Foot Locker: Impressive Performance Under Challenging Conditions

Foot Locker is materially outperforming competitors such as Dick's Sporting Goods and Hibbett Sports under challenging conditions, and this says a lot about the company and its management team

May 23, 2014 at 12:18PM

Fl Image

Source: Foot Locker

Foot Locker (NYSE:FL) announced earnings for the first quarter of fiscal 2014 on Friday, and the numbers were materially better than expected. Furthermore, Foot Locker is generating remarkable performance in terms of both sales and profitability in times when competitors such as Dick's Sporting Goods (NYSE:DKS) and Hibbett Sports (NASDAQ:HIBB) are delivering poor results due to challenges affecting the industry. It takes a particularly strong business to deliver solid results during difficult times.

Impressive performance
Total sales during the quarter ended on May 3 increased by a strong 14% versus the same quarter in the prior year to $1.87 billion, which came in above analyst´s estimates of $1.8 billion in revenues during the quarter.  Comparable-store sales were remarkably healthy during the quarter, with an increase of 7.6% versus the same period in 2013.

Foot Locker delivered growing profit margins in comparison to the same period in 2013, gross margin increased to 34.6% of sales versus 34.2% in the year-ago period, while selling, general, and administrative expenses fell to 19% of sales from 19.2 %. The company reduced its average diluted share count by 3.3% year-over-year.

All in all, net income came in at $162 million, or $1.10 per share, versus $138 million, or $0.9 per share, in the prior year quarter. This represents an impressive increase of 22% in earnings per share, and the figure was considerably above analyst´s estimates of $1.06 in net income per share for the quarter.

Chairman and CEO Ken C. Hicks provided an optimistic assessment about the company´s performance in the earnings press release. "We are off to a great start in 2014, with our first-quarter results representing the highest quarterly sales and profits in our history as an athletic company for the third consecutive year."

The Company opened 27 new stores during the quarter, it also remodeled or relocated 49 stores, and closed 36 stores during the period. Foot Locker operates 3,464 stores in 23 countries across North America, Europe, Australia, and New Zealand. In addition, 47 franchised Foot Locker stores are operated in the Middle East and South Korea, as well as 27 franchised Runners Point and Sidestep stores in Germany and Switzerland.

Fl Selling

Source: Foot Locker

Foot Locker vs. Dick's Sporting Goods and Hibbett Sports
Foot Locker delivered rock-solid performance during a particularly challenging period for sports shoes and apparel retailers, as many competitors in the category are being hurt by the unusually cold winter and lackluster consumer spending.

Dick's Sporting Goods delivered really disappointing financial figures for the quarter ended on May 3. Net sales increased 7.9% to $1.4 billion, while consolidated same-store sales grew only 1.5% during the quarter, materially below the company's own guidance for an increase of between 3% and 4% in comparable-store sales.

Earnings per share were also weaker than expected: Dick's Sporting Goods earned $0.50 per share on a non-GAAP basis, lower than the company´s guidance of between $0.51 and $0.53 per share, and also below analysts' forecasts of $0.52 per share on average.

Hibbett Sports announced earnings on Friday too, and the company is doing much better than Dick's Sporting Goods, but Hibbett Sports is still no match to Foot Locker in terms of growth.

Hibbett Sports announced a sales increase of 9.1% to $261.9 million during the quarter ended on May 3, this was lower than the $264 million forecasted on average by analysts. Same-store sales during the quarter increased 4.1%, and Hibbett opened 16 new stores during the period, bringing the total store base to 939 units in 31 states.

Hibbett Sports reported net income of $28.4 million, up versus $26.2 million in the same quarter of 2013. Earnings per share increased by 9% to $1.09, in line with analyst´s estimates.

Foolish takeaway
It´s relatively easy to deliver strong financial performance when demand is healthy and industry conditions are favorable, but it takes a particularly solid business to outperform in a challenging environment. Foot Locker is materially outgrowing competitors such as Dick's Sporting Goods and Hibbett Sports in a difficult context, and this speaks wonders about the company and its competitive strengths.


