Foot Locker has raised its annual forecast on the heels of strong Thanksgiving week sales and continued progress on its growth plan.
The company saw strong online and in-store sales and an increase in the total amount shoppers spent and the number of products they bought. It also saw shoppers willing to pay full price for new, compelling, and trendy products.
“We know we’re vying for wallet share with a value-conscious consumer this holiday season,” said CEO Mary Dillon. “While our customers remain discerning with their discretionary dollars and we expect that will continue to through the season, we’re also seeing them respond to newness at key moments.”
Dillon also pointed to the company’s turnaround efforts, including a new marketing partnership with NBA, which all contributed to a strong start to the 2023 holiday shopping season.
Looking ahead, the company is now anticipating an 8.5% to 9% decline in full-year comparable sales, an improvement over the 10% decline it was experiencing before. Meanwhile, the company’s similar store sales were down 8% for the last quarter that ended October 28, beating analysts’ expectations of a 9.7% drop.
The company’s earnings update sent its shares by 16% on Wednesday.
One of the critical challenges being faced by the New York-based company is the slowdown in consumers’ discretionary spending as they prioritize spending on food, everyday needs, and experiences. The company is also facing other issues, such as poorly performing stores in struggling malls, overreliance on Nike merchandise, and excess inventory. In Q3, the company’s inventory levels were 10.5% higher compared to the same period last year. That said, Foot Locker noted that 6% of that stock pile-up was strategic to maintain enough inventory for the holiday season.
According to Dillon, the company expects to keep its inventory levels either flat or slightly down compared to 2022 by the end of the fiscal year.