Foot Locker (NYSE:FL) swung to a loss in the second quarter and said it was closing stores in Asia and Europe, overshadowing better-than-expected sales and driving shares more than 8% lower in premarket trading. The company also issued lackluster sales guidance for FY24.
In the second quarter, the sportswear retailer reported an adjusted loss of $4M, or $(0.05) per share, beating expectations by 2 cents. This compares to a profit of $4M, or $0.04 per share in the same quarter last year. Total sales improved by 1.9% year-over-year to $1.9B, $10M above expectations.
Led by strong comparable store sales in its global Foot Locker and Kids Foot Locker segments, comparable sales for the entire company improved by 2.6%.
The poor performance of the stock in premarket trading is also attributed to the company’s plans to close 30 of its 140 stores in Asia Pacific and 629 stores in Europe as part of its Lace Up Plan and ongoing efforts to simplify its business model by focusing on its core banners and regions. The closures are expected to be completed in mid-2025.
Additionally, to reduce costs and build on its presence in Florida, Foot Locker (FL) is moving its corporate headquarters to St. Petersburg, Florida from New York City.
For FY24, Foot Locker (FL) reiterated most of its metrics for the year, including a 1% decline to 1% increase in sales, comparable sales to be up 1% to up 3%, and non-GAAP earnings of $1.50 to $1.70 per share, within the consensus estimate of $1.54. Gross margin expectations, however, were lowered to 29.5% to 29.7% from initial guidance of 29.8% to 30.0%.
