With its previously announced acquisition of Runners Point Group (RPG), Germany will become the biggest European market for Foot Locker after the deal is completed, overtaking Italy. While commenting on its splendid results for the first quarter ended May 4, Foot Locker's management said it will continue to operate multiple banners in Europe, as it does in the U.S., and that it may convert existing Foot Locker stores to Runners Point or Side Step, the more fashion-oriented chain of shoe shops operated by the German company, and vice versa.
As previously indicated, Runners Point Tredex, the e-commerce platform controlled by the German company will give Foot Locker greater flexibility in online transactions in Europe. In turn, Foot Locker will provide back-end support to RPG. It will look at adjusting its product range.
The management pointed out that RPG has been profitable and that its acquisition will be accretive to Foot Locker's results for this year, excluding exceptional costs related to the transaction and to the company's integration. RPG saw its sales grow by 18 percent to €197 million in 2012, with comparable store sales rising by 9 percent.
Beating analysts' projections, Foot Locker reported last week a 7.8 percent increase in net income to $138 million for its first quarter on 5.2 percent higher sales of $1,638 million. Like its profits one year ago, its net earnings were the highest of any quarter for the U.S.-based athletic shoe retailing group. The gross margin improved by 0.2 percentage points to 34.2 percent year-on-year.
Same-store sales were up by 5.2 percent across the group in the quarter, despite a very slow start to the spring season in February. Comparable store sales grew by a mid-single digit in the U.S. and the Asia-Pacific region, but by only a low single digit in Europe and Canada. The total number of stores declined by 14 units, and 64 stores were remodeled or relocated.
Basketball styles grew the most at Foot Locker stores all over the world, including in Europe where many customers were seen going for the Jordan brand. Running continued to grow without pulling away any business from basketball. Lifestyle continued to perform well, thanks especially to several Adidas and Nike models.