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Foot Locker (LSE:0IQK) achieved its first comparable sales growth in six quarters, marking a significant milestone in its turnaround efforts, as reported on Wednesday.
The footwear retailer experienced a 2.6% rise in same-store sales during its second quarter, surpassing the forecasted 0.7% increase. This growth was accompanied by an expansion in the gross margin, the first such increase in over two years.
Despite these positive outcomes, Foot Locker’s shares were trading lower in premarket activity. The company reported an adjusted loss of five cents per share, which was better than the anticipated seven cents per share loss. Revenue climbed 2% to $1.9 billion, exceeding the expected $1.89 billion.
The company maintained its full-year guidance, projecting that sales will range from a 1% decline to 1% growth. It also affirmed its earnings guidance of $1.50 to $1.70 per share.
Chief Executive Officer Mary Dillon attributed the improved performance to the effectiveness of the ‘Lace Up Plan,’ a strategy aimed at revitalizing stores and enhancing customer experiences. This plan included stabilizing the Champs Sports banner, which saw a significant reduction in its sales decline compared to the previous year.
As part of its efforts to streamline operations, Foot Locker announced plans to exit several international markets, including South Korea, Denmark, Norway, and Sweden. Additionally, the company will relocate its global headquarters from New York City to St Petersburg, Florida, by late next year. The company also plans to close or reassign operations for 30 of its 140 stores in the Asia-Pacific region and 629 stores in Europe.
Under Dillon’s leadership, Foot Locker is focusing on upgrading its store portfolio, with $275 million allocated for renovations this year, and repairing its relationship with key brand partner Nike.
As of 0708 EDT (1208 BST), shares in Foot Locker were down 8.87% in premarket trading, standing at $29.90. This follows a 0.06% increase in the share price before the results were announced, closing at $32.81 on Tuesday.
