Yahoo Finance Foot Locker (FL) Q1 Earnings Top Estimates, Revenues Dip Y/Y
Foot Locker, Inc. FL posted first-quarter fiscal 2024 results, with the bottom line surpassing the Zacks Consensus Estimate and the top line missing the same. Both quarterly earnings and sales declined year over year.
Despite macroeconomic challenges, Foot Locker focuses on the strong demand for sneakers, leveraging key retail moments and strengthening partnerships with brands like Nike through specialized offerings and customer insights, reflecting its commitment to operational excellence and strategic market positioning.
Additionally, Foot Locker's "Lace Up Plan" aims for sustainable, profitable growth by enhancing the FLX rewards program, improving product assortments with a new buying team, launching a mobile app, and reigniting growth with Nike later in the year. The plan includes optimizing the store footprint by closing some locations, opening new ones and implementing the "Store of the Future" concept to enhance consumer experience. Operationally, the company focuses on significant cost savings and maintaining fresh inventories to better align with customer demand.
Foot Locker, Inc. Price, Consensus and EPS Surprise
Foot Locker, Inc. price-consensus-eps-surprise-chart | Foot Locker, Inc. Quote
The athletic shoes and apparel retailer posted adjusted earnings of 22 cents per share, which surpassed the consensus estimate of 12 cents. However, the bottom line declined from adjusted earnings per share of 70 cents in the prior-year quarter.
Total revenues of $1,874 million decreased 2.8% from the year-ago period. Excluding the impacts of foreign-currency fluctuations, total sales decreased 2.4%. Revenues missed the Zacks Consensus Estimate of $1,887 million.
Comparable sales decreased 1.8% year over year, which includes a 220-basis-point impact due to the ongoing repositioning of the Champs Sports banner. However, global Foot Locker and Kids Foot Locker comparable sales increased 1.1%.
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An Insight Into Margins
FL's gross margin rate contracted 120 basis points (bps) in the reported quarter, thanks to sequentially moderated markdowns. This was somewhat offset by occupancy leverage. We expected a gross margin contraction of 310 bps for the quarter.
The selling, general and administrative (SG&A) expenses, as a percentage of sales, increased 220 basis points from the prior-year period. This increase was attributed to investments in technology and brand-building, along with higher inflation. However, it was partially offset by savings from the cost-optimization program, ongoing expense discipline, and a shift in the timing of expenses from the first quarter of 2024 to the second quarter. We anticipated SG&A expenses to expand 40 bps.
Store Update
In the fiscal first quarter, the company inaugurated four stores and shuttered 37 stores. Additionally, during this period, it renovated or relocated 16 stores and modernized 13 stores to adhere to its latest design standards, integrating essential aspects of the company’s current brand specifications.
As of May 4, 2024, FL managed 2,490 stores across 26 countries in North America, Europe, Asia, Australia, and New Zealand. Moreover, 206 franchised stores were operational in the Middle East and Asia.
Other Financial Details
The Zacks Rank #3 (Hold) company ended the fiscal first quarter with cash and cash equivalents of $282 million. Long-term debt and obligations under finance leases amounted to $441 million, and shareholders’ equity totaled $2,886 million. As of May 4, 2024, merchandise inventories were $1,659 million, down 5.6% from the year-earlier quarter.
Outlook
For fiscal 2024, management expects sales to grow 1% to decline 1%, including a 1% headwind from the lapping of an extra week in 2023. The company expects comps to increase 1-3% year over year. Licensing revenues are likely to be $17 million for the fiscal year.
The gross margin is anticipated to be 29.8-30%, implying lower markdowns. Management expects a fiscal 2024 EBIT margin of 2.8-3.2%. The SG&A rate is forecast to be 24.4-24.6%, which includes ongoing investment spending.
Foot Locker envisions fiscal 2024 adjusted earnings per share of $1.50-$1.70. Management predicts an adjusted CapEx of $345 million.
Price Performance
Over the past three months, FL shares have lost 25.2% against the industry’s 6.1% rise.
Key Picks
Some better-ranked stocks are Canada Goose GOOS, Bath & Body Works BBWI and Casey's General Stores, Inc. CASY.
Canada Goose is a global outerwear brand. The company sports a Zacks Rank #1 (Strong Buy) at present. You can see the complete list of today’s Zacks #1 Rank stocks here.
The Zacks Consensus Estimate for Canada Goose’s current fiscal-year earnings indicates growth of 13.7% from the year-ago period’s reported figures. GOOS has a trailing four-quarter average earnings surprise of 70.9%.
Bath & Body Works is a specialty retailer. It has a Zacks Rank #2 (Buy) at present.
The Zacks Consensus Estimate for Bath & Body Works’ current fiscal-year sales and earnings indicates a decline of 0.4% and growth of 1.8%, respectively, from the year-ago reported figures. BBWI has a trailing four-quarter average earnings surprise of 23.2%.
Casey's offers a comprehensive range of products and services to meet the needs of its customers. It currently has a Zacks Rank #2.
The Zacks Consensus Estimate for Casey's current financial-year earnings indicates growth of 10.4% from the year-earlier reported levels. CASY has a trailing four-quarter average earnings surprise of 12%.
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Foot Locker, Inc. (FL) : Free Stock Analysis Report
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Bath & Body Works, Inc. (BBWI) : Free Stock Analysis Report
