Disappointing investors, Foot Locker reported a lower-than-expected 2.6 percent increase in revenues to $2,078 million for the first quarter ended on May 4, with gains of 4.6 percent on a same-store basis and 4.7 percent in constant currencies. However, digital sales jumped by 14.8 percent, representing 15.4 percent of the total turnover.
The management acknowledged that the second quarter will be weaker, due to a shift in new product launches, but maintained its guidance for the full year, predicting a mid-single-digit increase in comparable store sales.
A relatively good surprise came from Europe, where the Runners Point and Sidestep chains stopped losing sales and grew at a low single-digit rate in the quarter, helping the group to book a mid-single-digit increase across the region. The Asia-Pacific region improved at a double-digit rate.
The company's gross margin rose by 0.3 percentage points to 33.2 percent, but a big increase in operating expenses and investments in digital capabilities and marketing led the group to post a small improvement in net income to $172 million from $165 million in the year-ago period. Markdowns remained at historically low levels.
The total number of stores declined slightly during the quarter to 3,201 from 3,221 on Feb. 3 after 14 new openings, 34 closures and 13 remodels. The Foot Locker Europe network was down to 634 doors from 642. Runners Point and Sidestep were also scaled down slightly to 102 and 78 units, respectively.
