Foot Locker 2Q Profit Disappoints, But Retailer Backs Outlook

Foot Locker (NYSE:FL) revealed slightly weaker-than-expected second-quarter earnings but backed its full-year outlook on Friday in a move analysts say signals rallying same-store sales in the second half of the year.

The New York-based sports apparel retailer reported net income of $66 million, or 44 cents a share, compared with a year-earlier profit of $59 million, or 39 cents.

Adjusted for one-time items, including the $94 million acquisition of German athletic chain Runners Point Group in May, Foot Locker said it earned 46 cents a share, missing average analyst estimates in a Thomson Reuters poll by a penny.

Revenue for the three months ended Aug. 3 climbed 6.4% to $1.45 billion from $1.37 billion a year ago, matching the Street’s view. Same-store sales, a key growth metric for retailers measuring sales at stores open longer than a year, increased 1.8%.

"Sales in the second quarter were more challenging than we planned for, especially in the United States,” Foot Locker CEO Ken Hicks said in a statement. “Despite this headwind, we produced second quarter ongoing profit and sales results that were our best ever.”

Shares of Foot Locker fell more than 4% in early trade to $32.59 on Friday.

The company backed its outlook on earnings growth for the full year, still expecting to achieve mid-single digit same-store sales growth and a double-digit profit increase.

Analysts see the unchanged forecast as a sign current-quarter earnings are off to a good start in the back-to-school season and ahead of the highly-trafficked holiday season.

UBS (NYSE:UBS) analyst Michael Binetti notes that despite the below-planned same-store sales growth, the guidance offers a sign same-store sales may be tracking higher in the second half of the year.