5 Percent Less Inventory Helps Foot Locker Boost Comp Store Sales 2.5 Percent

Despite basically flat overall sales, Foot Locker was able to increase its comp store sales by 2.5% and earn net income of $6 million for the quarter ending July 31, up from a break-even result during the same period last year. Executives attributed the athletic apparel and footwear retailer's improved performance to more targeted markdowns and inventory levels that were 5.1% lower than the same period last year.

"During the second quarter, we generated a comp store sales increase in line with our initial expectations even with our strategic decision to reduce the level of promotions in our U.S. stores," said Ken Hicks, Foot Locker's chairman, president and CEO during an August 20 conference call. "Our sales results reflect our improved inventory position, which is allowing our merchants to flow fresh assortments to our business more effectively."

Hicks added that Foot Locker's "increased selling prices reflect both a lower markdown rate and a favorable mix shift towards more premium-priced footwear." He cited more targeted markdowns on slower-moving items, "so that we get increased sales but we have profitable increased sales."

In another sign of the retailer's growing confidence, Hicks said Foot Locker's objective was to reduce the number of targeted store closings this year, which it had initially set at 150 stores. The company has decided to increase its store openings for the year, adding five new U.S. stores for a total of 45 new stores globally. "Our capital expenditures program remains on track to be about $110 million for the year, even as we increase our store opening plans," said Hicks.