Foot Locker Q2 profit falls, new CEO and chair announced

Foot Locker has reported a drop in profit and sales in the second quarter against record results a year earlier as it announced key changes to its leadership team.

In the three months to July 30, net income dropped steeply to 94 million dollars from 430 million dollars a year earlier.

Meanwhile, net sales came in at 2.07 billion dollars, down 9.2 percent from a year earlier, but 16.4 percent higher than pre-Covid levels from 2019.

Second quarter comparable-store sales dropped 10.3 percent year-over-year.

Foot Locker’s finance chief Andrew Page said the company remains “confident” in its ability to achieve earnings within its original guidance range, but added that the second half “will likely see more pressure than we originally anticipated”, so it now expects results at the lower end.

The company forecasts full-year sales to drop by between 6 percent and 7 percent, against a previous estimate of a drop of between 4 percent and 6 percent.

The company now expects non-GAAP earnings per share for the full year of between 4.25 dollars and 4.45 dollars, against a previous estimate of between 4.25 dollars and 4.6 dollars.

“Despite an increasingly challenging macroeconomic backdrop, we delivered a solid quarter against the favourable fiscal stimulus and promotional environment from last year,” said chair and CEO Richard Johnson in a statement.

Leadership changes

In a separate announcement on Friday, Foot Locker revealed that Johnson would be stepping down from the company and his joint role as CEO and chair would be split into two.

Mary N. Dillon, the former chair and chief executive officer of Ulta Beauty, will replace Johnson as CEO from September 1.

Foot Locker’s lead independent director Dona Young will become non-executive chair as of February 1.

“It has been a privilege and an honor to lead Foot Locker and work alongside the best team in retail for nearly 30 years,” Johnson said in a statement.

He continued: “Together, we have built a broad house of brands and banners fueled by a shared passion for the global sneaker community. We have turned a brick-and-mortar company into an interactive retail community poised for long-term growth in the digital era.”

Incoming CEO Dillon commented: “I am thrilled to be joining Foot Locker, an iconic company that possesses a strong set of values and focus on the customer experience as well as tremendous growth opportunities.

“It is clear how Foot Locker sits at the heart of the global sport and sneaker community, and I am excited to become part of the company's team.”