Foot Locker shares soar after report shows high demand

Foot Locker shares jumped as much as 18 percent Friday, the most since August, after the athletic retailer posted thirdquarter results that show high shopper demand despite inflationary pressure.

Comparable sales edged up 0.8 percent, well ahead of analyst estimates for a 5.9 percent decline. Though revenue fell 0.7 percent to $2.17 billion, it also beat expectations.

“Despite the tough environment, our expanding customer base remained resilient,” CEO Mary Dillon said in a statement.

Shoppers are pulling back on their discretionary spending as the cost of essentials such as food and housing has sharply increased. Foot Locker is in the process of revamping its assortment of merchandise as Nike Inc. shifts its products away from retailers. And Foot Locker expects a $50 million fourth-quarter impact from no longer selling Adidas’ Yeezy merchandise after Adidas ended its partnership with Ye.

Still, Dillon said on the Friday earnings call that brands such as New Balance; On, the Swiss fitness brand; and Hoka are appealing to existing customers and attracting new ones.

Merchandise inventory rose 29.5 percent for the quarter, reaching $1.69 billion. Analyst estimates compiled by Bloomberg called for a 9.3 percent increase to $1.42 billion. Foot Locker raised its fourthquarter and full-year outlook based on the company’s “inventory position in high-quality product” as well as “strong momentum” for the holiday season, Chief Financial Officer Andrew Page said in the statement. The company expects to end the fourth quarter with inventory up in the 30 percent range as well.

Shares of Foot Locker were down 24 percent this year through Thursday, deeper than the 17 percent decline of the S&P 500 Index.