Foot Locker Q3 beat lifts sporting goods stocks

The American sportswear and footwear giant predicted just a 2-4% sales decline in fourth-quarter sales on the back of a strong Thanksgiving week period, with comparable sales expected to fall by 7-9%, better than the 10.5% drop expected by the market.

The stock was up 12.5% in pre-market trade at $26.83, rebounding after a 36% slump since the start of the year.

Foot Locker reported an 8% decline in comparable sales in its fiscal third quarter ended 28 October which was partly due to "ongoing consumer softness", with North America sales down 9.5%, EMEA down 4.2% and Asia Pacific down only 0.5%.

Gross margins were down a significant 470 basis points on last year at 27.3% as a result of increased markdowns as well as occupancy deleverage and higher shrink, the company said.

Nevertheless, revenues came in at $1.99bn, ahead of the $1.96bn expected by analysts, while adjusted earnings of 30 cents a share were down on $1.01 last year but better than the 21 cents forecast.

For the full year, the company is guiding to a comparable sales decline of 8.5-9%, compared with previous guidance of a 9-10% drop.

"Looking forward, we are updating our outlook to reflect the momentum we have in our strategic initiatives into the fourth quarter, which includes strong results over the Thanksgiving week period, against the backdrop of ongoing consumer uncertainty," said president and chief executive Mary Dillon.

Foot Locker also announced plans to enter the Indian market in 2024 for the first time, entering into long-term licensing agreements with two strong operators in India – Metro Brands Limited and Nykaa Fashion.

The positive reaction to the results was providing a lift to others in the sports retail and apparel sectors, such as US-listed Dick's Sporting Goods and Nike, and Europe-listed names like JD Sports Fashion, adidas and Puma.