wanting the performance, but with added fashion. He said that women didn’t want basic garments and that they wanted to project an athletic fashion image.
Foot Locker spoke about the Six:02 stores and noted that one that will open in New York in a couple of weeks on 34th Street. This banner is women’s athletic shoes and apparel with a fashion and lifestyle element. It includes labels like Adidas by Stella McCartney and Fenty by Rihanna. Top sellers include the Fenty Fur Slide, Puma Creepers and Adidas leggings. So far, Foot Locker has opened 30 doors within this brand.
Looking ahead to the third quarter, Foot Locker expects a double-digit increase in earnings per share or close to it and a midsingle-digit gain in comp sales. The outlook for the full year is for midsingle-digit comp sales gain and double-digit earnings per share growth.