Foot Locker, Inc. filed its form 10-Q for the fiscal second quarter last week, revealing that sales in its athletic stores increased 3.1% to $1.23 billion from $1.19 billion in the prior-year period, while the Direct business, which includes the footlocker.com and Eastbay businesses, dipped 1.4% to $73 million from $74 million in fiscal Q2 last year. Internet sales increased 7.5% for the quarter, which was “essentially offset” by a decline in catalog sales, which the company said reflects the continuing trend of customers to browse and select products through its catalogs, then make their purchases via the Internet.
As previously reported, total consolidated sales rose 2.8% to $1.30 billion from $1.27 billion. Excluding the effect of FX rate fluctuations, total sales for the period improved 2.2% in the third quarter, while sales at the Athletic Stores rose 2.4%.
Operating profit in the Athletic Stores business declined 2.5% to $78 million, or 6.3% of sales, compared to $80 million, or 6.7% of sales, in Q2 last year. The filing indicated that both the Footaction and Champs Sports formats generated “significant profit increases” for the quarter, but were offset by a division profit decline in the Foot Locker Europe operations. FL reported that the increased promotional environment in Europe negatively affected Foot Locker Europes division results.
Direct business operating profits increased 16.7% to $7 million, or 9.6% of sales, compared to $6 million, or 8.1% of sales, in the year-ago period. The increases in division profit are primarily a result of improved gross margin due to better merchandise margins.
Foot Locker reported that decreased vendor allowances negatively affected the gross margin rate by approximately 20 basis points for both the quarter and year-to-date period.
>>> Is the vendor allowance decrease due in large part to a shift in more OTB to Nike again???
