Foot Locker stock rises pre-market on Q2 earnings beat; retailer announces CEO transition

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Shares of Foot Locker Inc. FL, +20.04% rose 18.8% before market open on Friday, boosted by the sneaker retailer’s second-quarter results. Foot Locker’s sales were $2.07 billion, compared with $2.28 billion in the same period last year and in line with Wall Street’s estimate. The company earned $94 million, or 99 cents a share, compared with $430 million, or $4.09 a share, in the prior year’s quarter. On an adjusted basis, Foot Locker earned $1.10 a share, compared with $2.09 a share in the prior year period. Analysts surveyed by FactSet were looking for earnings of 80 cents a share. Foot Locker’s same-store sales were down 10.3% year-over-year, compared with FactSet consensus of a 14.6% decline. During the second quarter, merchandise inventories rose 52.1% to $1.64 billion compared with the supply-constrained year-ago period. “Despite an increasingly challenging macroeconomic backdrop, we delivered a solid quarter against the favorable fiscal stimulus and promotional environment from last year,” said Foot Locker Chief Executive Officer Richard Johnson, in a statement. “Driven by strong execution from our team and ongoing progress against our key objectives, we grew our sales 16.4% above levels from 2019.” However, Foot Locker cut its fiscal year 2022 adjusted EPS outlook to $4.25 to $4.45 from the ‘upper end’ of $4.25 to $4.60. FactSet consensus is $4.42 a share. The retailer revised its fiscal year 2022 same-store sales outlook to down 8% to 9% from the ‘upper end’ of down 8% to 10%. The company also announced that Johnson will retire as CEO on Sept.1, but will remain as executive chairman until Jan. 31, 2023. Foot Locker named former Ulta Beauty CEO Mary Dillon as CEO, effective Sept. 1. “I am thrilled to be joining Foot Locker, an iconic company that possesses a strong set of values and focus on the customer experience as well as tremendous growth opportunities,” said Dillon, in a statement. “It is clear how Foot Locker sits at the heart of the global sport and sneaker community, and I am excited to become part of the Company’s team.” Foot Locker shares have fallen 26.7% this year, compared with the S&P 500 Index’s decline of 10.1%. Of 22 analysts surveyed by FactSet, two have a buy rating, 14 have a hold rating, and six have an underweight or sell rating.

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