Foot Locker Inc. reported earnings in the first quarter increased 3.8 percent to $191 million, or $1.39 a share, matching Wall Street’s consensus estimate. Same-store sales rose 2.9 percent. The period marked its 25th consecutive quarter of sales and profit increases.
First Quarter Results
Net income for the company’s first quarter ended April 30, 2016 was $191 million, compared with net income of $184 million in the same period of 2015. Earnings were $1.39 per share, a 7.8 percent increase from the $1.29 per share earned in the comparable period last year. First quarter comparable-store sales increased 2.9 percent. Total first quarter sales increased 3.7 percent to $1,987 million this year, compared with sales of $1,916 million for the corresponding prior-year period. Excluding the effect of foreign currency fluctuations, total sales for the first quarter increased 3.9 percent.
The company’s gross margin rate remained stable year-over-year at 35.0 percent of sales, while the selling, general, and administrative expense rate increased slightly due to $4 million of one-time costs to relocate the company’s headquarters within New York City. The SG&A rate this year was 18.2 percent of sales, compared to 18.0 percent in the first quarter of 2015.
“We produced the most profitable quarter in the company’s long history, an accomplishment of which everyone at Foot Locker, Inc. should be very proud,” said Richard Johnson, chairman of the board and chief executive officer. “Our team navigated well through a variety of challenges, not least of which were rapidly-shifting product category preferences by our customers, to achieve our 25th consecutive quarter of meaningful sales and profit increases over the prior year. Never has it been more apparent how important is the work that we have done to build leadership positions across channels, geographies, banners, and product categories.”
Financial Position
At April 30, 2016, the company’s merchandise inventories were $1,260 million, 2.1 percent higher than at the end of the first quarter last year. The company’s cash totaled $1,062 million, while the debt on its balance sheet was $129 million. The company spent approximately $88 million to repurchase 1.37 million shares during the quarter and paid its quarterly stock dividend of $0.275, spending $37 million.
“We continue to manage the business tightly, particularly in terms of inventory, occupancy expense, and wages,” said Lauren Peters, Executive Vice President and Chief Financial Officer. “We are focused on productivity as we work to drive top line sales, and we remain confident that we can achieve a mid-single digit comparable sales gain and a double-digit earnings per share increase for 2016.”
Store Base Update
During the first quarter, the company opened 32 new stores, remodeled or relocated 55 stores, and closed 19 stores. As of April 30, 2016, the company operated 3,396 stores in 23 countries in North America, Europe, Australia, and New Zealand. In addition, 49 franchised Foot Locker stores were operating in the Middle East and South Korea, as well as 15 franchised Runners Point stores in Germany.
