Investors are rewarding Foot Locker (FL) for taking a step in the right direction.
On Thursday, shares jumped more than 14% before the market open as CEO Mary Dillon called Q1 “a solid start to the year.” The company’s efforts to improve its digital business, store experience, loyalty, and brand building seem to be showing early signs of promise.
Same-store sales dropped 1.8%, better than the 1.93% decline Wall Street expected. Revenue came in at $1.88 billion, compared to the $1.89 billion expected, while adjusted earnings per share of $0.22 beat the $0.12 estimated.
The company reaffirmed its 2024 guidance, with same-store sales expected to grow between 1% and 3%, while overall sales are expected to range between a 1% decline and a 1% gain. It expects full-year EPS to come in between $1.50 and $1.70.
Prior to the report, Foot Locker shares dropped nearly 27% year to date, compared to the S&P 500’s (^GSPC) roughly 11% gain.
The company has been working on new store remodels (pictured below), which Dillon said is “elevating the customer experience.”
The company opened four new stores in the quarter and closed 37. It remodeled or relocated 16 stores and updated 13 stores to the current design standards.
Foot Locker plans to refresh two-thirds of its global Foot Locker and Kids Foot Locker locations over the next few years.
Its loyalty program, FLX Rewards, has been in testing and is expected to formally launch in Q2. It’s showing early signs of “higher activations and average transaction metrics in test,” per Evercore ISI analyst Michael Binetti.
He expects it will allow the company to gain more consumer insights. Just 20% of Foot Locker’s transactions happen through its loyalty program, compared to 60%-80% for the retail industry.
Dillon said the launch “will further strengthen” its “demand flywheel” as it looks to become a modern, omnichannel retailer.
The earnings breakdown
Here’s what Foot Locker reported for Q1, compared to Wall Street estimates, per Bloomberg consensus data:
Adjusted earnings per share: $0.22 versus $0.12
Revenue: $1.88 billion versus $1.89 billion
Same-store sales growth: -1.8% versus -1.93%
This story is breaking and being updated.
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Brooke DiPalma is a senior reporter for Yahoo Finance. Follow her on Twitter at @BrookeDiPalma or email her at bdipalma@yahoofinance.com.