Shares foot locker (NYSE:) jumped 30% on Thursday’s open as the company reported first-quarter adjusted earnings per share of $0.22, beating analysts’ estimates by $0.09.
However, revenue fell slightly short of expectations, coming in at $1.87 billion versus consensus estimates of $1.89 billion. The New York-based sporting goods retailer also reiterated its 2024 adjusted earnings per share forecast of $1.50 to $1.70, which matches the midpoint above analyst consensus at $1.57.
Foot Locker’s first-quarter results showed a strong start to the year, with President and CEO Mary Dillon praising the results of the company’s “Lace Up” plan.
Although total sales were down 2.8% compared to the same quarter last year and like-for-like sales were down 1.8%, the company managed to increase global like-for-like sales of Foot Locker and Kids Foot Locker by 1.1%. . Dillon emphasized that the company’s disciplined expense management and favorable changes in expense timing are key factors driving earnings outperformance.
The retailer’s gross margin decreased 120 basis points compared to the prior-year period. Inventory levels were 5.6% lower than at the end of last year’s first quarter, indicating tighter inventory levels.
Dillon expressed confidence in the “Lace Up” plan, which aims to strengthen brand partnerships, increase customer engagement and strengthen Foot Locker’s position in sneaker culture. She also noted the company’s investment in renovating stores and introducing new retail concepts, with more openings planned this year.
Looking ahead, Foot Locker’s 2024 guidance includes one-time costs associated with the rollout of its expanded FLX loyalty program in North America. Despite the expected payout, the company’s outlook remains stable, suggesting a positive outlook for the remainder of the year.
Following the report, Telsey analysts said expectations for Foot Locker in the first quarter of 2024 were low, and the company was able to beat forecasts for revenue, gross margin and earnings per share.
However, they added: “The results continue to show Foot Locker’s struggles compared to sporting goods retailers such as Dick’s (DKS; outperform; PT=$255), with earnings (1.8%) vs. +5. 3% for Dick and a reduction in operating margin by C 348 to 1.7% versus Dick’s reduction by ~50 bp. up to 11.0%.”