A common theme in recent earnings calls involving The Home Depot, Lowe’s and Target has been the “cautious consumer” as shoppers are becoming more selective about their spending, often waiting for the right moment to make a purchase rather than buying impulsively. You can add Foot Locker to that list after its fourth-quarter earnings call Wednesday (March 5).“Coming out of the holiday we felt really good about the momentum in the business,” Foot Locker President and CEO Mary Dillon told analysts during the ...

Core Insights - Foot Locker, Inc. reported fourth-quarter fiscal 2024 results with revenues falling short of estimates while earnings exceeded expectations, indicating a mixed performance [1][4] - The company achieved positive comparable sales and gross margin improvements, driven by strategic initiatives in fiscal 2024 [2] Financial Performance - Adjusted earnings per share were 86 cents, surpassing the Zacks Consensus Estimate of 73 cents and increasing from 38 cents in the prior-year quarter [4] - Total revenues were $2,248 million, a decrease of 5.7% year-over-year, missing the Zacks Consensus Estimate of $2,328 million [5] - Comparable sales rose by 2.6% year-over-year, with global Foot Locker and Kids Foot Locker sales growing by 3.6% [5] Margin Analysis - Gross profit was $663 million, up 4.6% year-over-year, with a gross margin rate increase of 300 basis points to 29.6% [6] - Selling, general and administrative (SG&A) costs as a percentage of sales decreased by 10 basis points to 22.3%, aided by cost optimization and disciplined management [7] Store Operations - In the fourth quarter, the company opened 7 new stores and closed 47, while remodeling or relocating 21 stores and refreshing 160 locations [8] - As of February 1, 2025, Foot Locker operated 2,410 stores across 26 countries, with 224 franchised stores in the Middle East, Europe, and Asia [9] Financial Snapshot - The company ended the fiscal fourth quarter with cash and cash equivalents of $401 million, long-term debt of $441 million, and shareholders' equity totaling $2.91 billion [11] - Merchandise inventories were $1.53 billion, reflecting a 1.1% increase from the previous year [11] Future Outlook - For fiscal 2025, revenues are expected to decline by 1% to grow by 0.5%, with comparable sales projected to increase by 1% to 2.5% [13] - Gross margin is forecasted between 29.3% and 29.7%, while SG&A rate is expected to be between 24.3% and 24.5% [14] - Adjusted earnings per share are projected to be between $1.35 and $1.65, with capital expenditure estimated at $270 million [15]

Financial Data and Key Metrics Changes - Total sales decreased by 5.8%, primarily due to the lapping of the 53rd week in 2023, foreign currency headwinds, and store closures [66] - Comparable sales increased by 2.6%, in line with expectations, marking the third consecutive quarter of positive comps [66] - Gross margin expanded by 300 basis points year-over-year to 29.6%, exceeding revised expectations [68] - Non-GAAP earnings per share were $0.86, above the guidance of $0.70 to $0.80 [10][66] Business Line Data and Key Metrics Changes - Global Foot Locker and Kids Foot Locker banners led comp sales growth with an increase of 3.6% [8][66] - Champs Sports experienced a 1.8% increase in comps, marking the second consecutive quarter of positive growth since repositioning [9][58] - Apparel business faced challenges with mid-teen comp declines, while accessories saw high single-digit growth [50][52] Market Data and Key Metrics Changes - North America comps were up 3.6%, with Foot Locker North America banner achieving a 5.5% increase [55] - European comps increased by 1.9%, despite a competitive and promotional environment [62] - Asia Pacific comps fell by 7.6%, with Foot Locker banner down 7.2% due to competitive dynamics and inflation [63][64] Company Strategy and Development Direction - The company is focused on executing the Lace Up Plan, which includes enhancing customer experience through store refreshes and digital improvements [11][19] - Plans to optimize the real estate portfolio by closing underperforming stores and converting select markets to a license model [15][26] - The company aims to deepen customer relationships through loyalty programs, with FLX Rewards penetration reaching 49% of sales in North America [32][33] Management's Comments on Operating Environment and Future Outlook - Management noted increased consumer caution and sensitivity, impacting business performance in early 2025 [16][17] - The company expects ongoing comp sales growth and margin expansion in 2025, despite recognizing consumer uncertainties [72][73] - Management remains confident in the execution of the Lace Up Plan and the potential for profitable market share gains [85] Other Important Information - The company achieved $100 million in savings as part of a $350 million cost savings plan, exceeding expectations [15][69] - The company plans to refresh approximately 300 stores in 2025, building on over 400 refreshes completed in 2024 [28][29] - Digital penetration increased to 21.8% of sales, with a target of 25% by 2026 [36] Q&A Session Summary Question: Can you provide more color on what you're seeing quarter-to-date regarding consumer behavior? - Management observed that while consumers respond positively to exciting promotions, there is increased caution in between these periods, particularly among younger demographics [90][92] Question: What are the expectations for Nike's performance in the near term? - Management expressed confidence in the partnership with Nike, noting that they are focused on long-term strategies and growth plans, despite some short-term promotional challenges [113][114] Question: Why aren't there bigger cost savings reflected in SG&A? - Management acknowledged that while progress has been made, the current SG&A rate is not supportive of long-term profit targets, and they will continue to work on lowering it [99][100]

