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Foot Locker is showing that it’s not all doom-and-gloom for US retailers.
The shoe store’s shares were Friday’s top gainer on the S&P 500, rising more than 9 per cent after a strong quarterly earnings report showed the benefits of being at the centre of the “sneaker culture” that has transfixed fashionistas.
Over the three-month period ending January 28, Foot Locker’s net income came in at $189m, or $1.42 a share, compared to the $175m in income and $1.32 a share that analysts surveyed by Bloomberg had expected. Revenue was in line with the $2.11bn expected, and same-store sales — a key industry metric — rose 5 per cent, versus expectations for a 4.8 per cent increase.
During a call with analysts on Friday, Foot Locker executives said they were benefitting from their position at the centre of the “sneaker culture” that has seen cool-obsessed consumers queuing up for hours to buy the latest must-have model.
And, unlike some retailers that are shuttering stores as foot traffic falls, Foot Locker executives said they have seen their customer base “energised” by the recent opening of two new stores in some of Manhattan’s busiest locations, including a flagship store on 34th Street and a new outpost in Times Square.
“We have a lot of really exciting initiatives ahead of us in 2017 that we believe will keep us at the centre of sneaker culture, and gives us the right foundation on which to succeed over the long term,” said chief financial officer Lauren Peters.
One thing to look out for in the coming months — “we know that our consumer likes to buy new sneaker when they get their tax refunds,” added chief executive Dick Johnson.
A not-so-bright spot, however, was Europe, where sales growth did not keep up the rapid pace over 2016 as it had in previous years, Foot Locker said, despite “solid momentum” across that business.
“We intend to continue to invest aggressively in our European business, including new stores and remodels,” Mr Johnson added.
Including today’s gains, the company’s stock has increased 12.2 per cent over the past 12 months. Barring any fallback, Friday’s gains have positioned Foot Locker stock for its best day since August.