Foot Locker’s quarterly sales to grow 5%
Analysts expect Foot Locker (FL) to report an ~5.0% increase in sales to $2.2 billion when it reports its fiscal 4Q17 results on March 2, 2018. In its fiscal 3Q17 earnings press release, Foot Locker’s CEO, Richard Johnson, indicated that despite the intense promotional environment, there had been some relative improvement in sales of premium products. He noted that this trend could help beat its sales and earnings per share (or EPS) guidance for fiscal 4Q17.
For fiscal 4Q17, Foot Locker expects to report a decline of 2.0%–4.0% in comps compared with the earlier guided range of 3.0%–4.0%.
Past sales performance
In fiscal 3Q17, Foot Locker (FL) reported a 0.8% decline in sales to ~$1.9 billion, which was marginally better than analysts’ expectation of ~$1.8 billion. The company’s top line was impacted by the severe hurricanes.
Segment wise, its Athletic Stores sales fell 1.9% to $1.6 billion. Its Direct-to-Customer segment saw a 6.6% gain in sales to $258.0 million, representing 13.8% of its total sales.
Due to the impact of the hurricanes, Foot Locker’s comps were -3.7% for the quarter. Store comps fell 5.1%. The company’s Direct-to-Customer segment reported a 6.1% increase in comps.
Over the past eight quarters, the company has beaten the analysts’ sales estimates just twice. Its sales were in line with estimates for one quarter, and it missed these estimates in the remaining quarters.
Foot Locker’s sales growth strategy
Foot Locker’s (FL) sales have been hit hard as online shopping is quickly gaining traction. The advent of Amazon (AMZN) was the most significant recent disruptive event for the retail sector, catching many brick-and-mortar stores off guard.
More importantly, sportswear retailers like Foot Locker are heavily dependent on brands like Nike (NKE) and Adidas. Nike and Adidas are not only offering products on Amazon but are also exploring ways to enhance direct selling to consumers. This trend has added to sports retailers’ concerns, as has the lack of innovative products in the industry.
Foot Locker has been focusing on enhancing its digital sales as well as overhauling its merchandise assortment. It’s looking to boost its top line through a higher penetration in the apparel category.
The company is also looking for business opportunities in the kids’ and women’s categories. It’s also implementing strong inventory control and streamlining its supply chain.