Foot Locker second quarter expected to mark comparable sales decline for the year

Foot Locker on Friday released its second quarter results for fiscal 2017. Richard Johnson, Chairman and CEO of Foot Locker, said he was “disappointed” in the results, which includes a decrease in comparable sales and net income.
 

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"While we believe our position in the market for premium sneakers remains very strong and our customers continue to look to us for compelling new athletic footwear and apparel styles," said Johnson, "sales of some recent top styles fell well short of our expectations and impacted this quarter's results.
 
Johnson added that the retailer was impacted by the “limited availability of innovative new products in the market,” and he expects comparable sales to be down between 3% and 4% for the remainder of the year.
 
"We are obviously disappointed in the results for the quarter,” Johnson said, “and our team is working quickly to adjust our operations to a changed retail landscape in which we are seeing our consumers move faster than ever from one source of inspiration or influence to another."
 
Total sales in the quarter fell 4.4% to $1,701 million from $1,780 million in the prior year, and comparable-store sales decreased 6.0%. The gross margin rate also decreased to 29.6% of sales from 33.0% in the previous year, and SG&A expenses increased 20 basis points to 19.9% of sales.
 
In addition, net income was $51 million, or $0.39 per share, compared to $127 million, or $0.94 per share in the prior year. This result includes a $50 million pre-tax litigation charge related to a recent appeals court decision in a lawsuit against the Company involving the conversion of its pension plan in 1996 (Foot Locker recorded a $100 million pre-tax charge in the third quarter of 2015 for this litigation as well).
 
Year-to-date sales were affected by the second quarter, decreasing 1.7% to $3,702 million; comparable store sales for the period fell 2.6%; and net income decreased to $231 million, or $1.74 per share, on a GAAP basis and decreased to $1.97 on a non-GAAP basis.

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