Foot Locker reported a 5.7 percent increase in comparable store sales for the third quarter ended on Nov. 2, indicating an improvement from the previous quarters as the increase for the first nine months of the year was only 3.8 percent. However, the management predicts that the increase on a same-store basis will be limited to a single-digit increase for the whole year because of a tough comparison with the 9.7 percent jump reached in the same period a year ago.
Sales went up by 11.4 percent in the quarter through the digital channel, building up to 15.3 percent of sales against 14.3 percent last year, while the company continued to reduce the total number of physical stores in the U.S. and the rest of the world.
The quarterly gross margin improved in the latest quarter by 0.5 percentage points against the year-ago period, reaching 32.1 percent, while operating expenses were reduced from 21.4 percent of sales to 21.3 percent. Net income declined to $125 million from $130 million, but adjusted to exclude extraordinary items, it went up to $122 million from $108 million.
Dick Johnson, chairman and chief executive of the company, attributed the gains to “our strategic focus on building even deeper connections with our customers and further strengthening relationships with our vendors.”
Excluding the impact of foreign currency fluctuations, total sales were up by 5.1 percent in the latest quarter and by 3.6 percent for the nine-month period. The company’s revenues rose by 3.9 percent in the quarter to $1,932 million, but the total number of directly operated physical stores was reduced to 3,160 from 3,221 on Feb. 3.
In Europe, the number of Foot Locker stores in operation declined to 636 from 642 in three months after six openings, 12 shutdowns and 26 relocations. The Runners Point chain was trimmed by ten units to 97, and Sidestep from by four units to 76 shops.
The management said it was pleased with tests conducted on its new FLX loyalty program and very pleased with initial tests on its new neighborhood Power Stores. It sees a potential for 100 of them, provided they are located in the right spots.
