FL - Earnings call transcript Q2 2018

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Operator

Good morning, ladies and gentlemen, and welcome to Foot Locker’s Second Quarter 2018 Fiscal Results Conference Call. At this time, all participants are in a listen-only mode. Later, we will conduct a question-and-answer session. This conference may contain forward-looking statements that reflect management’s current views of future events and financial performance. Management undertakes no obligation to update these forward-looking statements which are based on many assumptions and factors, including the effects of currency fluctuations, customer performances, economic and market conditions worldwide, and other risks and uncertainties described more fully in the Company’s press releases and in reports filed with the SEC, including the most recently filed Form 10-K and Form 10-Q. assumptions results could those may the statements. such results, significantly contained in forward-looking actual and differ changes or produce factors different in Any materially from conference recorded. Please is that this note being the call and Finance I will Relations. now over Jim President, Investor Lance, to Corporate Vice turn Mr. may you Lance, begin.

Jim Lance

quarter Thank Welcome second Foot call. Locker, to Kim. conference you, Inc.’s everyone earnings

the of quarter per reported quarter disclosed, related these and have release. results last pension litigation share in income the $XX million of million charge charge in last net detailed reported pretax toll income related in GAAP a tax regulations litigation. incremental this an As On to matter a the Included as was is year’s offset million the $XX year. morning’s earnings tax the per compared benefits second basis, Company $X in second the net second $XX to press previously pension million to in of same XXXX. the share changes in quarter share to charge reform release, press the of year’s $X.XX $X other related is to in by in we Included per of this compared $X.XX million

will the morning’s a noted, these included in based figures increase per on share, and results versus GAAP is quarter mentioned Excluding a be on to non-GAAP otherwise reconciliation earnings of rates items, our press XX% share. non-GAAP per last second basis, were this today call Unless non-GAAP $X.XX results. year’s A during release. $X.XX

details our on review of key along update Vice of the President with Lauren along and Lauren? drivers second who second the will Officer, and then with Dick quarter an remarks XXXX ongoing quarter financial Executive Foot and will for with initiatives. our our real performance balance year. outlook our Chief our who Executive estate Officer, Chairman results begin Johnson, the Locker’s will prepared We financial Chief Financial on provide Peters,

Lauren Peters

X.X% Jim, we in guidance good second earlier which Reported generated quarter, spoke. comparable sales morning time that we the the you, Thank the last within and everyone. we provided this morning is

We improving rate fresh inflection products. positive of sales, and gross an this and encouraged in expansion in assortment margin exciting our are by comp

that, with top-line. Given it starts all the

let’s July June comp in picked there. a down So, drill digits, sales single increased gain. digit By and low to May up single down month, back low low was digits. single post

percent week Our primarily sales total the difference The impact. total reported was sales gain sales increased increase shift XXrd comp the to X.X%. and our between due

foreign its our down. while by rates from exchange up, footwear with another our million. average decline in were consecutive prices units more sales strong effects for quarter reflecting strong performance, our increased and $XX eighth business, selling appetite Within Apparel up apparel, had posted double were the comp slight Additionally, ASPs up families a of of units branded Both premium, assortment. sales. digits, positive comp customers’

the improving women’s assortment, bags and reflecting declines. depth Lastly, were our both sales Men’s low down breadth demand strong hats posted by as and and into declines comp in produced double digit single-digit comp product a footwear. was for kids socks. low while accessories offset single Digging digits, gain, in

increase down penetration Canada was women’s digits, and signature comp were was strong positive American had an Champ East end The Turning next some a high to led generated The businesses. banner performances digits. single Foot at gain. Locker high mid single-digit U.S. Sports, Action, and We was was our Foot gains. down of banner SIX:XX has up store which posted mid low of Locker which the both mid the and single basketball, with Locker in Foot banners. banners results Bay, Kids Yet North by single-digits. Foot slight high comparable while sales also had digits single decline. Jordan our a strongest

more divisions down than down channel, Europe each others, X.X% Point direct-to-customer results. Sidestep drove X.X%. Locker overall, markets, Pacific Germany, single Sidestep. and work international In remains up decline, few Europe, Locker comp which was the were digits. sales Foot to double challenges Our softer some digits. posted sales market a and Asia our further Foot comparable Runners at channel Dick our In Runners were digits, at some contributed Point results a low comp while products quarter. to promotional the that impacted through the minutes, the such down around with provide will stores at during these top-line continued while as mid color single By

from of the for low for quarter, essentially was percent sales, store with banners Overall, year. a U.S. As XX.X% XX.X% our traffic DTC digits our and at single down traffic international at single digits up total last down the banners. high quarter, flat was

