Foot Locker shares soared more than 7% in premarket trading Friday after the company crushed analysts’ fiscal second-quarter earnings estimates and voiced optimism about the back half of the year.
Consumers have continued to spend on athletic footwear and workout apparel during the Covid pandemic, with these segments outperforming others such as dress wear and high-heels. Now, parents are budgeting their paychecks to buy new Nike and Adidas sneakers for their kids who are preparing to head back to school.
Foot Locker reported net income for the quarter ended July 31 of $430 million, or $4.09 per share, compared with $45 million, or 43 cents per share, a year earlier. Excluding one-time gains, the company earned $2.21 per share. Analysts polled by Refinitiv were looking for adjusted earnings per share of $1.01.
Revenue surged 9.5% to $2.28 billion from $2.08 billion a year earlier. That topped expectations for $2.09 billion.
Foot Locker’s comparable-store sales rose 6.9%. Analysts polled by StreetAccount had been looking for a 0.2% decline.
Chief Executive Richard Johnson said the company saw strong demand in its women’s and kids’ footwear business, in addition to its apparel and accessories segments. Foot Locker also kept promotions in check, fueling profits, he said.
Chief Financial Officer Andrew Page commented that the retailer remains “cautiously optimistic” about its outlook for the second half of the year.
“Recognizing we are still operating in an uncertain environment due to Covid-19, we continue to keep a close eye on the business, including temporary store closures and supply chain challenges,” he noted in the news release.
Earlier this month, Foot Locker announced it would be buying two smaller shoe store chains, for a total of about $1.1 billion cash, to extend its reach off-mall and into Asia. The company has been looking for ways to grow outside of enclosed shopping malls, where shopper visits have been suppressed during the health crisis.
Foot Locker shares are up about 35% year to date. The company’s market cap is $5.63 billion.