Foot Locker(FL) - 2026 Q2 - Quarterly Results

Executive Summary This section provides an overview of the CEO's remarks, highlighting sequential momentum and positive North American comparable sales, along with key financial and operational highlights for the second quarter of 2025 CEO's Remarks CEO Mary Dillon highlighted sequential momentum and positive North American comparable sales, particularly in Foot Locker, Kids Foot Locker, and Champs Sports, despite a challenging operating environment. The company continued executing its "Lace Up Plan" and received shareholder approval for the acquisition by DICK'S Sporting Goods - Built sequential momentum and delivered positive North American comparable sales results led by Foot Locker, Kids Foot Locker, and Champs Sports banners, including a positive start to the Back-to-School season in July[3] - Results reflect a challenging operating environment and soft store traffic trends, particularly in WSS and international businesses[3] - Shareholder approval for the Company's acquisition by DICK'S Sporting Goods was recently received, and all required regulatory approvals have been obtained[3] Second Quarter Key Highlights Foot Locker, Inc. reported a 2.4% year-over-year total sales decrease and a 2.0% comparable sales decrease for Q2 2025. North American comparable sales increased by 1.4%. The company recorded a GAAP EPS loss of $0.39 and a Non-GAAP EPS loss of $0.27, while continuing store modernization efforts and launching an enhanced FLX Rewards Program in Europe Second Quarter 2025 Key Financial & Operational Highlights | Metric | Q2 2025 Performance | Change YoY | | :----- | :------------------ | :--------- | | Total Sales (millions) | $1,851 | Down 2.4% | | Comparable Sales (%) | Down 2.0% | - | | North American Comparable Sales (%) | Up 1.4% | Improvement vs. Q1 | | GAAP EPS Loss ($) | $0.39 | Increased loss | | Non-GAAP EPS Loss ($) | $0.27 | Increased loss | | Gross Margin (bps) | Decreased by 50 | - | | SG&A as % of Sales (bps) | Increased by 20 | - | - Continued store modernization efforts with 52 Refreshes and opened 11 Reimagined Stores, including the first 2 Champs Sports stores[6] - Successfully launched enhanced FLX Rewards Program in Europe[6] Financial Performance Analysis This section analyzes the company's financial results, including GAAP consolidated statements, non-GAAP adjustments for a clearer business view, and sales performance across various banners and regions Consolidated Statements of Operations (GAAP) For the second quarter of 2025, Foot Locker reported a total revenue of $1,857 million, a net loss of $38 million, and a diluted loss per share of $0.39. These figures represent a decline compared to the prior-year period, with a significant increase in impairment and other expenses year-to-date Condensed Consolidated Statements of Operations (GAAP) | Metric (in millions, except per share) | Q2 2025 | Q2 2024 | YTD 2025 | YTD 2024 | | :----------------------------------- | :------ | :------ | :------- | :------- | | Sales | $1,851 | $1,896 | $3,639 | $3,770 | | Total revenue | $1,857 | $1,900 | $3,651 | $3,779 | | Cost of sales | $1,349 | $1,373 | $2,629 | $2,708 | | Selling, general and administrative expenses | $468 | $476 | $926 | $937 | | Impairment and other | $15 | $9 | $291 | $23 | | (Loss) income from operations | $(26) | $(9) | $(297) | $9 | | Net loss | $(38) | $(12) | $(401) | $(4) | | Diluted (loss) earnings per share | $(0.39) | $(0.13) | $(4.20) | $(0.04) | Non-GAAP Financial Measures and Reconciliation The company provides non-GAAP financial measures to exclude items like minority investment gains/losses, impairments, and certain non-recurring tax matters, aiming to offer a clearer view of core business performance. For Q2 2025, adjusted net loss was $27 million, and adjusted diluted loss per share was $0.27, both higher than the prior year - Non-GAAP measures exclude gains/losses related to minority investments, impairments and other, and certain nonrecurring or unusual tax matters to assist investors in comparing performance across reporting periods[21][23] Non-GAAP Reconciliation | Metric (in millions, except per share) | Q2 2025 | Q2 2024 | YTD 2025 | YTD 2024 | | :----------------------------------- | :------ | :------ | :------- | :------- | | Adjusted income before income taxes (non-GAAP) | $(16) | $(5) | $(14) | $24 | | Adjusted net (loss) income (non-GAAP) | $(27) | $(4) | $(33) | $17 | | Adjusted diluted (loss) earnings per share (non-GAAP) | $(0.27) | $(0.05) | $(0.34) | $0.18 | Notes on Non-GAAP Adjustments Key non-GAAP adjustments for Q2 and YTD 2025 included $15 million in acquisition-related expenses, significant non-cash impairment charges of $140 million for the WSS tradename and $110 million for goodwill year-to-date, and a $117 million tax valuation allowance on European deferred tax assets in Q1 2025 - Q2 2025 included $15 million of expenses related to the pending acquisition by DICK'S Sporting Goods, covering legal, investment banking, and employee retention costs[26] - Year-to-date 2025 included non-cash impairment charges of $140 million for the WSS tradename and $110 million for goodwill, triggered by a reduction in stock price and macroeconomic factors[27] - In Q1 2025, a $117 million valuation allowance was recorded on European deferred tax assets due to market weakness, along with a $7 million write-off of deferred tax costs[28] Sales by Banner and Region North America saw a comparable sales increase of 1.4%, with Champs Sports achieving its fourth consecutive quarter of positive growth at 2.0%. However, this was offset by declines in European and Asia Pacific businesses, which decreased by 10.3% and 6.4% respectively Sales by Banner and Region (Comparable Sales Growth) | Banner/Region | Q2 2025 Comparable Sales (%) | YTD 2025 Comparable Sales (%) | | :------------ | :----------------------- | :------------------------ | | Foot Locker (NA) | 1.8 | 0.4 | | Champs Sports | 2.0 | 1.2 | | Kids Foot Locker | 7.6 | 5.3 | | WSS | (8.1) | (6.3) | | North America Total | 1.4 | 0.4 | | EMEA Total | (11.4) | (10.8) | | Asia Pacific Total | (6.4) | (4.6) | | Total Company | (2.0) | (2.3) | - Champs Sports banner generated a comparable increase of 2.0%, representing its fourth consecutive quarter of positive comparable sales growth[7] - Excluding WSS, comparable sales in North America increased by 2.6%[7] Financial Position This section details the company's financial health, including its balance sheet with cash, debt, and inventory levels, and its cash flow statement reflecting operating, investing, and financing activities Balance Sheet As of August 2, 2025, the company reported $299 million in cash and cash equivalents and total debt of $444 million. Merchandise inventories increased by 3.7% year-over-year to $1,709 million, primarily due to a strategic pull-forward of fall product and foreign exchange fluctuations Condensed Consolidated Balance Sheets | Metric (in millions) | August 2, 2025 | August 3, 2024 | Change | | :------------------- | :------------- | :------------- | :----- | | Cash and cash equivalents | $299 | $291 | +$8 | | Merchandise inventories | $1,709 | $1,648 | +$61 | | Total Assets | $6,507 | $6,953 | -$446 | | Total Liabilities | $3,929 | $4,056 | -$127 | | Total Shareholders' Equity | $2,578 | $2,897 | -$319 | - Merchandise inventories were $1,709 million, 3.7% higher than the prior year, largely due to a strategic pull-forward of fall product and a 100 basis point change related to foreign exchange[10] Cash Flow Statement For the twenty-six weeks ended August 2, 2025, net cash provided by operating activities was $2 million, a significant decrease from $126 million in the prior year. Net cash used in investing activities was $102 million, and net cash used in financing activities was $3 million, resulting in a net decrease in cash of $102 million Condensed Consolidated Statement of Cash Flows (YTD) | Activity (in millions) | YTD August 2, 2025 | YTD August 3, 2024 | | :--------------------- | :----------------- | :----------------- | | Net cash provided by operating activities | $2 | $126 | | Net cash used in investing activities | $(102) | $(133) | | Net cash used in financing activities | $(3) | $(5) | | Net change in cash, cash equivalents, and restricted cash | $(102) | $(12) | | Cash, cash equivalents, and restricted cash at end of period | $328 | $322 | Operational and Strategic Updates This section provides updates on the company's store base, including openings, closures, and remodels, alongside details regarding the pending acquisition by DICK'S Sporting Goods Store Base Update During Q2 2025, Foot Locker opened 2 new stores and closed 11, while remodeling or relocating 14 stores and refreshing 52. As of August 2, 2025, the company operated 2,354 stores globally, a decrease from 2,410 stores at the beginning of the year - During Q2, the Company opened 2 new stores and closed 11 stores; remodeled or relocated 14 stores and refreshed 52 stores[11] - As of August 2, 2025, the Company operated 2,354 stores in 20 countries, plus 243 licensed stores[12] Store Activity (February 1, 2025 to August 2, 2025) | Region/Banner | Stores Feb 1, 2025 | Opened | Closed | Stores Aug 2, 2025 | Relocations/Remodels | | :------------ | :----------------- | :----- | :----- | :----------------- | :------------------- | | North America | 1,665 | 4 | 31 | 1,638 | 34 | | EMEA | 608 | 7 | 25 | 590 | 83 | | Asia Pacific | 137 | — | 11 | 126 | 29 | | Total | 2,410 | 11 | 67 | 2,354 | 146 | Selling and Gross Square Footage (in thousands) | Metric | August 3, 2024 | August 2, 2025 | | :----- | :------------- | :------------- | | Total Selling Square Footage | 7,905 | 7,744 | | Total Gross Square Footage | 12,828 | 12,500 | Acquisition by DICK'S Sporting Goods Foot Locker, Inc. announced that its acquisition by DICK'S Sporting Goods is on track to close on September 8, 2025, following shareholder and all necessary regulatory approvals. Consequently, the company will not hold a conference call or provide updated financial guidance - Shareholder approval for the acquisition by DICK'S Sporting Goods was received on August 22, 2025[3][13] - All required regulatory approvals have been received, and the transaction is expected to close on September 8, 2025[3][13] - Due to the pending transaction, Foot Locker, Inc. will not hold a conference call or provide/update financial guidance[14] Disclosure Regarding Forward-Looking Statements This section outlines that the press release contains forward-looking statements subject to various risks and uncertainties, including those related to the pending merger, and clarifies the company's stance on updating such statements Forward-Looking Statements and Risk Factors This section clarifies that the press release contains forward-looking statements subject to various risks and uncertainties, many beyond the company's control. These risks include potential termination of the merger agreement, legal proceedings, and the diversion of management's attention due to the pending acquisition. The company disclaims any obligation to update these statements - The press release contains forward-looking statements based on expectations and judgments, subject to numerous unforeseeable risks and uncertainties[17][18] - Factors that could cause actual results to differ include potential termination of the merger agreement, legal proceedings, delays or failure to close the transaction, reputational risk, and diversion of management's attention[18] - The Company undertakes no obligation to update the forward-looking statements[18]