Moving on of to the income rest statement. the

our in the primarily occupancy rate and XX.X% came year. the lower versus rate environment in a merchandise promotional margin in the to merchandise than markets XX the compensation. ongoing better was increase The higher markdowns our and basis which in our of at at in and offset of The led more improvement our XX result margin a results margin leverage gross reflects margin guidance. up Our buyers’ basis-point U.S. our banners, XX.X% than international last points basis second rate XX quarter, points in

rate sales XX.X% The the year. expense. reflects points came we digital as basis quarter, SG&A higher capabilities the XX.X% our in as in are the in to XXX expense incentive compared Our prior ongoing investments up compensation percent expense SG&A well a in making as at higher of

of prior our outlook accruals for As be our bonus reduced with QX line XXXX. in we we in in to described last our call, year,

more bonus normalized accrual. For includes SG&A XXXX, expense a

flat benefit rate contributed million, had to $X GAAP our customer XX basis as a to was in the a from charge, result expense million points last addition, which tax million we investments last experience, $X of income a the Depreciation up In quarter, came of deleverage. elevate legal interest ongoing in On year. the $XX year, while basis, was basis year, tax than our XXX tax the XX% was the than the prior non-GAAP a foreign this detailed basis, in reconciliation. the as tax several as from non-GAAP due income to the concluding came XX.X%; to GAAP rate lower at higher points On rate in XX.X%, impact due well adjustments the of the at a rate audit. federal

$X.XXX $XX ended QX are Turning a million of with $XXX million to sheet. plan the million. from year. cash the we capital to million of annual balance beginning of the by XX% We million the the million buyback increased of We on to included equivalents, with shares. during quarter cash We $XX cash $XXX about to the returned year of on million expenditures of the the $XX.X X.X along year shares and our This quarter of to of at quarter. end the million which track million. during spend and $XXX shareholders our this and $XXX last total, spent returned have X.X we In close decrease dividend for this shareholders repurchase through

real second X at X,XXX quarter estate. the end quarter. We the stores, of Looking with ended Company-owned of first the stores a from decrease

London new new stores opened and we Stores in Power the XX QX, Liverpool. including During

XX addition, remodeled closed In XX stores relocated and or stores. we

on our Kong Malaysia, track are expect expansion full close We still open approximately XXX Singapore. Hong doors and to into the to year, For XX we new including stores.

including an cost the the Dick, a X.X% currency basis, of few back inventory a drive a quarter, more in that increase of overall. ago, increase. decreased is We with On to flow more the the combined products, want our turn management and down X.X% X.X%. inventory and X.X% over That with to during on inventory compared the total half had starts of sales XXXX. to making compared and And remainder improving we inventory feel a I with sales a touch year approach stronger QX back-to-school disciplined topics outlook I the inventory Before period. the of important for solid year. from well-positioned to to results call This we’re productive

trends. For of the year, the about are we remainder top-line improving the encouraged

with For single single sales strengthening still comparable further we up within to expect the low be low quarter, range. digit third that digits QX

offset up to XXrd margin to coming shift. expense, anticipate due XX QX points. we partially the occupancy to margin, basis the week impact deleverage our gross from be assortments, by the For gains stronger of product XX Merchandise on

recall, the week shift. capability of investments charges. shift. SG&A is incentive of may $X XXX last the a QX increase basis as expense points that out as reminder, third percent as quarter due digital expense to This to to is Also we move with making, XXrd of $XX you compensation SG&A the the of sales, a as XXX related hurricane in sales. wage along well to the year, million As are of pressures, about by included million likely due primarily increase normalized

in and an points, Dick? XX to basis of sale. our $X.XX XXXX. by XX-week year, we full on low XXX the more margin of over the with to expect real a the to double-digit and sales update over all the SG&A range to cover basis we be call in XXXX digits on expect that, while XX as basis, the points, growth in to up of single now XXX EPS product to gross initiatives. we to percent improve Given for still along XX-week expect increase still I’ll now depth, hand digital a comparable estate EPS highlights Also Dick, non-GAAP

