Foot Locker's (FL) Q4 Earnings Top Estimates, Sales Increase
Foot Locker, Inc. FL posted fourth-quarter fiscal 2023 results, with the top and the bottom line surpassing the Zacks Consensus Estimate. Quarterly earnings declined year over year while sales increased.
The athletic shoes and apparel retailer posted adjusted earnings of 38 cents per share, which surpassed the consensus estimate of 34 cents. However, the bottom line declined from adjusted earnings per share of 97 cents in the prior-year quarter.
Total revenue of $2,384 million increased 2% from the year-ago reported period. Excluding the impact of foreign-currency fluctuation, total sales increased by 1.5%. Revenues beat the Zacks Consensus Estimate of $2,294.5 million. The metric
Comparable-store sales (comps) fell 0.7% due to consumer softness and changing vendor mix. The adverse impact of repositioning the Champs Sports banner also led to the decline. The combined comparable sales rose 5.2% in the Foot Locker and Kids Foot Locker North American banners.
Foot Locker, Inc. Price, Consensus and EPS Surprise
Foot Locker, Inc. price-consensus-eps-surprise-chart | Foot Locker, Inc. Quote
An Insight into Margins
Foot Locker's gross margin rate contracted 350 basis points (bps) in the reported quarter, thanks to higher markdowns. This was somewhat offset by occupancy leverage. We had expected a gross margin contraction of 310 bps in the quarter.
The selling, general and administrative (SG&A) expenses expanded 10 bps as a percentage of sales from the prior year, with savings from the cost optimization more than offset by inflation and investments in front-line wages and technology. We had anticipated SG&A expenses to expand 40 bps.
Store Update
During the fiscal fourth quarter, Foot Locker opened 29 stores, remodeled or relocated 66 outlets and closed 113 stores.
As of Feb 3, 2024, Foot Locker operated 2,523 stores across 26 countries in North America, Europe, Asia, Australia and New Zealand. FL also had 202 franchised stores operating in the Middle East and Asia. Management expects the fiscal 2024 store count to decline 4%.
Other Financial Details
The Zacks Rank #3 (Hold) company ended the fiscal fourth quarter with cash and cash equivalents of $297 million. Long-term debt and obligations under finance leases amounted to $442 million and shareholders’ equity totaled $2,890 million. As of Feb 3, 2024, merchandise inventories were $1,509 million, down 8.2% from the year-earlier quarter’s end level.
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Outlook
For the fiscal 2024, management expects sales to grow 1% to decline 1%, including an approximately 1% headwind from the lapping of an extra week in 2023. The company expects comps to increase 1-3% year over year. Licensing revenues are likely to be around $17 million for the fiscal year.
The gross margin is anticipated to be in the range of 29.8-30%, reflecting lower markdowns. Management expects a fiscal 2024 EBIT margin of 2.8-3.2%. The SG&A rate is forecast to be 24.4-24.6%, which includes ongoing investment spending.
The company envisions fiscal 2024 adjusted earnings per share of $1.50-$1.70. Management predicts adjusted CapEx at $345 million.
Price Performance
Over the past three months, shares of the company have decreased 14.2% against the industry’s 33.3% rise.
Key Picks
Deckers Outdoor Corporation DECK is a leading designer, producer and brand manager of innovative, niche footwear and accessories. It currently sports a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
The Zacks Consensus Estimate for Deckers’ current fiscal-year earnings and sales indicates growth of 38.6% and 15.7%, respectively, from fiscal 2024’s reported figures. DECK's trailing four-quarter average earnings surprise is 32.1%.
The Gap, Inc. GPS is a premier international specialty retailer offering a diverse range of clothing, accessories and personal care products. The company currently sports a Zacks Rank #1.
The Zacks Consensus Estimate for Gap’s fiscal 2023 sales indicates growth of 385% from fiscal 2022’s reported figures. GPS has a trailing four-quarter average earnings surprise of 138%.
Abercrombie & Fitch Co. ANF is a specialty retailer of premium, high-quality casual apparel. The company carries a Zacks Rank #2 (Buy). ANF delivered a 60.5% earnings surprise in the last reported quarter.
The Zacks Consensus Estimate for Abercrombie’s current fiscal-year sales implies growth of 15% from fiscal 2022’s reported number. ANF has a trailing four-quarter average earnings surprise of 713%.
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Foot Locker, Inc. (FL) : Free Stock Analysis Report
