Foot Locker reports 0.2 percent increase in annual sales

Foot Locker reported a net loss of 49 million dollars or 0.40 dollar per share, for the 14 weeks ended February 3, 2018, compared to net income of 189 million dollars or 1.42 dollars per share in the same period of fiscal 2016. With the benefit of the extra week, total fourth quarter sales increased 4.6 percent, to 2,210 million dollars this year. Sales for 2017 were 7,782 million dollars, an increase of 0.2 percent. Full-year comparable-store sales decreased 3.1 percent and excluding the effect of foreign currency fluctuations, total sales decreased 0.5 percent.

“The dramatic shifts influencing the expectations and behaviors of our customers continued to affect our business in the fourth quarter, just as they have throughout 2017,” said Richard Johnson, Chairman of the board and CEO in a media statement, adding, “That said, we remained a highly profitable company in 2017, even though our sales and profit results were not what we planned for going into the year.”

Foot Locker’s fourth quarter and FY17 results

Excluding the effect of foreign exchange rate fluctuations, total sales for the quarter increased 2 percent. Fourth quarter comparable-store sales decreased 3.7 percent. On a 14-week basis, the company’s gross margin rate decreased to 31.4 percent from 33.7 percent a year ago, reflecting the continuation of a highly promotional marketplace environment, and its SG&A expense rate increased to 19.1 percent from 18.7 percent in the fourth quarter of 2016.

Fourth quarter non-GAAP net income was 155 million dollars or 1.26 dollars per share versus 1.37 dollars in 2016. The extra week in this year’s fourth quarter results contributed 16 million dollars to net income, or 0.12 dollar per share. Excluding this benefit, non-GAAP net income was 1.14 dollars per share.

The company’s net income decreased to 284 million dollars in 2017 or 2.22 dollars per share, compared to 664 million dollars or 4.91 dollars per share in 2016. On a non-GAAP, 52-week basis, earnings per share totalled 3.99 dollars in 2017, a 17 percent decrease over last year’s non-GAAP earnings of 4.82 dollars.

Foot Locker announces 2018 outlook

The company currently expects a flat to up low single-digit comparable-store sales performance for fiscal 2018 and gross margins to begin recovering from 2017’s 31.6 percent rate, which fell 2.3 percent from the gross margin rate in fiscal 2016.

“The first quarter of 2018 will likely see the continuation of sales and margins in line with trends in the second half of 2017. However, we are confident that we will inflect back to positive comparable-store sales by the middle of 2018, with the pace of sales continuing to gradually strengthen in the second half of the year based on the improving depth and variety of premium products we see coming from our key vendors. We also expect a double-digit percentage increase in annual earnings per share, with an effective tax rate in the 27 to 28 percent range and a lower share count both contributing to this performance,” added Lauren Peters, Executive Vice President and CFO.

During the fourth quarter, the company opened 28 new stores, remodelled or relocated 45 stores, and closed 67 stores. As of February 3, 2018, the company operated 3,310 stores in 24 countries in North America, Europe, Australia, and New Zealand. In addition, 98 franchised Foot Locker stores were operating in the Middle East, as well as 14 franchised Runners Point stores in Germany.

Picture:Facebook/Foot Locker