Dick Johnson

several are was you for line succeed reflects we joining morning, earnings today. Thank share our doing in we the that the a work expectations, well-positioned everyone, in rapidly are you, to evolving quarter with a per posted on gain, This Good we positive thank us Lauren. XX%. environment. as second by and so grew and comp performance fronts, Overall,

moving Our fast. customers are

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start to me are by on all focusing even that meant areas customer. our bring closer three Let to us

product. is area first The

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The is focus our second area strategy. estate real around of

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about the the We overall customer potential are excited improve to experience.

on efforts at Looking digital the platforms. our upgrade ongoing

During the platform. quarter, to responsive completed our new, more our further sites upgrades of we digital

loyalty for all streamlined, As of time. we with over and customers. program much out VIP a and signup will more for personalization continue functionality, through example that section One our more My allow we banners Account a our will added XXXX, our process roll to upgrade across move the greater includes to more this straightforward

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also the will In of terms deliver that vendor help anticipate collaborations we back styles our for we product balance Not the with only unique guidance. against flow half. optimistic do improving in remain we footwear depth product comp throughout will of premium apparel and exclusives the multiple year, introduce from more brands outlook and and the partners, our the innovative us

inspire one business. my now this For be as Your passion we none service believe will success content and questions. marketplace. call you example, the We every and of use Air types featuring closing, Nike, Jayson our Air and can drive culture with all thanks introductions and contributions up enhance related the Foot each want further Discover for on Locker. leadership announced will exclusive to platform product our possible the associates’ business. Tatum our to of them the campaign This our the journey and express for position In of open empower I campaign in in creative would Nike continue this the sneakers. at week, ongoing Jim, we without Air Nike of long-term these energy, to to

Operator

will gentlemen, begin and Barclays Thank ahead. session. a Instructions] Matt Ladies from has McClintock [Operator question-and-answer we the question. Go you. now

Matt McClintock

is we’ve Hi. as single I’m what or low in XXXX, maybe to Yes. seen guidance take an longer to Is little the range think is coming maybe really Good get comps the in out and get everyone. back single range. to just this be some of we accelerate could we to to the or Thank Dick a to should comparing with for half it that range, morning, of that in term basketball digit basketball you. back the into higher? against malaise going digit of this about? the Lauren, us get low trying year comp the thinking that kind acceleration start

Dick Johnson

Matt. of question, a the things. combination for really many Thanks It’s

really well. Certainly certain great casual Our continue interest. making merchant items that and compelling and is to vendor basketball drives the critical stories to assortment that as exciting create with silhouettes silhouettes doing work heat team our for included is running and partners product product us, that in the getting strength the and drive the

comp while strong I footwear it’s things. and helps had many So, the eight now of broad silhouettes across assortment We’ve that think a side a business, many, business, women’s some comps. of men’s, quarters kids. apparel for higher to business our a certainly will on many heat and going, range need lot And the certainly we’ve drive got really acceleration We that across cylinders. of strength

Matt McClintock

from? a follow-up. of overall for that where a more came you this SIX:XX that. And into with more, just gain as I’m as Thank The apparel decline I in bit as detail, the little just could parse was it you at quarter, some strong to mean, trying maybe dive SIX:XX, Okay.

