Foot Locker shares climbed in early trading as its forecast showed the retailer is overcoming Nike's move to sell more shoes via its own channels.
Foot Locker said on Friday it now expects full-year sales and profit to be at the high end of its prior expectations. Chief executive Dick Johnson said the company is "off to a strong start in 2022" as it focuses on improving inventory and vendor relationships.
He also credited “broadening and enriching our assortment” of items for sale to meet consumers’ demand for choice.
The upbeat report bucked the trend for retailers this week. Profit cuts at companies such as Walmart, Target and Ross Stores led to massive selloffs in those stocks and across the industry. US retailers have struggled with accelerating inflation as it cuts into profits and hinders shoppers' purchasing power.
Athletic-wear is still seeing “robust growth,” said Mr Johnson, and Foot Locker is working to shore up operations and take advantage.
Comparable-store sales, a key retail metric, fell 1.9 per cent in the first quarter to April 30th. That was better than the 3.5 per cent loss expected by analysts. Apparel significantly outpaced shoe sales in the quarter.
Shares of New York-based Foot Locker rose 5.2 per cent in premarket trading in New York and were 1.8 per cent ahead by mid-morning. The stock had dropped 31 per cent this year through Thursday’s close.
Mr Johnson has moved to align Foot Locker with Nike's top rival, Adidas, to compensate after the world's largest athletic-wear maker pulled back some of its business.
Struggled
Like much of the footwear industry, Foot Locker has struggled with supply-chain problems that have begun to improve in recent months. Getting those goods to stores has been expensive, as retailers pay higher prices for ocean freight and bypass logjams at ports by shipping more items by air. Foot Locker said higher supply-chain costs caused its gross margin to decline by 80 basis points in the first quarter compared with a year ago.
Earnings per share, excluding some items, for the fiscal year ending in late January are now expected to be at the high end of the $4.25 to $4.60 forecast range, and sales are expected to be at the upper end of the forecast for a decline of 4 to 6 per cent. – Bloomberg
