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Foot Locker 2Q Results Leap Above Expectations

Foot Locker, Inc. (FL), the New York-based specialty athletic retailer, reported second quarter 2015 financial results on Friday that exceeded investor estimates.

Total sales increased 3.3% to $1.7 billion from $1.6 billion in the prior year period, beating Wall Street expectations of $1.66 billion. Excluding the effect of foreign currency fluctuations, sales grew by 9.9%. Comparable-store sales increased 9.6%.

Net income increased 33 percent to $119 million, or $0.84 per share, from $92 million, or $0.63 per share, last year, handily beating analyst estimates of $63 per share.

“We extended the momentum with which we started 2015, generating outstanding quarterly sales and profits in the second quarter,” said President and CEO Richard Johnson in a statement. “We continued to achieve broad-based and consistent strength across geographies, banners, channels, and categories.”

Gross margin increased by 60 basis points to 32.6% of sales, while SG&A expense improved by 140 basis points to 19.5% of sales.

“With the strong top line gain, the team at Foot Locker was able to flow the incremental sales dollars through to the bottom line at a very healthy rate, leading to good progress on all of our long-term goals,” said EVP and CFO Lauren Peters.

Year-to-date sales were $3.6 billion, an increase of 2.9% compared to sales of $3.5 billion in the corresponding six-month period of 2014, an 8.9% increase excluding the effects of foreign currency fluctuations. Year-to-date comparable store sales have increased 8.7 percent.

Net income for the company’s first six months of the year increased to $303 million, or $2.14 per share, compared to net income of $254 million, or $1.73 per share, for the corresponding period in 2014.

During the second quarter, the company opened 21 new stores, remodeled or relocated 65 stores, and closed 21 stores. As of August 1, 2015, the company operated 3,419 stores in 23 countries in North America, Europe, Australia and New Zealand. In addition, 48 franchised Foot Locker stores were operating in the Middle East and South Korea, as well as 27 franchised Runners Point and Sidestep stores in Germany and Switzerland.