Foot Locker sees its Runners Point chain growing outside Germany to other parts of Europe in due time, while reaching the same high profitability as its regular European stores. In the shorter term, further expansion in Europe and in the women's business, coupled with other strategic initiatives, should help the U.S.-based retailer post a mid-single-digit increase in comparable store sales this year, with earnings per share going up again at a double-digit rate.
For the financial year ended last Feb. 1, which had one week fewer than the previous one, Foot Locker has reported a 19-percent increase in earnings per share, or a net profit of $429 million. Net earnings grew by 16 percent in the fourth quarter, but adjusted to eliminate the extra week, integration costs for Runners Point and other extraordinary items, they rose by 26 percent to $122 million.
Aided by the basketball wave in the U.S., total sales rose by 4.6 percent in the quarter to $1.79 billion, beating analysts' estimates, with same-store sales up by 5.3 percent. Outside the U.S., Europe rose by a mid-single digit and Asia-Pacific by a low double digit.
Sales increased by 5.2 percent to $6,505 million for the full year, with comparable store sales rising by 4.2 percent and Europe representing about one-quarter of the total. Sales per square foot increased to $460 and the operating margin (Ebit) hit 10.4 percent, very close to the 11 percent target set by the group's chief executive, Ken Hicks.
Following the good results, UBS issued a “buy” recommendation for Foot Locker's shares, proposing to raise the price/earnings ratio from 13 to 14 times.
Including 193 Runners Point stores, Foot Locker operated a total of 3,473 stores in 23 countries as of Feb. 1, plus 46 franchised stores in the Middle East. The group is budgeting the opening of 60 stores around the world this year, while 100 should be closed and 300 remodelled.
