Foot Locker posted weaker-than-expected earnings and sales for its first quarter after high promotional activity and getting off to a slow start in February.
Net income for the company’s first quarter ended April 29, 2017 was $180 million, or $1.36 per share, compared with net income of $191 million, or $1.39 per share in the year-ago period.
First quarter same-store sales increased 0.5%, lower than expected. Total sales increased 0.7%, to $2 billion, compared with sales of $1.98 billion last year. Excluding the effect of foreign currency fluctuations, total sales for the first quarter increased 1.8%.
On the company’s quarterly earnings call, chief executive Richard Johnson said Footlocker plans to open a flagship in Los Angeles in the fourth quarter.
“The first quarter was one of our most profitable quarters ever, but it did fall short of our original expectations,” stated Johnson in the earnings release. “The slow start we experienced in February, which we believe was largely due to the delay in income tax refunds, was unfortunately not fully offset by much stronger sales in March and April. Nonetheless, we believe our banners remain at the center of a vibrant sneaker culture. We are confident that our customers have not lost their tremendous appetite for athletic footwear and apparel and that our position in the industry is stronger than ever.”
The company’s gross margin rate decreased to 34.0% of sales from 35.0% a year ago, and the selling, general. Administrative expense rate increased 30 basis points to 18.5% of sales.
During the first quarter, Foot Locker opened 30 new stores, remodeled or relocated 61 stores, and closed 39 stores. As of April 29, 2017, the company operated 3,354 stores in 23 countries in North America, Europe, Australia, and New Zealand. In addition, 62 franchised Foot Locker stores were operating in the Middle East and South Korea, as well as 15 franchised…