- Foot Locker Inc (NYSE:FL) reported fourth-quarter FY21 sales growth of 6.9% year-on-year, to $2.34 billion, narrowly beating the consensus of $2.33 billion.
- Q4 comparable-store sales increased by 0.8%, with apparel significantly outpacing footwear.
- The gross margin fell 10 basis points to 33%, with strong merchandise margin gains offset by occupancy deleverage.
- Selling, general and administrative expenses rose 14.1% Y/Y to $525 million, driven by increased labor costs, marketing and technology spend.
- The operating margin was 5%, and operating income for the quarter fell 26.7% to $118 million.
- Adjusted EPS of $1.67 beat the consensus of $1.44.
- The company held $804 million in cash and equivalents as of January 29, 2022.
- Dividend: The company's board declared a quarterly cash dividend of $0.40 per share, a 33% increase from the prior $0.30 per share, back to pre-pandemic levels. The dividend is payable on April 29, 2022, to shareholders of record on April 14, 2022.
- Buyback: The board has also authorized a new share repurchase program to repurchase up to $1.2 billion of common stock.
- Update On Vendor Mix: Beginning in Q4 of 2022, Foot Locker does not expect any one vendor to represent more than 55% of total supplier spend, down from 65% in Q4 of 2021.
- As a result, no single vendor is expected to represent more than 60% of total purchases for FY22, down from 70% in 2021 and 75% in 2020.
- The company also plans to accelerate the shift to off-mall and rollout of key growth banners, and implement a cost reduction program.
- Outlook: Foot Locker sees FY22 sales down 4% - 6% Y/Y and Comparable sales down 8% - 10%. The company expects gross margin of 30.1% - 30.3%.
- The company expects FY22 EPS of $4.25 - $4.60.
- Price Action: FL shares are trading lower by 31.3% at $28.45 on the last check Friday.
