Foot Locker reports drop in Q4 profit, but beats expectations

Sportswear retailer Foot Locker has reported a drop in profit in the fourth quarter as its sales fell slightly, but its overall results were ahead of expectations.

The New York-based company made a net profit of 19 million dollars in the quarter ended January 28, down from a profit of 103 million dollars a year earlier.

That came as the retailer's sales fell 0.3 percent to 2.33 billion dollars. However, excluding the effect of foreign exchange rate fluctuations, total sales increased 3.6 percent.

Meanwhile, comparable-store sales grew by 4.2 percent, which it said was driven by increased “traffic and improved access to high-quality inventory, resulting in broad-based strength across brands and regions”.

President and CEO Mary Dillon told investors: “Our team delivered a great finish to the year with strong fourth quarter results that capitalized on resilient holiday demand and a compelling assortment and inventory position from our brand partners.”

Foot Locker expects drop in 2023 sales

Looking ahead at fiscal year 2023, the company now expects sales to be down by between 3.5 percent to 5.5 percent year-on-year, and expects non-GAAP earnings per share (EPS) of between 3.35 dollars and 3.65 dollars.

Dillon continued: “We are entering 2023 with a focus on resetting the business - simplifying our operations and investing in our core banners and capabilities to position the company for growth in 2024 and beyond.”

She continued: “We are incredibly excited to introduce our "Lace Up" plan with a new set of strategic imperatives and financial objectives that are designed to set us up for success for the next 50 years.”

Its new long-term financial targets for fiscal years 2024 through 2026 include sales growth of between 5 percent and 6 percent, and adjusted EPS growth in the low- to mid-twenties.

It comes at a significant time of change for Foot Locker, which in recent months announced job cuts and the winding down of its Sidestep banner in Europe, which it said was “consistent with the company’s broader efforts to focus on its core and growth banners”.