Foot Locker’s Latest Earnings Prove It Isn’t Reliant on Nike
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Foot Locker is seeing strong results across multiple brands — despite reducing its Nike product.
Shares of the footwear retailer were up Friday morning after it reported better than expected results for the third quarter and a strong sales mix across various brands.
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This quarter marked the first period in which the diminishment of Nike product would be be felt in stores. Earlier this year, Foot Locker said the amount of Nike product in its stores would be significantly less as the Swoosh accelerated its shift towards DTC sales. While this move initially caused the retailer to post a bleak outlook for 2022, it has recently encouraged Foot Locker to lean into other high-demand brands.
By 10 AM ET on Friday, shares of Foot Locker were up more than 12%.
“Choice and variety is something that consumers demand,” said Foot Locker CEO Mary Dillon in a Friday call with analysts. The newly minted CEO said she is shifting the company from being product-led to being consumer-led, adding that most top Foot Locker customers tend to shop three or more brands.
Dillon noted the momentum of “non-Nike” sales in brands such as Adidas, Puma, Hoka, On, Crocs and New Balance.
Earlier this week, Foot Locker announced an expansion of its partnership with Puma to bring in more basketball product and produce exclusive collections for the retailer, which includes continued exclusive access to the signature shoes of NBA star LaMelo Ball, such as the MB.02, which released in October.
Puma sales at Foot Locker grew in the high single digits in Q3.
Adidas, which announced an expanded partnership with Foot Locker in May, grew in the mid-single digits in Q3 as well. Ugg sales grew almost 50% and Crocs, Converse and New Balance sales were also up. Momentum in On and Hoka has persisted as well, which has helped bring more female runners and sneakerheads into the mix of shoppers.
Overall, total sales in Q3 were up 3.3% on a constant currency basis. Comparable-store sales increased 0.8% over 2021 and earnings per share were $1.01 and non-GAAP EPS were $1.27.
To be sure, Foot Locker is still seeing success with the Nike brand and Dillon expects to end the year with a higher mix of Nike sales than initially anticipated. But sales are not dependent on the Swoosh alone.
Given the strong quarter, Foot Locker raised its outlook for Q4 and the full-year and now expects 2022 sales to be down 4% to 5% for the year, citing strong demand trends and inventory availability. 2022 EPS is expected to be between $4.42 and $4.50, compared to prior range of $4.25 to $4.45.
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