Dick Johnson

product up Matt, on as et last And had FENTY and was model little but in heat year. some SIX:XX SIX:XX, quarter apparel, product Saturdays different in that a much Well, strong and against the cetera. by bit launches is good launch not a FENTY from driven really it’s

just a prolific had against the we them. have this year really didn’t launches, to So, year when ammunition And so it did that job, didn’t and team pretty reassort the against last and push gap. big this to Carol ago have but they a we great it and a created up those were year product the year,

Operator

the on with line the is Jefferies from question. Stichter Janine

Janine Stichter

some on units ask I business morning. Jordan pullback about to Good pressure just the Yes. headwind perspective strategy? about give timeline? we distribution I due when business. just the bit to the to start wanted in under changes some Hi. think in the in that know, we and should a we seen us Thank have the abating that lap you. market. Can you How

Dick Johnson

started repeat just that? the end out you fade Can bit. to little a You of

Janine Stichter

Yes, sure.

Just basis start the get the made of when lapping the in and to lap when we’re we on changes pullback Thank on kind apples the in market? you. strategy that units the when we to distribution apples changes

Dick Johnson

Yes. I that start launch the remarks. in in my some we on mentioned to we to The improve. day of that, quarter. have when start fourth Janine, that start back, We prepared the to continues to We really to but don’t occur, overlap see to units quarter. sell-through have expect pulled get because abate the tail, fourth been

Operator

Eric from the question. with is Tracy on the Buckingham Research line

Eric Tracy

to with total, platforms that scaling abates I Hey, new then, go have everyone. perspective. the Good or am launched there just obviously, and basketball from the think back getting platforms been Jordan that, around that of that -- those, embedded we just I And or within about the of within sort mentioned just the in existing going accelerating overall? you visibility product Thanks. basketball to assumptions is assumption guess, already in if a coming? maybe And as comps where you the some within deeper there are half, assumption I morning. to could is how is, a that just

Dick Johnson

on exist some will already, be been some new has them them some hard those will as of partners, team, platforms merchant mentioned, that be some of will I new exciting platforms. and of work to things, vendor create certainly be our at with on Well,

And as it So, the and help by Jordan it’s of see say same of will think basketball this of of I’ve many cool some the return, up fall, not the when much places player focused the But, of in a will on return categories the broad it be different a things. right again, they our are that excitements -- now, has back some apparel finding that they’re Eric, NBA the or it it fact in will I expect on half. our seen some interests. around comp the abate the consumer. certainly, certainly that combination some as some whether we different lot against back times, got start brands. cool. strength cool strength are that starts with And be shouldn’t many numbers think we I help or be the certainly of range lead categories said movement to as there kid, business. And the I as They’ve to a at Basketball, is things driving to

think I well work and really bodes seasons. for for that holiday partners vendor with So, the our that fall the doing we’re

Eric Tracy

evolving. talked on in campaigns And Nike of DTC out I if could the some is follow there up of just Air. lot exclusive of then, the a with concern you about just around brand clearly, But terms there

sort of launch you So, examples? of maybe it things to if of other platforms. the your digital to, to there are And just schedule that to and/or exclusivity that’s the some particularly, driving as speak Dick, could, you relates store garner all traffic like level those type continue campaigns, and either if

Dick Johnson

product. launched got the grow, discovery we’ve the Find DTC just essentially ones. a merchant talked interact that that it’s vendor we They The are number of in the reiterate to working to they bring awful to want strong core of team enough the work with enjoy that consumer the those both on. I consumers. having of lot in right. that to when marketplace. energy driving create Europe. is our partners being deep many around is a But vendor got I’m we’ve traffic consumers talked going the digital we’ve the ASICS, has. sites customer can’t an all about would had an The Air driven store. create we’ve like And And have not environment. our and they last little and so. great get future all part into our But our core down the integrated in with excitement physical this West We some with you’re consumers, exclusive there Well, East launch platforms vendors. going quarter. to to flat device, marketing group merchant drive Those interact -- going marketing our are the to store truly deep, dates heat with teams our with Your but that continue U.S., and and thing being campaign second with about. our That’s our is conversations a digital do in I We’ve meets our their And the connections to job And stores. still is about bit of to them but being the to sites. doing heat

Lauren Peters

recognize Our our that with product wants connection across to customer compare engage to and suppliers brands. it our and physically the customer

so, very customer. efficient to And that to get recognize in they we’re channel a

