Foot Locker beats Street 3Q forecasts
NEW YORK (AP) — Shares of Foot Locker Inc. surged on Friday after the company’s third-quarter profit topped Wall Street expectations.
The stock jumped $7.83, or 25 percent, to $39.69 in morning trading.
The New York company is facing the same tough online competition as its competitors and peers in the broader retail sector. Specifically, Foot Locker has to contend with online businesses such as Zappos, as well as broader competitive threats coming from Zappos parent Amazon.com Inc.
“Significant challenges still remain in a very challenging environment,” said Mike Zuccaro, assistant vice president and analyst at Moody’s Investors Service. Zuccaro said the company’s market position “remains solid” and it has the ability to weather near-term challenges.
The shoe store reported a 35 percent drop in profit to $102 million, or 81 cents per share. Earnings, adjusted for non-recurring costs, came to 87 cents per share. Higher costs were a key factor in weighing down profit.
Still, the results exceeded Wall Street expectations. The average estimate of 14 analysts surveyed by Zacks Investment Research was for earnings of 80 cents per share.
Revenue fell just under 1 percent to $1.87 billion. Eight analysts surveyed by Zacks expected $1.84 billion.
Same-store sales, or sales in stores open at least a year, a key measure of a retailer’s health, fell 3.7 percent.
“The reduction and reorganization of our corporate and division staff during the quarter, while a difficult decision, was a critical step in positioning us for success as we navigate through the tremendous disruption affecting our customers and the retail industry in general,” said Chairman and CEO Richard Johnson.
Foot Locker shares have dropped 55 percent since the beginning of the year. The stock has decreased 54 percent in the last 12 months.
Elements of this story were generated by Automated Insights (http://automatedinsights.com/ap) using data from Zacks Investment Research. Access a Zacks stock report on FL at https://www.zacks.com/ap/FL