Shares of shoe retailer Foot Locker (FL +0.00%) soared on Wednesday after the company reported financial results for its fiscal fourth quarter of 2024, ended Feb. 1, 2025. As of 10:15 a.m. ET, Foot Locker stock was up about 9% but it had been up as much as 15% earlier in the day.
How Foot Locker was able to impress investors
Going into its Q4 report, Foot Locker stock was languishing near its lowest price in over a decade, reflecting just how low investors' expectations were for this shoe retailer. But against those low expectations, the company surprised folks. Its Q4 same-store sales were up nearly 3% year over year and its gross margin was considerably improved as well.
NYSE: FL
Key Data Points
According to Foot Locker and others, the shoe space is very promotional at the moment -- consumers are looking for bargains. This would seem to be a bad environment for Foot Locker right now. But the company was able to grow sales at existing stores without falling back on promotions, which would have hurt margins.
For its fiscal 2025, Foot Locker's management expects more of the same, which is why the stock is responding favorably today. The company says that shareholders can expect 1% to 2.5% same-store-sales growth in the coming year. And its gross margin is expected to increase to a range of 29.3% to 29.7%, compared with a 29% gross margin in 2024. These are positive trends in a competitive space and challenging macroeconomic backdrop.
What investors should expect now
Some of Foot Locker's 2024 numbers looked better because the company is closing a lot of underperforming stores. It closed 47 stores in Q4 alone and it expects to further reduce its store count by around 4% in 2025, representing close to 100 additional closures.
Foot Locker seems to be making a necessary move -- operating stores that perform poorly isn't a good idea. But it does shrink the size of the company, potentially making the business worth less. The trends with ongoing operations are promising. And hopefully they will lead to better profits and an improved financial profile. But Foot Locker probably needs a couple of years of progress to start consistently delivering meaningful gains in shareholder value.
