(Bloomberg) -- Foot Locker Inc.’s sales surpassed analysts’ expectations as turnaround efforts and a rekindled relationship with key partner Nike Inc. begin to pay off, but investors remain unimpressed by the progress.
The sneaker seller snapped five consecutive quarters of negative comparable sales with a 2.6% gain for the quarter ended Aug. 3, outpacing the average of analyst estimates. Revenue of nearly $1.9 billion also surpassed Wall Street’s expectations. But one downside to the results was that the chain reiterated its sales guidance for the year, rather than increasing it.
Foot Locker’s update wasn’t enough to sustain the stock’s 46% rally since its previous earnings report in May.
The company’s shares fell 12% at 9:34 a.m. on Wednesday in New York. On an intraday basis, that’s the biggest drop since March.
Still, the results show that customers are coming back to a chain that was struggling to attract shoppers. Chief Executive Officer Mary Dillon’s strategy includes an improved rewards program in the US and simplifying oversea operations.
Dillon has prioritized store revamps, and Foot Locker remodeled or relocated more than a dozen locations last quarter — and “refreshed” 67 others. The company is improving selling areas for its brand partners, including Nike and Adidas AG. Nike, which had tightened supply in recent years in a bid to channel sales to its own stores and website, has shifted its stance and committed to revitalizing its relationship with Foot Locker.
Foot Locker is also closing its stores and online businesses in South Korea, Denmark, Norway and Sweden. In the US, Foot Locker is opening a technology hub in Dallas in September and will relocate its headquarters to St. Petersburg, Florida, from New York in late 2025.
In March, executives delayed the company’s target to hit $9.5 billion in annual sales by two years, and Foot Locker now expects to hit that mark by 2028. That sparked a 29% one-day share decline, but the stock has since recovered, posting a 5.3% gain this year through Tuesday’s close.
(Updates shares in fourth paragraph.)
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