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Foot Locker (FL) Q1 Earnings & Sales Top Estimates, Stock Up

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Foot Locker, Inc. (FL - Free Report) continued with its positive earnings surprise streak for the third straight quarter, when it reported first-quarter fiscal 2018 results. This operator of athletic shoes and apparel retailer delivered quarterly earnings of $1.45 per share that beat the Zacks Consensus Estimate of $1.25 and rose 6.6% from the year-ago period.

We note that the bottom line has improved after declining in the trailing four quarters. On a reported basis, including one-time items, quarterly earnings came in at $1.38 per share, up from $1.36 delivered in the prior-year period.

The company’s better-than-expected results raised investor’s sentiment. Notably, the stock is up roughly 14% during pre-market trading hours. In the past three months, the stock has advanced 18% compared with the industry’s gain of 10%.

The New York-based retailer generated total sales of $2,025 million that not only increased 1.2% year over year but also came ahead of the Zacks Consensus Estimate of $1,974 million, after missing the same in the preceding quarter. However, excluding the effect of foreign currency fluctuations, total sales declined 1.5%.

Meanwhile, Foot Locker continues to grapple with soft comparable-store sales (comps) performance. Comps fell 2.8% during the quarter under review, following declines of 3.7% in both the fourth and third quarter of fiscal 2017 and 6% in the second quarter. However, we note the rate of decline has decelerated sequentially.

Gross margin contracted 110 basis points to 32.9% during the quarter. SG&A expense rate increased 50 basis points to 19% due to considerable investments in digital operations.

Foot Locker, Inc. Price, Consensus and EPS Surprise

 

Foot Locker, Inc. Price, Consensus and EPS Surprise | Foot Locker, Inc. Quote

Store Update

During the quarter under review, Foot Locker opened 11 new outlets, remodeled or relocated 43 outlets, and shuttered 37 outlets. As of May 5, 2018, the company operated 3,284 outlets across 24 countries in North America, Australia, New Zealand and Europe. Apart from these, there are 105 franchised Foot Locker stores in the Middle East. Germany has 11 franchised Runners Point stores.

Other Financial Details

Foot Locker ended the quarter with cash and cash equivalents of $1,029 million, long-term debt of $125 million, and shareholders’ equity of $2,543 million. During the quarter, the company repurchased 2.6 million shares of worth $112 million and paid a quarterly dividend of $41 million.

Wrapping Up

Foot Locker is certainly trying to improve performance through operational and financial initiatives. This Zacks Rank #3 (Hold) company is focusing on developing digital competencies and supply chain. The company’s digital endeavors comprise improvement of mobile and web platforms, implementation of new point-of-sale software worldwide, and expansion of data analytics capabilities.

3 Hot Stocks Awaiting Your Look

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Fossil Group (FOSL - Free Report) delivered an average positive earnings surprise of 54.1% in the trailing four quarters. It carries a Zacks Rank #2.

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