Foot Locker Hits Record High as Sales Buck Retail Slump
Foot Locker Inc. (FL), bucking the trend of struggling specialty retailers, posted second-quarter sales and profit that topped analysts’ estimates, sending its stock into record territory.
Earnings jumped 39 percent to 64 cents a share, excluding some items, the New York-based company said today in a statement. Analysts had projected 54 cents on average, according to data compiled by Bloomberg.
Foot Locker is overcoming a broader retail slump by revamping store layouts and merchandising, while closing weaker locations. Chief Executive Officer Ken Hicks also has added more running shoes, the best-performing part of the athletic-footwear market. That’s helped it outshine retailers like Aeropostale Inc. and RadioShack Corp. that are struggling with e-commerce competition and sluggish mall traffic.
“Foot Locker’s excellent execution in both the U.S. and Europe benefits from ongoing store remodels and strong inventory management,” Kate McShane, an analyst at Citigroup Inc. in New York, said in a note to clients. Foot Locker put up these results despite a “challenging mall environment,” said McShane, who recommends buying Foot Locker shares.
The shares rose 3 percent to $54.12 at the close in New York, reaching an all-time high. The stock has advanced 31 percent this year, compared with a gain of less than 1 percent for the Standard & Poor’s 500 Retail Index.
Foot Locker revenue rose 13 percent to $1.64 billion last quarter, topping the $1.57 billion projected by analysts. Net income increased to $92 million, or 63 cents a share, from $66 million, or 44 cents.
Same-store sales, a key measure of performance because only established locations are counted, advanced 7 percent. Analysts had predicted a gain of 5.4 percent, based on estimates compiled by Consensus Metrix.
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