Core Viewpoint - Foot Locker's stock surged after the company reported better-than-expected financial results for its fiscal fourth quarter of 2024, indicating a positive market reaction to its performance despite a challenging retail environment [1][2]. Financial Performance - Foot Locker's Q4 same-store sales increased by nearly 3% year over year, and the gross margin showed significant improvement [2][4]. - For fiscal 2025, the company anticipates same-store sales growth of 1% to 2.5% and expects gross margin to rise to a range of 29.3% to 29.7%, up from 29% in 2024 [4]. Market Environment - The shoe retail market is currently very promotional, with consumers seeking bargains, which typically poses challenges for retailers [3]. - Despite the promotional environment, Foot Locker managed to grow sales at existing stores without resorting to promotions that could negatively impact margins [3]. Store Strategy - Foot Locker has been closing underperforming stores, having closed 47 stores in Q4 alone, and plans to reduce its store count by approximately 4% in 2025, equating to nearly 100 additional closures [5]. - While closing stores may shrink the company's size, it is viewed as a necessary strategy to improve overall performance and profitability [6].

Core Insights - Foot Locker reported revenue of $2.25 billion for the quarter ended January 2025, a decrease of 5.7% year-over-year, and an EPS of $0.86, up from $0.38 in the same quarter last year [1] - The revenue fell short of the Zacks Consensus Estimate of $2.33 billion by 3.42%, while the EPS exceeded the consensus estimate of $0.73 by 17.81% [1] Financial Performance Metrics - Comparable store sales increased by 2.6%, surpassing the average estimate of 2% from six analysts [4] - Total number of owned stores at the end of the period was 2,410, slightly below the average estimate of 2,421 from three analysts [4] - Total gross square footage was reported at 12,751 Ksq ft, marginally lower than the estimated 12,759.37 Ksq ft [4] - The number of stores for Kids Foot Locker was 369, compared to the average estimate of 377 [4] - Foot Locker U.S. had 677 stores, slightly above the average estimate of 676 [4] - Foot Locker Europe had 608 stores, below the average estimate of 620 [4] - Sales were reported at $2.24 billion, lower than the average estimate of $2.34 billion from two analysts [4] - Licensing revenue was $5 million, exceeding the average estimate of $3.50 million from two analysts [4] Stock Performance - Foot Locker's shares have returned -9.4% over the past month, compared to a -4.1% change in the Zacks S&P 500 composite [3] - The stock currently holds a Zacks Rank 4 (Sell), indicating potential underperformance relative to the broader market in the near term [3]

Core Insights - Foot Locker Inc reported mixed fourth-quarter earnings, with adjusted earnings of 86 cents per share exceeding analyst expectations of 72 cents, while revenue of $2.24 billion fell short of the forecasted $2.32 billion, reflecting a 4.6% year-over-year decline excluding currency fluctuations [1] Financial Performance - The company experienced a 2.6% increase in comparable-store sales, indicating some resilience in its retail operations, although the fourth quarter of 2023 included an extra week, which affected year-over-year comparisons [2] - The stock price of Foot Locker rose by 10.1% to $19.21, after reaching an intraday high of $19.67, despite struggling in 2025 with a year-to-date decline of 12.1% and a year-over-year decline of 43.8% [2] Market Activity - Options traders are actively speculating on Foot Locker's stock movements, with a significant volume of 5,564 calls and 4,406 puts exchanged, which is seven times the average intraday volume, indicating heightened interest in the stock [3] - The most popular options contracts include the 3/7 20-strike call and the 17.50-strike put in the same weekly series [3]

Core Viewpoint - Foot Locker reported quarterly earnings of $0.86 per share, exceeding the Zacks Consensus Estimate of $0.73 per share, and showing significant growth from $0.38 per share a year ago, indicating a strong earnings surprise of 17.81% [1][2] Financial Performance - The company posted revenues of $2.25 billion for the quarter ended January 2025, which was 3.42% below the Zacks Consensus Estimate and a decline from $2.38 billion in the same quarter last year [2] - Over the last four quarters, Foot Locker has surpassed consensus EPS estimates three times but has only topped revenue estimates once [2] Stock Performance - Foot Locker shares have declined approximately 20.2% since the beginning of the year, contrasting with the S&P 500's decline of 1.8% [3] - The current Zacks Rank for Foot Locker is 4 (Sell), indicating expectations of underperformance in the near future [6] Earnings Outlook - The consensus EPS estimate for the upcoming quarter is $0.35 on revenues of $1.91 billion, while the estimate for the current fiscal year is $1.71 on revenues of $8.22 billion [7] - The trend of estimate revisions for Foot Locker has been unfavorable leading up to the earnings release [6] Industry Context - The Retail - Apparel and Shoes industry, to which Foot Locker belongs, is currently ranked in the top 26% of over 250 Zacks industries, suggesting a favorable industry outlook [8] - Empirical research indicates a strong correlation between near-term stock movements and trends in earnings estimate revisions, which can impact Foot Locker's stock performance [5]

