Sneaker and athletic apparel retailer Foot Locker reported a robust third quarter, doubling its profit and posting same-store sales growth of nearly 5%.
Net income rose to $157 million, or $1.17 per share, compared to $0.57 per share in the year-ago quarter. Adjusted earnings per share were 1.13, topping analysts’ expectations for $1.10 per share.
Comparable store sales rose 4.7% year over year, and were about even compared with the second quarter. Overall revenue generated at Foot Locker stores jumped 5.1% to $1.79 billion.
Foot Locker CEO Richard Johnson described the quarter as “exceptional” and the company is expecting a strong holiday season.
“Our inventory is fresh and well positioned as we prepare for the important holiday selling season, and we remain well on track to achieve our annual guidance of a mid-single digit comparable-store sales gain and double-digit earnings per share growth,” CFO Lauren Peters said in a news release.
Wall Street’s consensus is for the company’s earnings to rise 10.5% this year.
Since hitting a low of $51.79 in late June, Foot Locker’s stock has climbed nearly 39%. During the third quarter, it repurchased 1.15 million shares for $76.3 million and it also recently raised its dividend to $0.275 quarterly and paid out $37 million in the quarter.
“There remains risk from overexposure to brick-and-mortar (2,350 stores domestically), which has held back incremental operating margin expansion,” Credit Suisse analysts said.
Gross margin improved to 33.9% in the third quarter, fom 33.8% a year ago, while expenses declined 20 basis points to 19.4% of sales.
Foot Locker operates several e-commerce websites under the Foot Locker and other store banners. The Eastbay site, which primarily targets high school athletes, saw a traffic decline in third quarter, which the company attributed in part to “the overall shift in style preferences away from performance-oriented products to more athletic lifestyle assortments.”