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Foot Locker, Buckle Q2 Earnings Decline

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Specialty athletic retailer Foot Locker, Inc. (FL) reported Friday a second-quarter net profit that plunged from last year, hurt by a sales decline amid markdowns. Quarterly sales met Street estimates. The company also trimmed it adjusted earnings and sales growth guidance for the full-year 2022.

Denim retailer Buckle, Inc. (BKE) also reported a net profit for the second quarter that declined from last year, but topped analysts' expectations, while quarterly net sales increased but missed estimates.

Foot Locker is currently trading on the NYSE at $39.35, up $7.37 or 23.0 percent.

Foot Locker reported that net income for the second quarter plunged to $94 million or $0.99 per share from $430 million or $4.09 per share in the prior-year quarter.

Excluding items, adjusted earnings for the quarter was $1.10 per share, compared to $2.09 per share in the year-ago quarter.

Total sales for the quarter declined 9.2 percent to $2.07 billion from $2.28 billion in the same quarter last year. The Street was looking for revenues of $2.07 billion for the quarter.

Excluding the effect of foreign exchange rate fluctuations, total sales were down 6.1 percent. Comparable-store sales decreased 10.3 percent.

"Despite an increasingly challenging macroeconomic backdrop, we delivered a solid quarter against the favorable fiscal stimulus and promotional environment from last year," said Richard Johnson, Chairman and Chief Executive Officer.

Gross margin declined by 340 basis points compared with the prior-year period, driven mainly by higher markdowns

The company said the current inventory quality and aging are healthy, positioning the Company well for the Back-to-School season and the third quarter overall.

During the second quarter, the company opened 34 new stores, remodeled or relocated 24 stores, and closed 50 stores.

As at the end of the second quarter, the Company operated 2,799 stores in 28 countries in North America, Europe, Asia, Australia, and New Zealand. In addition, 148 franchised stores were operating in the Middle East and Asia.

"Following our solid results for the second quarter, against record results last year, we remain confident in our ability to achieve earnings within our original guidance range. But recognizing that the back half will likely see more pressure than we originally anticipated, we now expect to be at the lower end," noted Andrew Page, EVP and CFO.

Looking ahead, the company now projects adjusted earnings in the range of $4.25 to $4.45 per share on a sales decline of 6 to 7 percent, with comparable sales drop of 8 to 9 percent.

Previously, the company expected adjusted earnings at the upper end of the $4.25 to $4.60 per share range on a sales decline at the upper end of 4 to 6 percent range, with comparable sales drop at the upper end of the 8 to 10 percent range.

Meanwhile, Buckle reported second-quarter net income of $50.14 million or $1.01 per share, down from $51.42 million or $1.04 per share in the prior-year quarter.

Net sales for the quarter increased 2.3 percent to $301.98 million from $295.12 million in the same quarter last year.

On average, analysts polled by Thomson Reuters expected the company to report earnings of $0.89 per share on sales of $304.33 million for the quarter. Analysts' estimates typically exclude special items.

Comparable store net sales increased 1.6 percent. Online sales increased 6.5 percent to $46.2 million.

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