Stephen’s hot, LeBron is not. Rihanna and Stan Smith are doing well too.
That was the conclusion from the Foot Locker Inc. conference call today regarding its first-quarter results. While the numbers were good, a drop in basketball sneaker sales in the first quarter caused Foot Locker’s stock to sell off as much as 7 percent to $54.06 in early trading.
The selloff was triggered by a comment on the earnings conference call by chief financial officer Lauren Peters that basketball footwear was down midsingle-digits.
Johnson said that the signature side of basketball sneakers was the source of weakness. The primary losses came from the LeBron and KB products, while Kobe Bryant shoes held up because of all the attention paid to his retirement. He did concede that the Under Armour Stephen Curry shoes were a big hit. Foot Locker is predominantly a Nike outlet. They carry 844 styles of Nike basketball shoes versus 134 Under Armour styles.
The softness in LeBron James footwear must be a major concern for Nike, which recently signed a megadeal with the basketball star that reportedly is worth more than $1 billion.
Johnson said Foot Locker was in a leading position with the classic Stan Smith sneaker from Adidas. Women are especially buying the shoe as it has become a hot fashion trend. The Rihanna apparel for women by Puma has been successful as well. Foot Locker said it was moving from a pure performance silhouette for apparel to a more active lifestyle silhouette for women.
The selloff in Foot Locker’s stock came even though it was a quarter that would cause envy in most retailers. Net income rose to $191 million, an all-time high for the company and an increase over last year’s net income of $184 million. Earnings per share of $1.39 increased 7.8 percent over last year’s earnings per share of $1.29 and was in line with the FactSet estimate.
Comparable sales increased 2.9 percent. Total first-quarter sales grew 3.7 percent to $1.98 billion over last year’s $1.91 billion. The FactSet estimate was slightly higher at $1.99 billion.
“We produced the most profitable quarter in the company’s long history, an accomplishment of which everyone at Foot Locker, Inc. should be very proud,” said Richard Johnson, chief executive officer.
Gross margins remained stable at 35 percent of sales. During the quarter Foot Locker opened 32 stores and closed 19.