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Foot Locker reports big earnings beat and says inventory levels are ‘ready’ for the holidays, but stock falls

Economy, Finance

Shares of Foot Locker Inc. fell 4.5% in premarket trading, even after the athletic shoe and apparel retailer reported Friday fiscal third-quarter adjusted profit and sales that rose above expectations, while cost of sales fell, and said it was “ready” for the holidays despite the supply chain issues. Net income fell to $158 million, or $1.52 a share, from $265 million, or $2.52 a share, in the year-ago period. Excluding nonrecurring items, adjusted earnings per share increased to $1.93 from $1.21, well above the FactSet consensus of $1.37. Sales grew 3.9% to $2.19 billion, above the FactSet consensus of $2.15 billion, while cost of sales fell 1.9%. Same-store sales rose 2.2%, compared with the FactSet consensus of 0.6% growth. “The combination of robust demand and fresh inventory, coupled with more full-priced selling, led to gross margin expansion of 380 basis points to 34.7%, from the 30.9% in the prior year period,” said Chief Financial Officer Andrew Page. Looking ahead, Page said he expects global supply chain constraints to persist throughout the fourth quarter, but he believes “we are positioned for the holiday season, with positive momentum and inventory levels ready to meet customer demand.” The stock has gained 5.8% over the past three months through Thursday, while the S&P 500 has tacked on 6.8%.

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