Why Foot Locker missed Wall Street estimates
Foot Locker posted record earnings in fiscal 1Q17, which ended april 30, 2016. But while the retailer’s adjusted EPS (earnings per share) was in line with Market estimates, the company ended up missing Wall Street analyst consensus estimates for revenue. It was the company’s first sales miss after 22 consecutive quarters of revenue beats.
However, as we saw in the last part of the series, growth expectations for Foot Locker (FL) for the current year are lower due to some headwinds. Foot Locker’s same-store sales growth in fiscal 1Q17 was 2.9%. It was the 25th consecutive quarter of positive comps (comparables) (XLY) growth.
However, the number was lower than the company’s guidance range of mid-single-digit growth. The miss came due to weaker-than-expected performance in basketball.
Foot Locker also reported headwinds in the Runners Point and Sidestep banners in Europe. However, both banners are key future growth drivers for the company. The retailer expects to expand these in more European countries.
Foot Locker is also in the process of remodeling two key stores in New York. They’re expected to be ready in the second half of this year. These temporary store closures have had an impact, shaving a few basis points from comps growth in the first quarter.
Foot Locker’s outlook
Despite these first-quarter headwinds, Foot Locker still expects to generate mid-single-digit comps growth for fiscal 2017. This is based on a stronger launch calendar for footwear in the coming quarters. That compares to the following comps growth for FL’s peers for fiscal 2017:
In the final part of our series, we’ll look at Foot Locker’s earnings growth projections.