❖ Foot Locker, Inc. FOURTH QUARTER 2024 EARNINGS RESULTS MARCH 5,2025 m CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS We do not intend to publiclu update or revise any foruard-locking statements as a result of new information. future events, changes in circumstances, or otheruise. These c statements qualify all foruward-locking statements attributable to us, or persons acting on our behalf. Nanagement cautions quot hat the forward-looking statements contain re not quarantees of future performance, an ...

Shares of Foot Locker Inc. were falling toward an 18-month low in early Wednesday trading, after the athletic-footwear retailer continued to see improving sales and profitability, but also provided downbeat guidance given uncertainties over how economic uncertainties will impact consumer spending.Comparable sales, or sales of stores open for more than a year, increased for a third straight quarter, following efforts to boost in-store experiences, and are expected to see another full year of growth. ...

Financial Performance - Total sales for Q4 2024 decreased by 5.8% to $2,243 million compared to $2,380 million in Q4 2023, with a foreign exchange impact leading to a 4.6% decrease when adjusted[4]. - Comparable sales increased by 2.6%, with global Foot Locker and Kids Foot Locker combined comparable sales growth of 3.6%[5]. - Net income from continuing operations was $55 million, a significant recovery from a net loss of $389 million in the prior-year period[11]. - Non-GAAP EPS for Q4 2024 was $0.86, compared to $0.38 in the corresponding prior-year period[11]. - In Q4 2024, the company reported a pre-tax income of $77 million, a significant improvement from a loss of $524 million in Q4 2023[25]. - Adjusted net income (non-GAAP) for Q4 2024 was $82 million, compared to $36 million in Q4 2023, reflecting a 127.8% increase[25]. - The company achieved earnings per share (EPS) of $0.51 in Q4 2024, recovering from a loss of $4.13 per share in Q4 2023[25]. - Net income for 2024 was $12 million, a significant improvement from a net loss of $330 million in 2023[35]. Sales and Store Operations - The full-year 2025 sales outlook is projected to change between -1.0% to +0.5%, with comparable sales expected to grow by 1.0% to 2.5%[13]. - The company completed 160 store refreshes in Q4, bringing the total to over 400 for the year[5]. - The company plans to close all stores in South Korea, Denmark, Norway, and Sweden as part of its strategy to improve international operations[26]. - Total store count as of February 3, 2024, was 2,523, with 26 new stores opened and 139 closed[37]. - Foot Locker U.S. selling square footage decreased from 2,401 thousand in February 2024 to 2,337 thousand in February 2025[37]. - Foot Locker Europe had a total of 637 stores as of February 3, 2024, with 10 new stores opened and 39 closed[37]. Financial Position - Cash and cash equivalents increased to $401 million as of February 1, 2025, up from $297 million a year earlier[33]. - Total liabilities decreased to $3.839 billion as of February 1, 2025, compared to $3.978 billion a year earlier[33]. - The company’s total shareholders' equity increased to $2.909 billion as of February 1, 2025, compared to $2.890 billion a year earlier[33]. - Net cash provided by operating activities increased to $345 million in 2024, compared to $91 million in 2023[35]. - Total cash, cash equivalents, and restricted cash at the end of the period increased to $430 million from $334 million in the previous year[35]. Capital Expenditures and Investments - The company plans to focus on customer-facing investments, with capital expenditures estimated at $270 million for 2025[13]. - Capital expenditures for 2024 were $240 million, slightly down from $242 million in 2023[35]. - Net cash used in investing activities was $240 million in 2024, compared to $222 million in 2023[35]. - The company recorded a $35 million impairment charge related to a minority investment during fiscal year 2024[29]. - The company reported a fair value adjustment loss of $35 million on minority investments in 2024, compared to a loss of $478 million in 2023[35]. Inventory and Merchandise - Merchandise inventories increased by 1.1% year-over-year to $1,525 million, with a 2.5% increase when excluding foreign currency fluctuations[8]. - For fiscal year 2024, the company incurred $32 million in impairment charges related to underperforming stores and $26 million in reorganization costs for headquarters relocation[27].