Do you know how to profit from the wereable computing revolution?
Let's face it, every investor wants to get in on revolutionary ideas before they hit it big. Like buying PC-maker Dell in the late 1980s, before the consumer computing boom. Or purchasing stock in e-commerce pioneer in the late 1990s, when it was nothing more than an upstart online bookstore. The problem is, most investors don't understand the key to investing in hyper-growth markets. The real trick is to find a small-cap "pure-play" and then watch as it grows in EXPLOSIVE lockstep with its industry. Our expert team of equity analysts has identified one stock that's poised to produce rocket-ship returns with the next $14.4 TRILLION industry. Click here to get the full story in this eye-opening report.

Andrés Cardenal has no position in any stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

1 Key Step to Get Rich

Our mission at The Motley Fool is to help the world invest better. Whether that’s helping people overcome their fear of stocks all the way to offering clear and successful guidance on complicated-sounding options trades, we can help.

Feb 1, 2016 at 4:54PM

To be perfectly clear, this is not a get-rich action that my Foolish colleagues and I came up with. But we wouldn't argue with the approach.

A 2015 Business Insider article titled, "11 websites to bookmark if you want to get rich" rated The Motley Fool as the #1 place online to get smarter about investing.

"The Motley Fool aims to build a strong investment community, which it does by providing a variety of resources: the website, books, a newspaper column, a radio [show], and [newsletters]," wrote (the clearly insightful and talented) money reporter Kathleen Elkins. "This site has something for every type of investor, from basic lessons for beginners to investing commentary on mutual funds, stock sectors, and value for the more advanced."

Our mission at The Motley Fool is to help the world invest better, so it's nice to receive that kind of recognition. It lets us know we're doing our job.

Whether that's helping the entirely uninitiated overcome their fear of stocks all the way to offering clear and successful guidance on complicated-sounding options trades, we want to provide our readers with a boost to the next step on their journey to financial independence.

Articles and beyond

As Business Insider wrote, there are a number of resources available from the Fool for investors of all levels and styles.

In addition to the dozens of free articles we publish every day on our website, I want to highlight two must-see spots in your tour of

For the beginning investor

Investing can seem like a Big Deal to those who have yet to buy their first stock. Many investment professionals try to infuse the conversation with jargon in order to deter individual investors from tackling it on their own (and to justify their often sky-high fees).

But the individual investor can beat the market. The real secret to investing is that it doesn't take tons of money, endless hours, or super-secret formulas that only experts possess.

That's why we created a best-selling guide that walks investors-to-be through everything they need to know to get started. And because we're so dedicated to our mission, we've made that available for free.

If you're just starting out (or want to help out someone who is), go to, drop in your email address, and you'll be able to instantly access the quick-read guide ... for free.

For the listener

Whether it's on the stationary exercise bike or during my daily commute, I spend a lot of time going nowhere. But I've found a way to make that time benefit me.

The Motley Fool offers five podcasts that I refer to as "binge-worthy financial information."

Motley Fool Money features a team of our analysts discussing the week's top business and investing stories, interviews, and an inside look at the stocks on our radar. It's also featured on several dozen radio stations across the country.

The hosts of Motley Fool Answers challenge the conventional wisdom on life's biggest financial issues to reveal what you really need to know to make smart money moves.

David Gardner, co-founder of The Motley Fool, is among the most respected and trusted sources on investing. And he's the host of Rule Breaker Investing, in which he shares his insights into today's most innovative and disruptive companies ... and how to profit from them.

Market Foolery is our daily look at stocks in the news, as well as the top business and investing stories.

And Industry Focus offers a deeper dive into a specific industry and the stories making headlines. Healthcare, technology, energy, consumer goods, and other industries take turns in the spotlight.

They're all informative, entertaining, and eminently listenable ... and I don't say that simply because the hosts all sit within a Nerf-gun shot of my desk. Rule Breaker Investing and Answers contain timeless advice, so you might want to go back to the beginning with those. The other three take their cues from the market, so you'll want to listen to the most recent first. All are available at

But wait, there's more

The book and the podcasts – both free ... both awesome – also come with an ongoing benefit. If you download the book, or if you enter your email address in the magical box at the podcasts page, you'll get ongoing market coverage sent straight to your inbox.

Investor Insights is valuable and enjoyable coverage of everything from macroeconomic events to investing strategies to our analyst's travels around the world to find the next big thing. Also free.

Get the book. Listen to a podcast. Sign up for Investor Insights. I'm not saying that any of those things will make you rich ... but Business Insider seems to think so.

Compare Brokers