By Chelsey Dulaney
Foot Locker Inc. posted a better-than-expected 14% increase in
profit in its first quarter as the sportswear retailer continues to
benefit from sales growth.
Foot Locker has posted higher profits and sales recently but
reported challenges in athletic apparel as competition to meet
shoppers' growing desire for workout clothes and training gear
heats up. For Foot Locker, workout clothes, sports jerseys and
training gear have been used mainly as a tool to drive customers to
its stores to purchase shoes, which make up about three-quarters of
the retailer's sales.
As the U.S. sportswear industry shifts toward more fashion- and
lifestyle-focused athletic looks and away from technical sports
products, Foot Locker is trying to do more with smaller apparel
offerings compared with department stores such as Macy's Inc.
In March, the company lifted its long-term financial objectives
after strong 2014 results.
In the latest quarter, sales excluding newly opened and closed
locations grew 7.8%.
Overall, for the period ended May 2, Foot Locker posted earnings
of $184 million, or $1.29 a share, up from $162 million, or $1.10 a
share, a year earlier.
Sales increased 2.6% to $1.92 billion.
Analysts polled by Thomson Reuters had expected earnings of
$1.23 a share and revenue of $1.91 billion.
Excluding foreign-exchange impacts, sales grew 7.9%.
Gross margin widened to 35% from 34.6% a year earlier, while
inventory levels were down 2.7% from a year earlier as of May
2.
Shares, inactive premarket, are up 14% this year.
Write to Chelsey Dulaney at Chelsey.Dulaney@wsj.com
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