Foot Locker Inc.
) recently reported better-than-expected third quarter 2012
financial results with quarterly earnings of 63 cents a share
coming way ahead of the Zacks Consensus Estimate of 54 cents.
Moreover, earnings per share surged 46.5% from 43 cents reported
in the comparable quarter prior-year.
Net sales for the quarter registered a growth of 9.3% to
$1,524.0 million compared with $1,394.0 million in the last year
quarter, driven by a 10.2% rise in comparable store sales. The
improvement in comparable store sales was contributed by a 9.4%
rise in store sales and an 18.3% increase in direct-to-consumer
sales. Further, revenue came in way ahead of the Zacks Consensus
Estimate of $1,466.0 million.
Gross profit augmented 11.5% to $505.0 million from $453.0
million in the third quarter of 2011, whereas gross margin for
the quarter expanded 60 basis points to 33.1% year over year. The
increase in gross margin was benefitted by operating leverage,
partially offset by a contraction of 30 basis points in
Increase in sales along with continuous growth in comparable
store sales and improved margins led to a 47.2% hike in operating
income to $156.0 million from the prior-year level of $106.0
million. Consequently, operating margin for the quarter expanded
270 basis points to 10.2%.
Other Financial Aspects
Foot Locker ended the third quarter with cash and cash
equivalents (including short-term investments) of $853.0 million,
up from $698.0 million at the end of the prior-year quarter.
Inventory at the end of the quarter increased 3.0% to $1,240.0
million from $1,204.0 million at the end of the last year
At the end of the quarter, long-term debt came in at $133.0
million, down from $136.0 million at the end of the year-ago
period. Shareholder's equity came in at $2,289.0 million versus
Share Repurchases Activity
Foot Locker bought back about 841 thousand of its common stock
for a value of $29.7 million in the third quarter of 2012.
However, year-to-date, the company had deployed $94.3 million for
buying back only 3 million shares of its common stock. The
company is sanctioned to repurchase an additional of 397.0
million shares under its share repurchase program.
Year-to-date, Foot Locker has launched 70 new stores while
shuttering 72 stores. Additionally, the company has renovated and
relocated around 159 stores in the first nine months of 2012. At
the end of the third quarter, Foot Locker operated 3,367 stores
in 23 countries in North America, Europe, Australia and New
Zealand. Further, the company was running 40 franchised stores in
Middle East and South Korea.
In the company's conference call, management said that it
anticipates the company's comparable store sales to grow in the
upper limit of mid-single digits. Further, gross margin is
expected to expand about 50 basis points in the next quarter.
Management noted that the fourth quarter consists an extra week,
which will contribute approximately 10 cents to earnings per
share in the quarter.
New York-based Foot Locker is a leading athletic retailer and
operates under two segments - Athletic Stores and
Direct-To-Consumers. The company offers athletic footwear,
apparel, accessories, and equipment under various formats,
including Foot Locker, Lady Foot Locker, Kids Foot Locker, Champs
Sports, Footaction, and CCS.
Foot Locker, which competes with
The Finish Line Inc.
), carries a Zacks #2 Rank, implying short-term Buy rating on the
stock for the next 1-3 months based on positive earnings surprise
history averaging about 13.7% for the last four quarters,
including the current reported quarter.
FINISH LINE-CLA (FINL): Free Stock Analysis
FOOT LOCKER INC (FL): Free Stock Analysis
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