Foot Locker announced third quarter (Q3) results ending October 30 showing a rise in total sales by 3.9% and a net profit of $158 million compared to last year at $265 million. However, even with the decline in profit for Q3, executives view the performance as strong and while Q3 profits compared to the unprecedented year of 2020 were down, the company was up 26.4% compared to Q3 of 2019. Richard Johnson, Chairman and CEO, stated, “These impressive top and bottom-line results were against a robust back-to-school season from last year and in spite of the ongoing supply chain challenges.”
Year-to-date profits soar 295%
The company’s gross margin for Q3 was 34.7% as compared to 30.9% in the same period last year. “The combination of robust demand and fresh inventory, coupled with more full-priced selling, led to gross margin expansion of 380 basis points,” said Andrew Page, executive vice president and CFO. Year-to-date gross margin is 34.9% compared to 27.2% last year, contributing to the robust profit increase for the first nine months of 2021.
Despite the Q3 profit decrease, nine month profits were exceptionally strong at $790 million and have nearly tripled compared to the same period last year. Year-to-date profits are up 121% compared to 2019. “The third quarter was another period of strong performance for our Company that reflects the powerful connectivity we have built with our customers,” said Johnson.
Strong consumer trends bode well for Foot Locker
Johnson discussed three key consumer behaviors and mega trends that are driving demand that align with the products offered by Foot Locker including the democratization of the sneaker culture, consumers’ growing emphasis on fitness and self-care, and the continuation of the athleisure and casualization trends. Johnson stated in the call, “We have the best team, the best partners and loyal customers that continue to support the brand.”
Foot Locker sells a deep assortment of products across various price points which appeals to a broad market of customers. The company continues to seek new and exciting collaborations and acquisitions to further its product assortment including the recent acquisitions of WSS, a U.S.-based athletic footwear and apparel retailer that primarily operates on the West Coast, and atmos, a global streetwear and sneaker boutique founded in Harajuku, Tokyo.
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As of October 30, 2021 the Company’s merchandise inventories, which include the addition of WSS, were 9.1% higher than at the end of the third quarter last year and the company is well positioned to meet upcoming holiday demand. Page stated, “We expect global supply chain constraints to persist throughout the fourth quarter; that said, we believe we are positioned for the holiday season, with positive momentum and inventory levels ready to meet customer demand.”
Foot Locker operates 2,956 stores in 27 countries in North America, Europe, Asia, Australia, and New Zealand.