Operator

question Michael Binetti from line. Credit on Suisse has a the

Michael Binetti

question. Hey, taking Thanks for guys. our

said So, think maybe were digits back low where want were days But, And And advantage of -- we I single to think Lauren, go then think promotional double low quarter. able this I XX digits was Europe there. to of today. said kind to down you ago. periods ahead bit just of we quarter. down can you then, in the you I the little first And here take some

maybe single inning think in will Europe. so, period progress. low good that didn’t region we’re in on cleaner guidance guidance So, cleaning hey, given the able margin that there? and what’s channel been here, Europe we’re that ago. little now U.S. I year, the thinking And a have is than the the seems the lot product there? you’ve what in your do for would we was lift the of by kind about there digit half, some XX the if say passed embedded gross in you’re you acceleration comp you maybe wondering it forward the days I’m were again, like surprised Europe. promotional thought that Is slow feeling comps in second big to I

Lauren Peters

The that extended of we’ve across inventory period discipline you’ve region. and applies from time, certainly described seen the

to moving can product dealing Our good where slow the that about do what items, really European so set. position team, to they we keep inventory doing with get feel to we fresh and that need a

we’ve trend margin responding improving all that period that’s we of XX back But, a improvement points been Locker delever. through that and they improvement, so, the quarter is third basis promotional the why our that of on product work while we to the a reason week, guided Europe in we’ve shift XXrd Foot for some improves And and we’ve business recognizing merchandise right, got less the to have the as got customer that��s that at gross basis that move an encourage being in said, hard with describe that that margin points to XX that half.

that Does think that And the help? is third quarter. as so the dynamic, you about

Michael Binetti

that that as you and the in low the look a the Definitely. the And off maybe leverage XQ, occupancy reminding that more leverage the Would I a best at in of buying us you’ve you pointed B&O very rest was then, on positive albeit line, leverage, mind you. comp. point to, seen little years bit and just then, in what year. caused change on Thank leverage thinking

Lauren Peters

we’ve week, up you against go this difference. got after XXrd This quarterly the is --

had benefit in that So, we shift, on that QX. that point from week helped and occupancy leverage XXrd QX, that in

Operator

with question. McShane the line is Kate on the Citi from

Kate McShane

for our in Hi. saw Thanks traffic week while they We’ve from still significant was question. improved, your sequentially quarter. taking several And for traffic. traffic. My question Good lift flat is it morning. that around the this retailers heard centered

stronger do So, still way kind of a the the flat you stronger is seems to be store. a being wondered be why to that consumer? I year reconcile, any of gave at at think just traffic I is there to guess, beginning guidance the what versus same consumer, seemed And with the the what

Dick Johnson

Good The is we there there And about. within is here. and traffic. geography puts the have did flat look out market, the U.S. and U.S. strong we is certainly takes to Yes. sentiment by pretty consumer And morning, and as Kate. customer a

we get improve back So, into we the likely will to season. anticipate some to traffic deeper trends that see as school

consumers are the generate. by heat driven and Our that the we really excitement

a point. to really So, valid them bring But, up to we we’re the have make sure driving that you stores.

geography that customer The patterns on traffic the traffic high, do that Western expect there the in some there. U.S. sentiment the some is of other based things reading. across seems are quite not We to face traffic significantly as is Certainly, be continue across we’re in But, Europe, to challenges sentiment high. the of different most positive we out Europe.

Operator

the is Kummetz Mitch on question. line with the

Mitch Kummetz

follow in earlier obviously about to because and QX. Yes. Michael’s kind Thanks. what’s just nice Europe from to go question up embedded of the on I QX improvement wanted guidance, sequential

do negative, thoughts You have stays to the that? just wanted mean, goes half, get I still easier that compares back positive it the back or you half. on business your there in are you think that in assuming

Dick Johnson

The that mix, much get we referenced good just we Yes. business But, inventory as European We prepared perspective. about the into remarks, management Lauren see work in an the improving. did do from sequentially product team don’t the and talked that the granularity.

sequential continue assortment, European So, turn improvement certainly the the as with we see to business. expect to they

