Foot Locker CFO: ‘supply chain constraints to persist in Q4’
- Foot Locker reports market-beating results for its fiscal third quarter.
- The shoe company says it is positioned well for the holiday season.
- Shares of the U.S. retailer still fell close to 15% on Friday morning.
Foot Locker Inc (NYSE: FL) reported its financial results for the third quarter on Friday that beat Wall Street estimates.
Shares still fell about 15% this morning on a warning that supply chain constraints will persist in Q4, which is still surprising since the shoe company did confirm that it was still positioned well for the holiday season.
Foot Locker topped estimates in Q3
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Foot Locker said its net income printed at $158 million that translates to $1.52 per share. In the same quarter last year, it had posted a much higher $256 million in net income or $2.52 per share. Adjusted for one-time items, the U.S. firm earned $1.93 in Q3.
The NYSE-listed company generated $2.19 billion in sales, representing an annualised growth of 3.9%. According to FactSet, experts had forecast $1.37 of adjusted EPS on $2.15 billion in sales.
The quarterly report comes months after Foot Lock said it will buy Text Trading Company and Eurostar Inc. The retailer is spending a total of $1.10 billion to bring the two companies under its umbrella.
What the holiday quarter would look like
Other notable figures include a 2.2% year-over-year increase in comparable sales versus 0.6% expected. Cost of sales was down 1.9%, and gross margin jumped 380 basis points in the fiscal third quarter to 34.7% from last year’s 30.9%.
CFO Andrew Page attributed strong margin to fresh inventory, robust demand, and full-priced selling. Commenting on what the holiday quarter would look like, he said:
We expect global supply chain constraints to persist throughout the fourth quarter; that said, we believe we are positioned for the holiday season, with positive momentum and inventory levels ready to meet customer demand.
In related news, Foot Locker named Frank Bracken as the new COO of the company. Bracken was previously serving as the CEO of Foot Locker North America.