Foot Locker previewed its upcoming-second quarter earnings release with some good news, with comparable store sales increasing approximately 18 percent and diluted earnings expected to be between 38 and 42 cents per share. The the footwear and athletic apparel retailer expects earnings per share to fall below the 55 cents per share in the same quarter in 2020, but back to normalcy compared to the 93 cents per share loss on a 43 percent sales loss experienced in a coronavirus-hit first quarter.
Shares of the company jumped as much as 23 percent in Monday premarket trading following the update and remained up nearly 8 percent at the end of trading.
When excluding pre-tax charges of approximately $19 million related to the wind down of the Runners Point banner and the Eastbay brand restructuring, and approximately $18 million for costs incurred in connection with the recent social unrest, adjusted earnings are excepted to be between 66 and 70 cents per share. Wall Street analysts polled by FactSet were expecting in the ballpark of an adjusted 60 cents per share loss.
“Despite gross margin pressure from channel mix shift and a highly promotional environment, we were able to return to positive earnings per share due to the meaningful lift in top-line sales and disciplined expense management,” added Lauren Peters, executive vice president and chief financial officer at Foot Locker.
Richard Johnson, the company’s chairman and CEO, believes the strong response has been fueled by pent-up demand for its assortment as well as the distribution of federal government stimulus checks.
The retailer plans to report financial results for its second quarter ended Aug. 1 before the U.S. markets open on Friday, Aug. 21.
Foot Locker previously withdrew its full-year 2020 guidance in March. Given the uncertainty surrounding the COVID-19 pandemic and its potential impact on the back-to-school season, team sports participation, and additional government stimulus packages, the company does not plan to provide a full-year 2020 outlook at this time.
Less than two weeks ago, Foot Locker unveiled a few changes expected within its executive structure, including creating a new executive vice president and chief commercial officer role. Andy Gray, elevated from his previous position as chief merchandising officer for North America, will lead the company’s efforts to enhance the customer experience across the globe.
Frank Bracken will be the company’s new executive vice president and CEO of North America. Bracken was previously senior vice president and general of Foot Locker and Kids Foot Locker U.S., as well as vice president and general manager of Foot Locker Canada. Scott Martin was named the new executive vice president and CEO of Asia Pacific, in addition to his responsibilities as chief strategy and development officer.
Bracken and Martin will replace two outgoing executives in their respective positions, both of whom are retiring at the end of August.
The retailer didn’t give an update on how many of its 3,100 retail stores worldwide have reopened. As of May 22, Foot Locker had reopened about 45 percent of its global stores including 900 in the U.S. and Canada, but most stateside retail reopenings bowed in June.
As the company forges ahead with its rebound, it hasn’t been afraid to make significant investments, especially given some of the relevant social issues currently going on in the U.S. In July, Foot Locker announced it had pledged $200 million toward supporting the Black community over the next five years through investments in youth-centric Black-owned businesses, purchases from Black-owned brands and donations to organizations dedicated to creating opportunities for minorities.
As part of the investment, Foot Locker said it will work to increase its marketing spend with Black-owned companies and creators while diversifying its global supply and agency investments to incorporate more Black-owned businesses.