Foot Locker Beats on Earnings; Sales In Line
Profit and revenue increased for footwear and apparel retailer Foot Locker (NYSE: FL – $71.87) in the third quarter as same-store sales climbed, though at a slower pace than last year. Same-store sales rose 4.7% in the latest quarter, meeting the consensus estimate by analysts. But same-store sales were flat compared with the second quarter, and growth decelerated from the 8.7% clip posted in the year-ago period. For the October quarter, Foot Locker reported a profit of $157 million. Excluding special items in the period, the company earned $1.13 a share, up from $1.00 a year ago and two cents better than consensus. Revenue increased 5.1% to $1.89 billion, meeting projections. During the quarter the company opened 21 new stores and closed 28 others, ending the period with 3,394 outlets in 23 countries.
Other than a comment that the company is “well on track” to meet its targets for double-digit earnings per share growth, there was no specific guidance from management. However, the Street is expecting the company to report full-year earnings of $4.76 vs. $4.26 in fiscal 2016 and $5.20 – $5.25 next year. New York based Foot Locker’s performance has been helped recently by trendy sneakers that has customers buying shoes for fashion rather than sport, even as shoppers have skipped many other brick-and-mortar stores. Stronger trends in basketball, coupled with developing opportunities in women’s and children’s footwear and apparel, have largely improved the company’s long-term growth outlook. At 14 times estimated 2017 earnings, the shares are reasonably valued and can be held for the long haul.