Two weeks after entering into a definitive merger agreement with Dick’s Sporting Goods, Foot Locker formally reported results for the period ended May 3.
Total sales for Foot Locker declined by 4.5 percent on currency-neutral basis to $1,788 million as the group reported an operating loss of $271 million versus a year-ago profit of $18 million. The Q1 net loss was $363 million. Year-over-year gross margin contracted by 40 basis points, including a 10-basis point drop in merchandise margins. Merchandise inventory was essentially flat at period end at $1,665 million.
Softness in Foot Locker Europe’s 597-store operation negatively impacted overall comparable sales for the period, which declined by 2.6 percent. The drop included a modest 0.5 percent decline in North America, but an 8.5 percent drop within the company’s international businesses. On a constant-currency basis, EMEA revenues declined by 13.2 percent to $346 million. Meanwhile, Asia-Pacific sales fell by 5.4 percent to $103 million and dipped by 1.9 percent in North America to $1,339 million.
The group reported some positive news, most notably that its non-Nike brand business was performing strongly. Adidas, New Balance, Asics, On, Hoka, UGG, and Timberland generated double-digit, year-over-year growth. Nonetheless, Foot Locker senior management stated that the company remains supportive of Nike’s turnaround efforts under CEO Elliott Hill, which are expected to yield dividends in H2 and into 2026.
Foot Locker, ahead of the formal merger with Dick’s, continues to make investments in its “Re-imagined” formats and other store formats. There will also be more than 300 store refreshes this year after 400+ in 2024. The retailer characterizes 2025 as a year when it will return to a healthier store fleet and generate comp growth of 1.0 – 2.5 percent. Although elevated consumer uncertainty remains a possible damper on business going forward, Foot Locker anticipates expanding its gross margin by 40-80 basis points this year to a range of 29.3-29.7 percent, with most of the improvement coming in H2 as promotional levels lessen.
“…We are doubling down on our value proposition,” said Frank Bracken, president of Foot Locker, “really tapping into some of the passion points of global footwear, but also acknowledging workwear is a key category and instrument of growth for us. We’re doing a lot of work on the merchandise mi and our pricing strategy. And we continue to connect with consumer at a very local level.”
