Foot Locker (NYSE: FL) told investors almost two weeks ago its second-quarter sales were going to be stronger than anticipated, and now that the numbers are in, it turns out earnings are, too.
The footwear retailer's financial position has improved so much, in fact, that it will be reinstating the dividend it suspended back in May, along with its stock buyback program.
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Taking it one step at a time
Foot Locker's sales jumped 17% in the second quarter to just over $2 billion on an 18.6% increase in comparable-store sales.
The market was already prepped for those results after Foot Locker preannounced earnings on Aug. 10, but at the time the retailer said it expected to record profits of between $0.66 per share and $0.70 per share, which was below analyst forecasts of $0.77 per share.
While the footwear company didn't match Wall Street's outlook, it did exceed its own guidance, recording adjusted earnings of $0.71 per share.
Foot Locker ended the quarter with almost $1.4 billion in cash and just $121 million in debt after paying back $330 million it borrowed during the coronavirus outbreak. That strong financial position is allowing the company to reinstate its payout, but it's doing so very cautiously.
Where Foot Locker's dividend had been $0.40 per share at the time it was suspended, the reinstated one will be just $0.15 per share.
The retailer missed only its second-quarter payment, which saved it about $42 million. The new, lower-value dividend will cost it less than $18 million based on the 105 million shares it had outstanding at the end of the period.
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