MW Foot Locker's sales recovery continues, but consumer pressures hurt outlook

By Tomi Kilgore

Stock initially jumps after a big profit beat, but gives up gains as full-year earnings outlook disappoints

Shares of Foot Locker Inc. were falling toward an 18-month low in early Wednesday trading, after the athletic-footwear retailer continued to see improving sales and profitability, but also provided downbeat guidance given uncertainties over how economic uncertainties will impact consumer spending.

Comparable sales, or sales of stores open for more than a year, increased for a third straight quarter, following efforts to boost in-store experiences, and are expected to see another full year of growth.

The stock $(FL)$ initially jumped as much as 4.3% in premarket trading after earnings were reported, but then zigzagged lower. It was down 0.4% in recent trading, which put it on track to open around the lowest closing prices seen since September 2023.

Chief Executive Mary Dillon said she expects "consumer and category promotional pressures to remain uncertain in 2025, especially within the first half," but still sees comparable sales rising 1% to 2.5% for the year, which surrounds the average analyst estimate compiled by FactSet of 1.9% growth.

That follows 1.4% growth in the fiscal year to Feb. 1, which snapped a four-year streak of comparable sales declines.

The company also expects total sales for the current fiscal year to be down 1% to up 0.5%, while the current FactSet sales consensus of $8.23 billion implies 3% growth.

Full-year adjusted earnings per share, which excludes nonrecurring items, are expected to be $1.35 to $1.65, below current analyst expectations of $1.72.

For the fiscal fourth quarter to Feb. 1, the company swung to net income of $49 million, or 51 cents a share, from a loss of $389 million, or $4.13 a share, a year ago.

Meanwhile, adjusted EPS more than doubled, to 86 cents from 38 cents, and topped the FactSet consensus of 72 cents.

Total sales fell 5.7% to $2.25 billion, below the FactSet consensus of $2.32 billion, while comparable sales for the quarter rose 2.6% to beat forecasts for a 2.3% rise.

Gross margin, or what the company made on sales, improved to 29.7% from 26.8%, as the cost of sales fell more than total sales.

The stock has tumbled 18% over the past three months through Tuesday, while the SPDR S&P Retail ETF XRT has dropped 14.2% and the S&P 500 index SPX has lost 4.9%.

-Tomi Kilgore

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March 05, 2025 08:04 ET (13:04 GMT)

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