(fl) 4q15 results: strong sales benefited from nike and ... microsoft word - foot locker fl 4q15...
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1 DEBORAH WEINSWIG, EXECUTIVE DIRECTOR–HEAD OF GLOBAL RETAIL & TECHNOLOGY DEBORAHWEINSWIG@FUNG1937.COM US: 917.655.6790 HK: 852.6119.1779 CN: 86.186.1420.3016 Copyright © 2016 The Fung Group. All rights reserved.
FEB. 26, 2016
(FL) 4Q15 Results: Strong Sales Benefited from Nike and Under Armour • Foot Locker reported 4Q15 revenue of $2.0 billion, up 5.0% year over year, in line
with the consensus estimate.
• The company reported adjusted EPS of $1.16 for the quarter, up 16.0% year over year and beating the consensus estimate of $1.12. The upside was driven by sales in the basketball and running footwear segments. Comparable-‐store sales increased by 7.9%, beating the consensus of 5.9% and in line with guidance for a mid-‐single-‐digit increase.
• For 2016, Foot Locker expects a mid-‐single-‐digit comp increase, in line with the consensus estimate of 4.7%. EPS is projected to grow in the double digits versus analysts’ expectations of a 10.8% increase, to $4.75.
Figure 1. Foot Locker Key Metrics
4Q15 4Q14 YoY Change
Revenue (USD Bil.) $2.0 $1.9 5.0%
Gross Margin 33.6% 32.9% 72 b.p.
SG&A/Sales 19.3% 19.6% (34) b.p.
Operating Margin 12.2% 11.7% 49 b.p.
Adjusted EPS (USD) $1.16 $1.00 16.0% Source: Company reports
Foot Locker reported strong 4Q15 total sales of $2.0 billion, up 5.0% year over year and in line with the consensus estimate. On a constant-‐currency basis, sales increased by 8.8%. Net income totaled $158 million, or $1.16 per diluted share, an 8.2% gain over the year-‐ago quarter.
Results by Segment
Footwear drove sales gains, with double-‐digit growth in the quarter. Men’s footwear increased at a high-‐single-‐digit rate, while women’s and kids’ footwear were both up by double digits. Nike, Under Armour and other activewear brands have driven sales amid the ongoing athleisure trend.
By category, the running business recorded mid-‐teen gains in comps in the quarter, with double-‐digit gains in every region, driven by Nike and adidas. Basketball saw gains in the lower end of the mid-‐single digit range, thanks to strong growth of the Jordan brand (especially in North America), as well as Nike and Stephen Curry for Under Armour. These gains were partially offset by low-‐single-‐digit declines in apparel and accessories.
Results by Division
Total sales in the international division increased by more than 10% in local currency in each of the regions, led by Foot Locker Asia-‐Pacific’s mid-‐teens comparable sales gain. Foot Locker Europe increased in the teens and Foot Locker Canada saw double-‐digit comp growth.
2 DEBORAH WEINSWIG, EXECUTIVE DIRECTOR–HEAD OF GLOBAL RETAIL & TECHNOLOGY DEBORAHWEINSWIG@FUNG1937.COM US: 917.655.6790 HK: 852.6119.1779 CN: 86.186.1420.3016 Copyright © 2016 The Fung Group. All rights reserved.
FEB. 26, 2016
The direct-‐to-‐customer division turned in another strong performance, with an overall comparable sales gain of 9.6%. Domestic store banner e-‐commerce businesses collectively increased by 20%, with even faster growth outside the US. This was partially offset by Eastbay sales, which experienced a low-‐single-‐digit decrease in the quarter.
The domestic divisions posted solid sales, with Kids Foot Locker leading the way with a high-‐single-‐digit comparable sales gain and a double-‐digit revenue increase. Champs Sports and Lady Foot Locker each had mid-‐single-‐digit comp increases, while Footaction saw a low-‐single-‐digit increase compared to the year-‐ago quarter. The Runners Point and Sidestep banners saw mid-‐single-‐digit decreases in comps.
2015 Results
For 2015, Foot Locker reported that total sales increased by 3.6%, to $7.4 billion. Adjusted EPS was $4.29, up 20% compared to 2014. Comparable-‐store sales increased by 8.5% in the year.
Guidance
For 2016, Foot Locker expects mid-‐single-‐digit comp growth, in line with the consensus estimate of 4.7%. EPS is projected to grow by double digits versus analysts’ expectations of a 10.8% increase, to $4.75. The consensus estimate calls for sales to increase by 5.1% to $7.8 billion. The company did not provide sales guidance for 2016.
3 DEBORAH WEINSWIG, EXECUTIVE DIRECTOR–HEAD OF GLOBAL RETAIL & TECHNOLOGY DEBORAHWEINSWIG@FUNG1937.COM US: 917.655.6790 HK: 852.6119.1779 CN: 86.186.1420.3016 Copyright © 2016 The Fung Group. All rights reserved.
FEB. 26, 2016
Deborah Weinswig, CPA Fung Business Intelligence Centre New York: 917.655.6790 Hong Kong: 852.6119.1779 China: 86.186.1420.3016 deborahweinswig@fung1937.com Filippo Battaini filippobattaini@fung1937.com
Chim Sau Wai chimsauwai@fung1937.com
Rachael Dimit rachaeldimit@fung1937.com
Marie Driscoll, CFA mariedriscoll@fung1937.com
John Harmon, CFA johnharmon@fung1937.com
Aragorn Ho aragornho@fung1937.com
John Mercer johnmercer@fung1937.com
Shoshana Pollack shoshanapollack@fung1937.com
Kiril Popov kirilpopov@fung1937.com
Jing Wang jingwang@fung1937.com
Steven Winnick stevenwinnick@fung1937.com
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