Foot Locker’s forecast shows it’s overcoming Nike pullback

Bloomberg

Foot Locker Inc shares climbed after its forecast showed the retailer is overcoming Nike Inc’s move to sell more shoes via its own channels.
Foot Locker said that it now expects full-year sales and profit to be at the high end of its prior expectations. Chief Executive Officer Dick Johnson said the company is “off to a strong start in 2022” as it focuses on improving inventory and vendor relationships. He also credited “broadening and enriching our assortment” of items for sale to meet consumers’ demand for choice.
The upbeat report bucked the trend for retailers. Profit cuts at companies such as Walmart Inc, Target Corp and Ross Stores Inc led to massive selloffs in those stocks and across the industry. US retailers have struggled with accelerating inflation as it cuts into profits and hinders shoppers’ purchasing power.
“Our consumer has remained resilient,” Johnson said on a conference call with analysts. “We have not seen a material change in consumer behaviour to indicate a softening in demand for our category.”
Comparable-store sales, a key retail metric, fell 1.9% in the first quarter ended on April 30. That was better than the 3.5% loss expected by analysts. Apparel significantly outpaced shoe sales in the quarter.
Earnings per share, excluding some items, for the fiscal year ending in late January are now expected to be at the high end of the $4.25 to $4.60 forecast range, and sales are expected to be at the upper end of the forecast for a decline of 4% to 6%.
Johnson has moved to align Foot Locker with Nike’s top rival, Adidas, to compensate after the world’s largest athletic-wear maker pulled back some of its business. The pair are targeting sales of more than $2 billion by 2025 — triple last year’s level. Foot Locker also sees bigger roles for Puma and New Balance.