Foot Locker (FL) - Get Foot Locker, Inc. Report posted stronger-than-expected third quarter earnings Friday, stocking up on inventory as it cautioned that supply chain disruptions would persist throughout the holiday period.
Foot Locker said adjusted earnings for the three months ending on October 30 came in at $1.93 per share, up 59.5% from the same period last year and firmly ahead of the Street consensus forecast of $1.21 per share. Group revenues, Footlocker said, rose 3.75% to $2.189 billion, just ahead of analysts' estimates of a $2.14 billion tally, as same-store sales rose by a better-than-expected 2.2% from last year.
Foot Locker also noted a 9.1% jump in merchandise inventories, adding that it's 'well-positioned" to meet consumer demand over the holiday season, but cautioned that supply chain disruptions would persist throughout the current quarter.
Nike (NKE) - Get NIKE, Inc. Class B Report, Foot Locker's biggest supplier of shoes and apparel, cut its full-year sales forecast in late September owing to supply chain issues that it said were impacting the movement of goods from Asia to north America.
Over the summer, two Nike suppliers in Vietnam, where around half its shoes and a third of its apparel are produced, planned production cuts to meet COVID requirements amid a surge in Delta infections in the south Asia region.
"The third quarter was another period of strong performance for our Company that reflects the powerful connectivity we have built with our customers," said CEO Richard Johnson. "These impressive top and bottom-line results were against a robust back-to-school season from last year and in spite of the ongoing supply chain challenges."
"On top of that, we successfully completed the acquisition of WSS in the third quarter, and subsequently closed the atmos transaction as well, welcoming both of these great teams to the Foot Locker, Inc. family," he added.
Foot Locker shares were marked 9.15% lower in early trading immediately following the earnings release to change hands at $52.30 each.
Foot Locker's solid October quarter followed robust updates from department store stalwarts Macy's M and Kohl's KSS earlier this week, as well as a much stronger-than-expected reading for October retail sales.
Macy's posted stronger-than-expected third quarter earnings of 76 cents per share Thursday while lifting its full-year sales and profit guidance, while Koh's topped forecast with a bottom line of $1.65 per share as U.S. department stores follow larger big-box retailers with inflation-defying sales gains and holiday-quarter outlooks.
U.S. retail sales jumped for a third consecutive month in October, data from the Commerce Department indicated Tuesday, rising 1.7% to a collective $638.2 billion as consumers continue to shrug-off surging inflation pressures thanks in part to job market gains and improving wages.
Inflation continues to hover over the retail sector, however, after consumer price inflation accelerated to the fastest pace in three decades last month as record-high energy prices and supply chain disruptions lifted the heading reading to 6.2%.