Foot Locker Inc., the New York-based athletic retailer, reported comparable store sales increased by 18 percent in the second-quarter ended Aug. 1 as the chain reopened and sales unexpectedly increased -- likely due in part to government stimulus checks.
"As we continued to reopen stores throughout the quarter, we saw a strong customer response to our assortments, which we believe was aided by pent-up demand and the effect of fiscal stimulus," Chairman and CEO Richard Johnson said in a statement. "This fueled our in-store sales and also drove continued momentum across our digital channels. While these undoubtedly remain challenging times, we are nonetheless pleased by the health of our category, our deep connections with our customers, and the strength of our vendor relationships."
The company, which plans to release full earnings on Aug. 21, said it expects diluted earnings per share to be 38 cents to 42 cents per share, down from 55 cents last year. However, those results will include $37 million in pre-tax charges. Those relate to the purchase of German specialty retailer Runners Point Group, the restructuring of Foot Locker's Eastbay division and costs incurred in connection with the recent U.S. social unrest.
Excluding non-recurring items, the company expects to report adjusted earnings per share of 66 cents to 70 cents. Analysts had expected a 60 cents per share loss.
Lauren Peters, executive vice president and chief financial officer, said that despite pressures, Foot Locker returned to positive earnings per share due to an increase in “top-line sales and disciplined expense management.”
However, Foot Locker, which has 3,100 stores in 27 countries, has previously withdrawn its 2020 guidance given the uncertainty surrounding the coronavirus pandemic. The company said it can't yet gauge the outbreak's impact on the back-to-school season, team-sports participation and additional government-stimulus packages.
Still, Foot Locker's stock rose as much as 9.5 percent to $30.12 early Monday on the positive results, although it later eased back to $29.33 shortly before 1 p.m. ET.
In June, Nike CEO John Donahoe said the financial crisis would likely see the athletics retailer cutting jobs after a $790 million loss in revenue in Q4.
In an email to employees, Donahoe reportedly said the impending layoffs were not due to the pandemic, but instead a response to the company’s structure. It became necessary, he said, to streamline operations and simplify the company to boost speed and responsiveness.
The layoffs are scheduled for two separate phases, with one in late summer and another in the fall, but other details remained uncertain.
Last summer, Foot Locker collaborated with Nike to open a mega store in New York City. The new shop in the city’s Washington Heights neighborhood offers children’s and women’s merchandise on the first floor and men’s items upstairs. It also offers a lounge area with flat-screen televisions and seating for events.
It’s the first location where Nike has made some of its proprietary technology available in another merchant’s store.
(This article has been updated.)
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