Source: Foot Locker

Foot Locker (FL 0.68%) 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 (DKS -1.80%) and Hibbett Sports (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.

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.