Mitch Kummetz

Okay. I helped in quarter, the if that drag as sell QX? the merch in to I am the in And the the the imagine you look? what third was impact that or the that I on that wondering expect positive lift Jordan part quarter margin. is margin better tighter well as it through know Is then, of a QX, business, distribution just does more merch expected in it’s a -- how And the comp

Dick Johnson

see the headwind into get we the said, level a overall as abating won’t the fourth nuance. that Jordan of quarter. in But, for We bit we

that So, some the third the that in right. we second you to going infer from into see that quarter, going of the can we’re quarter same saw

cetera. launch how on the depends strikes quick the just it around, of et move deliver some And dates how

fourth the brand. it’s some a we certainly But, of headwinds So, progress abating quarter. into Jordan going work in always those the with see

Mitch Kummetz

that say how Lauren, pare does Would little from does expect back side, you how into other I you digital bit? it continue -- to how delever, much digital is that investments discrete how a this for basis maybe the XXX SG&A, Just XXX quick think to you’re year. on one the items, expecting versus Can to of points real start and on should the we XXXX? invest to to heavily this that that or a that think about -- should going

Lauren Peters

is The expecting. are in that digital SG&A a elements delever it. But, of big investments there capability we’re chunk other

have year is now, talking a wages, while incentives about a SG&A fact wages piece and more been of And we’ve normalized medical that selling big providing. We for the we higher got that have minimum as this well. costs we’re as our

well question we pace have and that. that their that, XX/X, XXX the with But about outlook customer of to best our contemplates connected customer. our XXX that it are drive sure connected we can, digital to specific guidance we to to and how we’re capabilities your business we’re the evolves given to is that for use capabilities make the technology that and expectations So, want keeping and future the best with to

it’s to invest call am but see ready capabilities. in yet, continue not hard business a to XXXX So, I doesn’t that to those

Operator

FBR is question. line on Riley B the from Anderson the Susan Incorporated with

Susan Anderson

Hi. Good business to questions. I my women’s stores Thanks just SIX:XX for and morning. the on wanted taking there. follow-up the

So, Thanks. improve there that forward. should the strategy we we if And two, an not just stores start compares expect year? to from last to going those update necessarily us could give of until on maybe then, the cycle you and kind

Dick Johnson

SIX:XX Carol team from It’s certainly not great to going bit assortment but year as very little the and when some up job against about reassorting change are specifically mix mix the ago, Susan, not SIX:XX The it some the half, of a Well, quarter. that headwinds continue getting significant right. the driven back represented and around a the is talked that launches going FENTY. the the are of vendors we as to with launch so are in dramatic as and well. provide we fact by stores products, second a doing in the is

and a Locker like XX So, drives like traffic. SIX:XX we Times see Highland significant Square, that is where connected stores Street, Hollywood in to Foot

We’re able to see a really nice sales model.

the in continue on. may location, an right place, a as on brand a the mall-based time that And been of be to launched recognized other of brand brands. new brand that consumers. the get is is by the recognition the energy Some to need sure to a there, name we growing And takes brand we name put It’s a energy lot the a it, work while we lot there since right continue be long brand not it the clearly, is led known. digitally to in exactly to out of the to stores emphasis make

So, continue stores, brand right we lead rhythm the to and will find to in to vendor continues digitally, try to improve. assortment continue the the the

given that on come the the of of headwinds lot necessarily quarter the the a some saw. pluses in So, SIX:XX sales a on business. through line just doesn’t quarter we like It second

Lauren Peters

said, that’s to where coming we launch-driven, with finds when help but in she And And for is the when see him, you bringing while great maybe American, had stores experience. product that comes the for she she special that within that. got And is as for something it’s I it Good delighted we’re up female shopping, customer she Foot product, Dick lined is add as space the a shop and she certainly of we’ve her, myself introduced to can not introduction can’t she responding special. was in Locker,

he like does, her. deliver just product, that’s special likes she So, and to are to what we trying

