Foot Locker expects to see a huge jump in sales during the second quarter of 2020 thanks to a surge in consumers who spent federal stimulus dollars on new athletic shoes, according to news reports.
The company’s quarterly projections, released Monday, show sales grew by 18% at stores that have been open for at least a year, surprising investment analysts who had expected a drop of 9% or more.
The reopening of Foot Locker stores in June after being shut down since March due to the coronavirus pandemic likely fueled the dramatic rebound.
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Chairman and CEO Richard Johnson attributed the bump in sales to “pent-up demand and the effect of fiscal stimulus.”
“While these undoubtedly remain challenging times, we are nonetheless pleased by the health of our category,” he said.
CFO Lauren Peters added the company saw stronger sales thanks to “disciplined expense management” and, to a lesser degree, price cutting to lure customers.
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The official second-quarter earnings results will be released Aug. 21. The company expects to report a per-share adjusted profit between 66 and 70 cents. Wall Street had been projecting a loss of 16 cents.
Wall Street shares for the popular sneaker chain rose more than 7% after Monday’s announcement, while Nike shares shot up 4%, according to reports.
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Investors, however, are only cautiously optimistic as the entire athletic apparel industry struggles amid the pandemic.
Foot Locker stock is still down 25% when compared with 2019, with the chain citing “the uncertainty surrounding the evolving Covid-19 pandemic and its potential impact on the back-to-school season, team sports participation and additional government stimulus packages.”
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