“I get excited about product,” Richard Johnson, chairman, president and chief executive officer of Foot Locker, told analysts on the company’s Friday morning conference call. “As the uniform of the kid turns to fleece [in the fall], we’ve got really great relationship[s] with Champion and some products. Obviously, Nike is part of that.”
But in particular, fleece pieces, he said, “are $85, $95, $100, might be $110 to $150. All those things add up to an [average selling price] that we see continuing to expand.”
Even so, his optimism wasn’t shared by investors.
Shares of Foot Locker fell more than 17 percent during Friday’s trading session.
The retailer delivered disappointing quarterly results the same morning before the bell, failing to improve on both top- and bottom-line figures.
Sales for the three-month period ending Aug. 3 were relatively flat — $1.77 billion, down from $1.78 billion in 2018’s second quarter. Company profits, meanwhile, fell to $60 million, down from $80 million the same time last year.
James Lance, vice president of corporate finance and investor relations at Foot Locker Inc., attributed the loss to a $30 million charge that resulted from closing 23 Six:02 Foot Locker locations, or women’s-only banner stores, as well as roughly $3 million in tax reform and pension charges.
But Foot Locker’s apparel sales were especially weak during the quarter, with comps falling across men’s, women’s and children’s. And while there were a few bright spots — such as fleece and graphic T-shirts — it wasn’t enough to offset the reduced interest in clothing at the retailer.
“Our apparel business took a step backward in the quarter,” Johnson said on the conference call. “This result was due in part to softer demand for some of the looks that have been successful in the past year or so.
“There’s always shifts in the business from a fashion perspective and the ramp-down, the slowdown and the ramp-up don’t always happen at the exact same time,” he added.
This was disappointing news, especially considering Foot Locker released a number of exclusive apparel collections, such as Nautica and Tommy Hilfiger, in the last few months.
But Foot Locker’s blunder doesn’t mean apparel isn’t trending right now.
And in terms of athleticwear, the numbers are also on the rise. U.S. sales of women’s sports bras rose 6 percent in the 12 months ending May 2019. Earlier this week, Dick’s Sporting Goods released quarterly earnings, reporting that it was “extremely pleased” with apparel and footwear sales.
“Today’s fashion is about easy style that is functional; an equation brands throughout the apparel industry can and should apply,” said Marshal Cohen, chief industry advisor for The NPD Group. “The future success of the apparel industry will rely on categories that act active, but look fashion[able].”
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