FL Q1 Loss Meets Estimates, Comparable Sales Decline 2.6% Y/Y

Foot Locker, Inc. FL has posted first-quarter fiscal 2025 results, with the top line lagging the Zacks Consensus Estimate and the bottom line meeting the same. Both metrics declined year over year. Comparable sales declined year over year in the quarter under review.

The company continues to execute its Lace Up Plan strategies as it prepares for the completion of the DICK'S Sporting Goods transaction. Softer global traffic trends impacted first-quarter performance. 

During the quarter, focus remained on rolling out the Reimagined and Refresh programs, enhancing digital offerings, strengthening customer engagement through the FLX program and leveraging brand partnerships. The company also stayed agile in managing promotions, inventories, expenses and cash flow amid an uncertain macroeconomic environment.

More on Foot Locker’s Q1 Financial Results

The athletic shoes and apparel retailer posted an adjusted loss of seven cents per share. The figure significantly decreased from adjusted earnings of 22 cents in the prior-year quarter. (Stay up-to-date with all quarterly releases: See Zacks Earnings Calendar.)

Total revenues of $1,788 million decreased 4.6% from the year-ago period. Excluding the impacts of foreign-currency fluctuations, total revenues decreased 4.5%. Revenues missed the Zacks Consensus Estimate of $1,826 million. 

Comparable sales declined 2.6% year over year, including a 0.5% decrease in the North American region. In the company's international operations, comparable sales dropped 8.5%, primarily due to weakness in Foot Locker Europe.

Insight Into FL’s Margins

Gross profit was $514 million, down 5.5% year over year. FL's gross margin rate increased 40 basis points (bps) year over year to 28.7%. Merchandise margins fell 10 bps, while occupancy costs, as a percentage of sales, rose 30 bps year over year. We expected the gross margin to be 28.3% in the quarter under review.

Selling, general and administrative (SG&A) costs declined 0.7% year over year to $458 million. This metric, as a percentage of sales, deleveraged 100 basis points compared with the prior-year period, due to the impact of lower sales and investments in technology that outweighed the benefits of the cost optimization program and continued expense discipline. We anticipated SG&A expenses, as a percentage of sales, to deleverage 90 bps.

Foot Locker Provides Q1 Store Update

In the first quarter, the company opened nine new stores and closed 56 stores, including locations in South Korea, Denmark, Norway, Sweden, Greece and Romania. FL also remodeled or relocated 11 stores and updated 69 stores to reflect its revised design standards, which feature key elements of the current brand guidelines.

As of May 3, 2025, the company operated 2,363 stores across 20 countries in North America, Europe, Asia, Australia and New Zealand. Additionally, 236 licensed stores were operating in the Middle East, Europe and Asia. These licensed operations include the Greece and Romania businesses, which were sold to the company’s license partner in April 2025.

As announced on May 15, 2025, Foot Locker and DICK'S Sporting Goods have finalized a definitive merger agreement, under which DKS will acquire Foot Locker.

FL Stock Past Three-Month Performance

FL’s Financial Snapshot: Cash, Debt & Equity Overview

This Zacks Rank #4 (Sell) company ended the fiscal first quarter with cash and cash equivalents of $343 million. Long-term debt and obligations under finance leases amounted to $440 million. Shareholders’ equity totaled $2.61 billion. As of May 3, 2025, merchandise inventories were $1.67 billion, up 0.4% from the year-earlier quarter.

Over the past three months, FL shares have gained 33.7% compared with the industry’s 4.9% growth.

Stocks to Consider

Some better-ranked stocks are Urban Outfitters Inc. URBN, Genesco Inc. GCO and Allbirds Inc. BIRD.

Urban Outfitters is a lifestyle specialty retailer that offers fashion apparel and accessories, footwear, home decor and gift products. It currently sports a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

The Zacks Consensus Estimate for URBN’s fiscal 2025 earnings and sales implies growth of 20.9% and 8%, respectively, from the year-ago actuals. URBN delivered a trailing four-quarter average earnings surprise of 29%.

Genesco is a Nashville-based specialty retail and branded company that sells footwear and accessories in retail stores. It currently has a Zacks Rank #2 (Buy).

The Zacks Consensus Estimate for GCO’s fiscal 2025 earnings and sales implies growth of 62.8% and 0.6%, respectively, from the year-ago actuals. Genesco delivered a trailing four-quarter average earnings surprise of 37.2%.

Allbirds is a lifestyle brand that uses naturally derived materials to make footwear and apparel products. It carries a Zacks Rank of 2 at present.

The Zacks Consensus Estimate for BIRD’s current financial-year’s earnings implies growth of 16.1% from the year-ago actual. The company delivered a trailing four-quarter average earnings surprise of 21.3%.

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This article originally published on Zacks Investment Research (zacks.com).

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