Foot Locker Earnings Call Nuggets: Quarter-to-Date Comps and ASP Outlook
Foot Locker Inc (NYSE:FL) recently reported its fourth quarter earnings and discussed the following topics in its earnings conference call.
Michael Binetti – UBS: Just a quick clarification Ken. I think we got the March and the February number in there. Can you just tell us where the quarter to-date is on comps right now?
Kenneth C. Hicks – Chairman, President and CEO: We did not say that, but the quarter up right now is in the low singles. We recognized we only have a couple of days of March in the whole month of February.
Michael Binetti – UBS: With basketball up 20% plus in the quarter, I am trying to figure out where some of the headwinds that brought the core Foot Locker chain down to comps at about high-single-digits. Could you comment on some of the offsets there?
Kenneth C. Hicks – Chairman, President and CEO: Running as we said is not up to that level and some of the classics did not performed at a stronger level.
Michael Binetti – UBS: So, you are rebooting a little bit on the women side, you’ve got some new test stores of SIX-02 but I think I’d say even with that negative high-single-digit decline at Lady Foot Locker wasn’t up to where you thought it would be at this point after all the stores you closed over the years in the lady business. Can you give us kind of an update on what’s going on there and it seemed what is causing perhaps the deceleration even at this point and maybe little bit on how you think about what gives you confidence and the opportunity to grow that significantly over the next few years?
Kenneth C. Hicks – Chairman, President and CEO: We obviously would like for the women’s business to be stronger. The challenges that we have in women is the Lady Foot Locker business is that we changed that customer and you guys have heard me say before when you fire a customer, they know immediately and it takes a while to bring a customer in. Our overall women’s business as we said was flat, so we are able to make up that loss with the fashion customer in our other chains like Foot Locker and Champs. In Lady as we move to a more active customer, a little bit older 25 to 35, that’s taking time. We also are going through a transition in the apparel area where we have sold a lot of cotton by the pound and now we’re focusing on higher quality from both the brands on our own private Actra label.
Kate McShane – Citi: Within your guidance, I wondered if you could give us any indication of what your ASP outlook is for the year.
Lauren B. Peters – EVP and CFO: ASPs have been favorable and we’d expect that that would continue to help support that mid-single-digit comp gain guidance that we gave. With a value that we are putting into product and what we’re offering the customer is supporting that, and the other thing that’s contributing to that is our shifts in apparel as we moved that business to a branded product away from that cotton by the pound that Ken mentioned.
Kate McShane – Citi: I know its early days, but wondered if you had seen any change in the running category momentum since the new Flyknit product has come out?
Richard A. Johnson – EVP and COO: Well, we’ve got Flyknit featured in our run stores. We expect a bigger batch of Flyknit to be in our stores in April and May. So, we expect to see some very positive movement with that.
Kate McShane – Citi: And then my last question is just on Europe. Ken, can you walk us through a little bit what you’re seeing in Europe? How – I know the comps are low single-digits. Maybe how the environment has changed this past quarter versus the quarter before?
Kenneth C. Hicks – Chairman, President and CEO: We’re seeing similar things what we have seen in Europe from the point that the Northern Europe, and particularly, Germany continues to be strong. Southern Europe has its challenges. But what we think is that it’s reached a level. That’s a maintainable level. We also have worked hard on our assortments there. We’ve put in a stronger basketball and performance and running position and those have worked well for us. So, we’re seeing the product mix help us. We are strengthening our position in the markets that are not as impacted by some of the things going on, and even in those markets we see kind of a settling out of the business.
A Closer Look: Foot Locker Earnings Cheat Sheet>>