Foot Locker’s key metrics fell across the board in the latest quarter but the declines were less than Wall Street anticipated, sending the retailer’s shares up more than 26% in trading Friday.
The stock had fallen more than 55% before Friday’s earnings report as new athletic footwear styles failed to excite shoppers amid competition from the online segment led by Amazon.
To turn things around, Foot Locker has invested in its digital offering, closed under-performing stores, and created new ways to collaborate with its biggest partner, Nike, including having experts on site at some locations to discuss Nike products.
Those efforts didn’t generate growth in the third quarter. Same-store sales, a key retail metric, dropped 3.7% year on year, total sales fell 0.8% to $1.87 billion, and net income dropped to $102 million from $157 million a year earlier.
But analysts had predicted a 4.6% drop in comparable sales and $1.83 billion in total sales. Adjusted earnings came in at 87 cents per share, beating estimates of 80 cents.
“Wall Street was expecting a much more severe fall from grace,” U.S. News & World Report said, adding that Foot Locker’s shares were still down 43% for the year after rising 26.3% to $40.18 in trading Friday.
As CNBC reports, “Fears that e-commerce giant Amazon.com may seek to expand into apparel have made it a tough year for Foot Locker shares.” Since Nike confirmed plans to sell a limited product assortment on Amazon’s U.S. website, sales of Nike footwear on Amazon have outpaced those at Foot Locker.
In an earnings call, CEO Richard Johnson said the company was “making solid progress on several fronts, including three of the biggest initiatives which I have discussed previously: our new digital e-commerce platform, our mobile app platform development, and our new point-of-sale technology.”
“Each of these multiyear projects will play a key role in enhancing how our customers experience and engage with our banners,” he added.
But U.S. News warned that over the next few years, Foot Locker “will have to do something truly magical to actually grow.”