US' Foot Locker projects FY25 sales to grow up to 0.5%, comps up 2.5%

The company’s store count is anticipated to decrease by around 4 per cent, with square footage expected to decline by approximately 2 per cent. Licensing and other revenue is estimated at $24 million and gross margin is expected between 29.3 and 29.7 per cent, supported by improved merchandise margin.

The selling, general and administrative (SG&A) expenses rate is forecast at 24.3 to 24.5 per cent, with modest leverage excluding incentive compensation normalisation. Depreciation and amortisation (D&A) are projected at $200 to $210 million, while EBIT margin is expected to be between 2.6 and 3.1 per cent.

Net interest costs are estimated at approximately $12 million, and the non-GAAP tax rate is forecast between 32.5 and 33.0 per cent. Non-GAAP earnings per share (EPS) is projected to range from $1.35 to $1.65. Capital expenditures are planned at $270 million, focusing on customer-facing investments, with adjusted capital expenditures at $300 million, including $30 million in technology investments reflected in operating cash flows, Foot Locker said in a press release.

“Looking ahead, we will continue to prioritise our customer-facing investments, keep our inventories controlled, and manage our expense base with discipline to improve our profitability. While we expect consumer and category promotional pressures to remain uncertain into 2025, especially within the first half, our Lace Up Plan strategies continue to resonate with our customers and brand partners. We started the year with one of our largest basketball activations in the company's history at NBA All-Star 2025, underscoring how we are capitalising on our basketball leadership and our strong brand partnerships. We are confident that our strategies and actions will enable us to achieve our growth expectations in 2025 and are committed to delivering sustainable shareholder value creation,” said Mary Dillon, president and chief executive officer (CEO) at Foot Locker.

Financial performance in full fiscal 2024 (FY24)

The company reported total revenue of $7.99 billion in FY24 ended February 1, 2025, reflecting a 2.20 per cent decline year-over-year (YoY). The sales of the company dropped by 2.24 per cent YoY to $7.97 billion in FY24, while licensing revenue rose by 21.43 per cent. Cost of sales decreased by 3.88 per cent, while SG&A expenses increased by 3.67 per cent.

Depreciation and amortisation rose by 1.51 per cent, and impairment costs grew by 21.25 per cent YoY. The income from operations declined by 27.46 per cent YoY, however the net income from continuing operations improved, bringing net income to $12 million. Diluted earnings per share stood at $0.13, recovering from the previous fiscal’s loss.

Fourth quarter (Q4) FY24 performance overview

Foot Locker reported a 5.8 per cent YoY decline in total sales for Q4 FY24, reaching $2.24 billion. Excluding foreign exchange rate fluctuations, total sales declined by 4.6 per cent. However, comparable sales grew by 2.6 per cent, driven by a 3.6 per cent increase in global Foot Locker and Kids Foot Locker combined sales. Champs Sports also recorded its second consecutive quarter of growth, with a 1.8 per cent increase in comparable sales.

The gross margin improved by 300 basis points (bps) supported by sequentially stronger merchandise margin trends despite elevated promotional activity. Occupancy costs as a percentage of sales remained flat compared to the last fiscal. SG&A expenses as a percentage of sales improved by 10 bps, reflecting benefits from the company’s cost optimisation programme, disciplined expense management, and lower incentive compensation, partially offset by investments in technology and brand building, added the release.

The net income from continuing operations reached $55 million, recovering from a net loss of $389 million in the same period of last fiscal. On a non-GAAP basis, net income from continuing operations was $82 million, up from $36 million in Q4 2023. EPS from continuing operations stood at $0.57, compared to a loss of $4.13 per share in the prior fiscal. Non-GAAP earnings per share were $0.86, up from $0.38 in the same quarter of 2023.

“We delivered Q4 results above our previously revised expectations, as our investments and execution drove positive comparable sales and meaningful gross margin improvement compared to the prior year,” added Dillon. “Reflecting on 2024 overall, we made significant progress in elevating our in-store experience with our new reimagined doors and store refresh programme, enhancing our digital and mobile capabilities, expanding engagement with our FLX rewards programme, and leaning into brand building through compelling campaigns and partnerships. Our return to positive comparable sales growth, gross margin expansion, and positive free cash flow in fiscal 2024 serve as proof points that our Lace Up Plan is working.”

ALCHEMPro News Desk (SG)