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A deep malaise that infected most of the sporting goods and footwear business for nearly a year is now perhaps yielding to a new period of recovery.
Foot Locker reported on Thursday better-than-expected earnings in its fiscal first quarter, news that initially sent shares in the company up by more than 30% before ultimately closing with a 15% gain to $25.89 per share. That was just one day after stock in Dick’s Sporting Goods reached a new company high of $226.03 per share after its own news of improved sales and a boosted full-year outlook for 2024.
Adidas, which previously posted its first full-year loss in three decades, more recently delivered strong results for its first quarter and raised its full-year revenue projections.
“I remain confident that we’re on the path towards delivering sustainable, profitable long-term growth and shareholder value,” said Mary Dillon, Foot Locker president and CEO, in an earnings call with analysts. The company’s retail brands also include Champs Sports, Kids Foot Locker, Atmos, and WSS.
The reasons for the improved results are not particularly dramatic. Rather, they lie primarily in a mix of basic fundamentals, including improved product mixes among both manufacturers and retailers, new store concepts that have resonated, reduced losses due to lost and stolen merchandise, and improved macroeconomic conditions that for many of the key category players have led to higher customer spending levels.
“It’s the core strategies that are coming to life that are driving our performance, and we’re not seeing any pockets of softness around the country,” said Dick’s president and CEO Lauren Hobart in that company’s earnings call.
Still Some Outliers
There are still two notable exceptions to the developing recovery theme in the category, however: Nike and Under Armour. Nike is in the midst of a three-year, $2 billion cost-cutting program that includes multiple rounds of layoffs, and also is still unwinding the debacle surrounding its newly designed MLB uniforms. Its stock has sagged by more than 12% this year.
Under Armour, meanwhile, recently announced a restructuring that will include significant layoffs, a move that follows falling sales and the abrupt departure of former chief executive Stephanie Linnartz. Shares in that company have fallen by more than 20% this year.
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