Foot Locker reported an increase in same-store sales of 7.7 percent for the third quarter, ended Oct. 31. In absolute terms, the company’s revenues grew by 9.0 percent to $2,016 million, with a 7.7 percent rise in local currencies, beating analysts’ estimates. Digital sales jumped by 52 percent, representing 21.4 percent of revenues against 15.0 percent a year ago. Sales were basically flat at the company’s physical stores, and they were down by a high single digit in Europe, where Foot Locker has launched its app.
The gross margin declined by 1.2 percentage points to 30.9 percent, largely due to higher markdowns that were only partially offset by vendors’ allowances. Operating expenses dropped by similar rate as a percentage of sales. Net earnings more than doubled to $265 million from $125 milion, boosted by a $190 million non-cash gain on the company’s minority investment in the Goat Group.
Excluding this and other extraordinary items, adjusted net earnings grew by 4.9 percent to $128 million, beating analysts’ estimates. The items included costs of $3 million related to the shutdown of the Runners Point chain in Germany and $1 million in connection with social unrest.
The company closed a total of 95 stores during the quarter, including 75 Runners Point units. It opened 27 new stores and remodeled or relocated six others. The store fleet at the end of the quarter included 628 locations operated by Foot Locker Europe, down from 636 on Feb. 1, and 73 Sidestep stores, down from 77. The overall square footage of the two banners remained more or less the same overall.
For the first nine months of the financial year, the company’s sales were down by 7.5 percent in constant currencies and by 7.1 percent on a comparable store basis, despite a 18.6 percent increase recorded in the second quarter thanks to the U.S. government’s temporary stimulus package.