In what is likely the group’s final quarterly sales report as a standalone public company, Foot Locker detailed lower sales and gross margin and a wider operating loss for the period ended Aug. 2. The group, given its pending transaction with Dick’s Sporting Goods, did not conduct a conference call to discuss the results or offer any details about its past or future financial guidance.
Merger with Dick’s Sporting Goods affects
Foot Locker shareholders approved the merger with Dick’s at a special meeting on Aug. 22, only days before all regulatory approvals to complete the deal were received. Both clearances pave the way for the transaction, which will pay Foot Locker shareholders $24.00 a share in cash or 0.1168 shares of Dick’s common stock, to be finalized on Sept. 8.
Sales fell 2.0% despite a 1.4% gain in North America
In Q2, Foot Locker failed to meet its revenue projection as total sales fell by 2.4 percent to $1,851 million from $1,896 million. Excluding currency impact, total sales declined by 3.7 percent. Comparable sales tumbled by 2.0 percent despite a 1.4 percent gain in North America, negatively impacted by a 10.3 percent comp sales dip in the company’s European and Asia Pacific businesses. The company stated that the period’s results were affected by a challenging operating environment and soft store traffic trends, despite a positive start to the Back-to-School selling season in North America.
The Q2 operating loss was $26 million, compared to a loss of $9 million in the year-ago period, as gross margin declined by 50 basis points to 27.1 percent. Merchandise margins decreased by 50 basis points as year-over-year inventories rose by 3.7 percent to $1,709 million due to “a strategic pull-forward of fall product” and a 100-basis point charge related to currency fluctuations. The net loss was $38 million against a loss of $12 million in the same year-ago period.
Foot Locker ended the period with 2,354 doors across 20 countries in North America, Europe, Asia, Australia and New Zealand, as well as another 243 licensed stores operating in the Middle East, Europe and Asia.