Operator

Financial Susquehanna question. with line on Group is the from Poser Sam the

Sam Poser

talk about kid to you’re shoe fashion for lifestyle an lifestyle and A of kind in more offset talk the basketball businesses what or where ones. up Thank you saw or year, you kind in numerous that you seeing my actual One, Jordan, about you specifically, can in care detail of the year? or necessarily, taking more the because And question. the the morning. doesn’t few you brought businesses rates basketball Good change this could shoe. saw what shoe you last secondly, the running as rates it’s casual occasions on running rates sell-through

in you those give on do us those momentum Thanks. categories? you how some details other offsets So, can and

Dick Johnson

Sam. Sure,

sell-through don’t marketplace. just are better the specifics sell-through the numbers to going on into tail say that have we of clearly. not on get in the impairs because Jordan, suffice reduction our of We’re seeing We to launch. it But, of the day

question better margin. and that it a positive impact certainly, have seeing And on the asked absolutely So, somebody does earlier does. a sell-throughs about

continues We all the things and an vendor we’ve on Reebok, business see as our partners, impact now. the the of side other be able We’re to women’s most At silhouettes, one of unique great casual are business, helping the offset led, models of of fleet. certainly Force the the you’re is Alter more and from seeing it’s the to not signature that across are it really things. having basketball again, of or across like silhouette, it’s -- some see it’s our same of do Air business, at strengths chunky classic I basketball Fila some which all the softness the the rage Icon, students right our you you phenomenon silhouettes business basketball men’s cases side look the the in side well. time, been the on Disruptor running midsole of X as a with And the think, things. Whether sort some of where

little It’s lot early offsets the I going just to coming a back to that we’ve LeBron views there of So, marquee/player to And get fact the heat new take shoe, some will is basketball. seen a some basketball. to of signature there. think the be there while

Sam Poser

are that orders secondly, to is write and is now closer speed able so so And the to flow your on, brands Okay. initiatives flow, how of flow you then, that newness, and evolving? product, need the how and on, and helping the the from of

Dick Johnson

that market, becoming but to that continues processes but changing closer are to success, because inventory. to percentage it’s closer And great marketplace out market, point. Well, make of we’re open we’ve to small sure model the evolve, inventory market. relatively a into work we’re seeing at new some it’s the to of faster, our our get products that it working to of build this faster. to partners with are Sam. portion shoes seeing mean, are to available I And vendor by our all try closer But, little small still a to figure all got our with shoes buy to getting of vendor the partners we’re on available there bit

Sam Poser

stuff basically the or lastly, is improves in it And performing what that and right. of the sales, and number, the in of the mix basketball All improvement as in you your in improves? it basketball change is as that’s and are guidance depth same-store now predicting kind well

Dick Johnson

with be to many, Right is basketball, some wins, consumer of side many in such is the seeing Yeezys, we’re of nothing be strength Fila do consumer At same and the things. tremendous buy. the Max our sorts now, talked across in there if times and said those consumer the time, I’ve driven platform, basketball silhouettes, the cool. Disruptor is excited that by all motivated basketball. cool to by our Air about Sam, happens that by LeBron will that have that really And we to

know see in product guidance the of in got what half we’ve coming next reflects the we today what back we So, and that quarters. the and for marketplace the the two flow

Operator

from question. the Genuity is with Canaccord Lyon the Camilo on line

Pallav Saini

magnitude, increase trending some of Good in on give Can depth morning, that this half some second the mentioned first sense versus strong in magnitude half? allocation the you a maybe of Thanks question. is the Pallav you’re on the Saini getting for more examples us Dick, of our you the Camilo. behind taking for platforms.

