Foot Locker: Q2 2021 results well above consensus

  •   06/09/2021 - 08h10
  •   DEHOUI Lionel

Foot Locker is a specialist in the distribution of sports equipment throughout the world. It was founded in 2001 when retailer Woolworth's changed its name to its flagship brand. Although the group closed 57 stores in the second quarter of 2021, it opened 16 new ones and relocated or renovated another 23 stores. Its quarterly results were well above consensus.

Foot Locker: Q2 2021 results well above consensus

Foot Locker's Q2/2021 Net Income and EPS

As announced in early August, Foot Locker Group released its financial results counting for the second quarter of 2021 ended in late July. It earned $430 million in net income during that period compared to $45 million in net income in Q2/2020. In other words, its business generated $4.09 in EPS in Q2/2021 versus $0.43 in the equivalent period last year.

Therefore, the US retailer has outperformed the $60 million (or $0.55 per share) in net income achieved in Q2/2019. Note that Covid-19 and its economic impact are post fiscal 2019.

On a non-GAAP basis, Foot Locker reported earnings up 200% to $2.21 per share from $0.71 in Q2/2020. EPS had reached $0.66 in Q2 2019 on a non-GAAP basis.

Note: Adjusted EPS is double the consensus expectation of $1.01.

 

Sales acceleration in the second quarter of 2021

The US group's strong second-quarter performance was driven by a 6.9% increase in same-store sales. This exceeded the market's expectations of a 0.2% decline.

Overall, Foot Locker's sales rose 9.5 percent to $2.275 billion in the three months. The group's sales in the same period last year had generated $2.077 billion.

Total sales for the second quarter of 2021 were up 7.3% excluding the impact of currency fluctuations. In the pre-Health Crisis year (2019), the group's total sales had increased by 28.2% in the second quarter.

 

Foot Locker's profit in the first half of 2021

Considering the entire 1H2021, Foot Locker's net profit is $632 million versus a net loss of $65 million in H1/2020. This corresponds to an EPS of $6.02 versus $0.62 in H1 2020. Earnings per share generated in the first six months of 2021 were $4.17 compared to $0.05 a year ago.

Year-to-date sales were up 36.1% to $4.428 billion compared to $3.253 billion in 1H2020. In terms of same-store sales for the six months, they were up 33.4% as were total sales (+33.4%).

 

Financial Position of the Company as of July 31, 2021

Foot Locker's merchandise inventory was $1.080 billion as of July 31, 2021 (down 10.4%). As of that date, its cash and cash equivalents are $1.845 billion with debt of $112 million.

The US group's total cash and cash equivalents (net of debt) stood at $1.733 billion at the end of this first half of 2021. At the end of the first half of 2020, Foot Locker's total cash position stood at $484m.