By Saabira Chaudhuri
Foot Locker Inc.'s (FL) second-quarter profit jumped 59% as the
athletic apparel and footwear chain saw its same-store sales pop,
while margins also increased.
Shares surged 8% in premarket trading to $37.25 as results
comfortably beat Wall Street expectations. The stock is up 85% in
the past 12 months.
The company has now logged 10 straight quarters of
year-over-year sales and earnings growth as new products from Nike
Inc. (NKE), Under Armour Inc. (UA) and other apparel and footwear
makers continue to power demand in the running, basketball and
lifestyle categories. New styles, colors and materials are being
used in athletic gear, which helps drive consumers to the retail
chains that sell those wares.
And while economic malaise in European sales has weighed on
retailers expanding or with heavy exposure in the region, Foot
Locker appears to be weathering the uncertainty in the region
relatively well. On Friday, Chief Executive Ken C. Hicks noted that
the company saw profitability in the second quarter across North
American stores as well as Europe.
Roughly 20% of Foot Locker's sales are derived from Europe,
according to a recent note from analysts at Susquehanna Financial
Group.
The company's resilience to Europe's woes stands in sharp
contrast to rival shoe companies. Wolverine World Wide Inc. (WWW)
recently reported a double-digit fall in its second-quarter
earnings as economic uncertainties in Europe contributed to a soft
retail market, while Deckers Outdoor Corp. (DECK) said that it saw
declines in its European wholesale and distributor divisions.
For the quarter ended July 28, Foot Locker posted a profit of
$59 million, or 39 cents a share, compared with $37 million, or 24
cents a share, a year earlier. Excluding a tax benefit, per-share
earnings were 38 cents.
Revenue rose 7.8% to $1.38 billion or 11% excluding the impact
of currency fluctuations.
Analysts polled by Thomson Reuters expected per-share earnings
of 33 cents on $1.35 billion in revenue.
Gross margin widened to 31.3% from 30.4%.
Same-store sales surged 9.8%, while inventory fell 3%.
Smaller rival Hibbett Sports Inc. (HIBB) also reported
second-quarter results on Friday, logging a 33% jump in profit as
revenue rose, although less than analysts expected. Hibbett also
raised its outlook for the year.
Foot Locker said it operated 3,354 stores in 23 countries in
North America, Europe, Australia, and New Zealand at the end of the
second quarter, down from 3,476 a year ago.
Write to Saabira Chaudhuri at saabira.chaudhuri@dowjones.com
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