Foot Locker Inc (FL) Reports Mixed Fourth Quarter Results and Provides 2024 Outlook
Total Sales: Increased by 2.0% year-over-year, while comparable sales saw a slight decrease of 0.7%.
Earnings Per Share (EPS): Reported an EPS loss of $4.13, with non-GAAP EPS income of $0.38.
Inventory Levels: Decreased by 8.2% compared to the previous year, indicating improved inventory management.
2024 Outlook: Foot Locker Inc (NYSE:FL) provides non-GAAP EPS guidance of $1.50-$1.70, including a non-recurring charge of $0.10.
Store Operations: Opened 29 new stores, remodeled or relocated 66 stores, and closed 113 stores.
On March 6, 2024, Foot Locker Inc (NYSE:FL) released its 8-K filing, detailing the financial results for the fourth quarter ended February 3, 2024. The company, a leading global retailer of athletically inspired shoes and apparel, operates thousands of retail stores across various regions and has a strong e-commerce presence.
Despite a challenging retail environment, Foot Locker Inc (NYSE:FL) reported a total sales increase of 2.0% over the previous year. However, comparable sales slightly decreased by 0.7%. Notably, Foot Locker and Kids Foot Locker in North America saw a comparable sales increase of 5.2%, signaling strength in these segments. The company faced a loss per share of $4.13 but was able to achieve a non-GAAP EPS income of $0.38, which was ahead of their guidance range.
Financial Performance and Strategic Initiatives
President and CEO Mary Dillon expressed satisfaction with the fourth-quarter results, highlighting the accelerated sales trends and improvements across multiple key performance indicators (KPIs). The company's strategic imperatives under the Lace Up Plan have driven momentum through the holiday season, with a focus on full-price selling and effective promotions. Inventory levels were proactively managed, ending the year 8.2% lower than expected, which is a positive sign for inventory turnover and management efficiency.
Looking forward, Foot Locker Inc (NYSE:FL) is committed to evolving into a modern, omnichannel retailer. The company is strengthening brand partnerships, increasing customer engagement, transforming its real estate footprint, and driving digital growth. The upcoming 50th anniversary of the Foot Locker brand is seen as an opportunity to reinforce the company's market position and long-term growth prospects.
Financial Outlook for 2024
Executive Vice President and CFO Mike Baughn provided an update on the financial outlook for 2024. The company maintains its long-term earnings potential and EBIT margin target of 8.5-9%, although it anticipates a two-year delay in achieving this goal, now expected by 2028. The year 2024 is viewed as a cash rebuilding year, with no dividend resumption planned at this time. However, the company remains confident in its strategy to unlock shareholder value, including a return to quarterly dividends and share repurchases over time.
The full-year 2024 outlook includes an anticipated $0.10 non-recurring charge related to the rollout of the enhanced FLX loyalty program. The company expects sales to change between -1.0% to +1.0%, with comparable sales growth of +1.0 to +3.0%. Store count is projected to decrease by approximately 4%, while gross margin is forecasted to be between 29.8% to 30.0%, reflecting lower markdowns year-on-year.
Balance Sheet and Store Base Update
As of the end of the fourth quarter, Foot Locker Inc (NYSE:FL) had cash and cash equivalents of $297 million, with total debt at $447 million. Merchandise inventories stood at $1,509 million, 8.2% lower than the previous year. The company's store base saw significant changes, with 29 new openings, 66 remodels or relocations, and 113 closures. As of February 3, 2024, Foot Locker operated 2,523 stores in 26 countries, along with 202 licensed stores in the Middle East and Asia.
The company's management team will discuss the fourth-quarter results and provide a business update during a conference call and webcast scheduled for today. Investors can access the call live or via replay on the company's website.
Foot Locker Inc (NYSE:FL)'s mixed fourth-quarter results reflect the company's resilience in a challenging retail environment and its strategic focus on growth and operational efficiency. With a positive outlook for 2024, the company is poised to continue its transformation and drive shareholder value.
Explore the complete 8-K earnings release (here) from Foot Locker Inc for further details.
This article first appeared on GuruFocus.
