Shares of Foot Locker (FL 53.79, +7.70, +16.71%) have rebounded sharply following
a two-day plunge after the footwear retailer reported its third quarter results
Foot Locker's adjusted earnings came in slightly better-than-expected at $0.95 a share -- up 9.2% compared to the same period last year -- while its revenue was in-line, falling 0.5% year/year to $1.86 bln. However, excluding impact from foreign exchange rate fluctuations, revenues were actually up 0.4% during the quarter. Meanwhile, the company's gross margin climbed 60 basis points to 31.6%.
Meanwhile, same store sales rose 2.9% year/year, and the company said on its earnings call that it expects a low-to-mid single digit increase in same store sales for the fourth quarter -- which is above consensus estimates. Foot Locker's Chairman and CEO, Richard Johnson, said that the accelerating same store sales reflect the company's strategic partnerships with vendors and its efforts to inspire youth culture and create deeper connections with local communities.
In addition, Mr. Johnson said that the company is "well positioned to produce even stronger results in the all-important holiday selling season and the fourth quarter overall."
Foot Locker shares have largely been trending sideways for the last six months, and today's 15% surge leaves them up just 4% for the week. Still, that's better than the retail sector overall, especially as of late; the SPDR S&P Retail ETF (XRT) has dropped around 14% since late September. Ongoing concerns over gross margin pressures and whether the U.S. consumer will be as strong in 2019 have weighed on the group as a whole.
So, in that light, last night's report from Foot Locker is certainly being taken as a positive.
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