Dick Johnson

Again relationship part that’s those don’t are mean, disclose. they competitive vendor our our of very partners. stuff really all are I we that with positions,

allocations the how We’ve in or know get we order we the allocated So, of the product, embedded specifics guidance that you. the and product our books, all quarter-to-quarter. flow seen don’t into change of we books, is the how order we that’s know gave

Pallav Saini

you experience of Is traction U.S.? seeing Stores U.S. the where opening in a in-store there maybe Stores. my you is with in the similar following plan And elevating the the the UK, And in in strategy Power do you are in elevated Power second to are the your given you’re or examples question some elaborate it. on the that experience the Can offering Got the on any future? U.S.? stores in you you’re plan

Dick Johnson

elements. of plans on the the taken to Liverpool specific We down Power lease XXth we to got as New construction We’ve and Arch the on qualify Store at the Street got had in times We’ve marketing Marble that you’ll I Detroit great elements team the elements store here in Store, the And and open construction teams strategy. of Absolutely, the our some Liverpool that the traditional reopened up think brand when that first over the at actually it London. able multi-geographic a to market. our the one saw more Power and is Power a be that a store traditional really Street opportunities the the in Power of and to just it store. our just work while in more strategy bring of have on U.S. that store into in sort I bring Stores we Stores been our into Probably to York It’s some two done were not key Oxford in certainly based many London see store. estate open first wouldn’t the we’ve it’s simply We a will represents UK. real

geographies. third right that a driven fact it period we were So, the and lease that again work our quarter, open happen. construction Kowloon, all of but right to terms, exciting, in to it will the right the continue property, again, able Power We’ll up was Kong make across Store get in the by very Hong the

Operator

from the is Bank question. Trussell Paul with Deutsche line the on

Paul Trussell

guided you here the and of cautiously the comps to in happening to of flat digit ‘XX, take optimistic were beginning but a single turn low were a fiscal the tough back ‘XX on step up the If time. year, coming kind you we few in off at to quarters

you Now, for the some had meaningful are the attain the vendors, thinking generate I’m challenges greatest about things geographies, key and ability feel facing? like as how around year, turning et you’ve you’ve halfway to in traffic, you’re managed certain just the ability to cetera? through your still more profitability categories do and of from what successes, where such stores inventory, product

Dick Johnson

Well, Paul, digitally U.S., heat the the was clearly both was in us categories flat, the certainly the found traffic and business, product vendors significant, the the strength of -- online.

in time management needed what some talked couple legislated job work questions that and of The summer team good now, in work the managing that’s a did on little to So, where they expenses. presents a from periods inventory over a they the sales they’ll bit an straightened to we’ve here. opportunities about that got, getting that great that opportunity. other hard North did out in perspective to inventory going be the I And feel really the get The about continue things in Europe. We’ve turned, America.

I one cases. our business is think, of down to up and able of well pretty in expenses that flex we’re most strengths the

them We continue the to out that digital out second about stronger, our at invest of presence -- we significantly we’ll as here of roll things, about end facing we one the getting the learn certainly customer the mini August. in hub that tests more talked roll more

So, what to made lot against progress. is on the of everyday sort focused Retail we’ve team and got of the details is work lot We’ve talked delivering a do. on an we’ve a about. focus of

Paul Trussell

big little a made Fair SG&A in this inquire touched bit having on impact enough. then, earlier, But, just and think to more on investments the where are you to Lauren, And wanted also, digital all this year? as guidance we it’s the picture being you know down think terms year. it cycle. you’re But, will look and giving hurdle that XXXX. beyond the bit come leverage for is not I growth we rate a of the investment expense to fair the Certainly,

Lauren Peters

mobile We those foundational that the banner. made beginning in to website. out and capabilities And of the are by laying with investments roll some come banner some stuff changes see and that online we’ve

talked into changes and to of there, lot about program intended We element. some loyalty we’ll see as the So, that certainly a get enable that making and our the is we that. benefit further we’re this technology

described, go don’t plays forward. So, out it to will that over not bearing longer we you it’s how term. go continuing as we now as bear more forward, some there. tell fruit the yet us ready to I invest see I But, as but investment I’m not

Operator

now to Lance. the I Mr. turn call back

Jim Lance

November again, our today. follow XXst. take be call Wednesday, earlier Thanks which shortly will at my results am Okay. call that for we us take quarter place morning. calls. of on please Thank release again third good next you the The And back X I’ll us bye. will anticipate to follow-up desk for earnings and join joining in

Operator

conference. Thank for gentlemen. participating. you, concludes This you today’s Thank ladies and

may You disconnect. now

Foot Locker (FL) 24 Aug 182018 Q2 Earnings call transcript