Foot Locker Earnings Call Nuggets: Lady Foot Locker and Consumer Environment

On Friday, Foot Locker Inc (NYSE:FL) reported its third quarter earnings and discussed the following topics in its earnings conference call. Take a look.

Lady Foot Locker

Paul Trussell – Deutsche Bank: Just to start off, can you just give a little bit more color Ken on what you’re seeing initially through the Lady Foot Locker remodels and if you can just give a little bit more color on SIX-02 and how it will differentiate from the remodel at Lady Foot Locker stores?

Ken C. Hicks – Chairman, President and CEO: The Lady Foot Locker stores are which more apparel presentation and apparel driven, more performance oriented, not as much on the classics and fashion shoes and we’ve got 14 of them up and they are performing better than the overall chain. But we’re still learning and we’ve got to make sure we keep them in stock on the apparel that we’ve got the right presentation of the performance that we tell the customers what’s there in the staff. So, while they are performing better than the chain some are performing much better and some are performing just at the chain, so we’re looking for more consistency as we have in our other remodels. With regard to SIX-02; SIX-02 is really taking that and putting it on steroids. It’s a much of stronger performance environment, very apparel driven, be more than 50% apparel in terms of presentation and it will be a much friendlier environment, it’s a bigger store so we’ll have more space to tell stories and communicate to that customer the full assortment of what we have.

Paul Trussell – Deutsche Bank: It was good to hear that merchandise margins were held flat in the U.S., but if you can just give us some color on expectations going forward and especially talk about Europe will we start to see some relief there from our merchandise margin standpoint, now that inventories are clean?

Lauren B. Peters – EVP and CFO: Yeah, well, as we’ve said, the expectation is that – the dynamics we saw in the third quarter will continue into certainly the fourth quarter and we’ll see about next year as we get closer but that dynamic is that when you lower IMU that we’re managing to offset at least domestically with a lower markdown, but in Europe, we have wanted to keep the inventory fresh and have had to take some additional markdowns to do that and so, we would hope that begins to mitigate and certainly as we see some strengths in basketball, which is an advantage for us, maybe that will help us there, but the dynamic of shipping revenue, I don’t see that abating, the customer loves free shipping.

Paul Trussell – Deutsche Bank: Just lastly, could you speak about the trends in footwear versus apparel margins this quarter?

Lauren B. Peters – EVP and CFO: I’ll tell you that we narrowed the gap, but we are still not declaring victory with apparel margins ahead of footwear margins.

Ken C. Hicks – Chairman, President and CEO: It’s about as close as you can get but I want to see it for a while before we say we’re there.