FL - Earnings call transcript Q4 2018

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Operator

Good morning, ladies and gentlemen, and welcome to Foot Locker's Fourth Quarter 2018 Financial 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 call 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 or 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

and Thanks everyone quarter Locker, conference earnings Inc.'s Foot Welcome year call. Shelby. fourth to full

last after period is a $X.XX Point As Runners related Sidestep per year. disclosed. net XX-week of for $XXX income charge matter fourth primarily and million quarter reported net the basis, GAAP impairment in today's a and $X.XX charge million previously compared income a have for compared pension Included million in On press $XX a $XX to this release, the last a fourth the quarter loss the related of loss tax quarter pretax per company we reported fourth these to to results million XX-week million to of year's share share $X $XX year. or was

related items the reform. $XXX included to the assets. pre-tax of certain by related million were related down that tax tax $XXX late two fourth and write of tax charge million million legislation a a $XX the tax tax largely Pre-tax our matter. expense, large in due as million Point largely pension affecting for XXXX XXX following; impairment benefit U.S. in enacted a after downs totaled items Group million Dutch rates, offset there expense, $XX ago, tax release. detailed quarter tax tax A change charges our $X And to to deferred to year write in Runners press the addition, assets million in or $X reform In today's totaling

share on earnings share a thus quarter earnings items, per fourth week of Last a non-GAAP year's produced per XX-week of on $X.XX a $X.XX. GAAP XX-week $X.XX per year’s non versus extra $X.XX share basis, EPS last resulting Excluding in basis. were these

per Lastly, the to XXXX full for $X.XX year $X.XX XX-week year. XX-week the earnings share compared were non-GAAP prior

with of be $X.XX otherwise impact for details they Vice with Executive Officer along fiscal the Johnson, in XXXX. non-GAAP release. our week will Locker’s for and noted, Officer the today Chief based the President fourth non-GAAP XXrd Excluding on our our financial and will provide Chief will will early week, and fourth our share. who Foot investments exclude to Peters, results earnings Dick and Chairman financial of on a rates included on reconciliation performance Lauren from per press is on mentioned thoughts recent strategic the highlights Financial call comparability; quarter outlook along XXXX. and impact results begin XXXX. We'll the update Unless XXrd during remarks today's quarter from our with figures GAAP provide were an Executive prepared The

and reminder, financial time XX, that Meeting on turn now during that, objectives. your we lay New out initiatives priorities, strategic we a Investor will an our March will hosting be As on York month in we at last growth here over which Therefore, quarter focus Q&A the Lauren. it you that we questions to term With I'll the long and today's ask XXXX. for results outlook fourth would announced

Lauren Peters

mid-single $X.X a up the over Including were very fourth high the single sales prices to for delivered that increase X.X% year, sales result improve November up all billion, us double a excitement international. the was we joining delivered and XX-week strong Thank you in had incredible was heat In performances last performance gain. results, quarter our comparable during Traffic January $X.X posting North report X.X% the product billion. sales geographies. to Comparable on you, the low top of up for digits. throughout season quarter We in the selling with were year’s digital, XXXX. digits. able holiday built of throughout was regard to channel, fourth up with line digits. total you momentum a positive thank December quarter. year we to and morning. than Jim. digits. Good stores that morning and pleased this Average strong was were double across across down were of single we better overall our America digits trends the I'm

X.X% As our increase, gain. delivered XX.X% sales while a a a group, our comp comparable stores digital posted channels

ago. quarter, As a year XX.X% the up of percent XX.X% a for to total from increased sales, DTC

digit. high Foot Foot Locker Our digit mid-single gain. from results. Pacific Locker up up gains. single business U.S. digit Canada posted was low impressive North comp Kid's had digits posting Locker terrific a and with gain. Internationally, Action comp Foot digit Champs our double generating double also and Locker, Foot quarter, Foot a sales strong sales a single all a banner posted American We performances saw performance, delivered positive divisions East Bay, each

overall Locker Runners double strongest digits, single gains, footwear decreased mid-single women's family single Europe both down digits, posted strong down basketball category, posted gain, running up sales continued while styles double improve My to By in digit digits. and men's Sidestep the double and was while Point double Men's high and kids mid-single digits. and digits. Foot was high Our was footwear the while was classic up digits were business business, up digits, quarter. men's of up

also increase Lakers gains at tees continues business posting a NBA to led well fleece mid-single sold Nike good branded of sales from and perform by through -- with apparel strong Champion, and rates. digit by driven apparel, Our apparel

up business digit. strong children's was double Our apparel

women's with posted by mid-single accessories from we that in our a comp The apparel digit throughout decreases sales year down the QX, offset while socks, more half in in double a low trends saw was resulting continued in digit gain, single business in men's decline. bags Our than digits, gains

This from split and in improvement primarily XX.X% quarter improvement across markdowns buyer XXX margins relatively sales our point income fixed Moving statement basis footwear, to from ago. accessories. We evenly margin margin. The apparel expenses. an the leverage down of and produced XX lower the was year merchandised a to gross excellent points on basis to and occupancy were increased merchandised between due XX.X%

families the to points business and in the margins vendor surpassed partners. This the contributed great more margins margin by to our all apparel footwear quarter, with apparel consistent lift, actually of performance collaboration them. improved than our strong While in apparel our work team and improvement

XX than For basis we margin the provided to year, XX.X% of better improved our beginning the the by full points the year. guidance at gross

increase on our XXX basis the in points Our last guided XX.X% SG&A below basis basis the we XX to call. point increased quarter, XXX to rate point by to

good our a the top line did team expenses Our stronger through quarter the job managing during and flowing sales.

XXX higher quarter basis Incentive from For was came $XX year the the about higher logistics, incentive XXXX’s of slightly investments at compensation Depreciation to XX a XX.X% expense in year, and $XX the spend million The full made million in we from basis increase. compensation. capabilities ago. points points reflects and up rate. our this SG&A digital decreased

improvements the on to our depreciation X% stores, For the full investments capabilities, year, chain to and amortization digital ongoing other infrastructure. and and due $XXX supply increased in million

million Altogether, QX, income and income non-GAAP quarter of XX% line was marked year's year, an a was the $XXX over $XXX top in rate the by improving increase rate. XXXX. XX.X% Our And fourth last expected rate run year. increase tax non-GAAP line million, QX quarter last and with our fourth below impressive net resulting of net non-GAAP of in over full for X% an an bottom

$XXX bringing $XX we of shares million million quarter, our full approximately million. shares for X.X a cost repurchased to of X.X million a total the year total During at

also returned of return million. We for to cash million which quarterly our year shareholders to the XXXX, our total dividend shareholders through $XXX our in $XXX brought to

program to opportunities, million $XXX funded $XXX cash financial increased were that a even initiatives our with new as expenditure of as term growth repurchase of $X.XX sheet February, long in in of actions investments funding net confidence enhanced million these per board ended suffice the As payout of and Foot cover our million $XX together, to the Further, balance $XXX with year a our upon the investments to in our moment, announced deliver strong the capitalizing details strategic returns and in we demonstrate build billion year. it let on to the those strategic for share a ability to that company continue in debt. the We Locker's and taken $X.X Dick of dividend say new XXXX, position million but I’ll through internal during well invest the of shareholders. program. to momentum our capital we share XXXX, three quarterly announced authorized year rate invested

bit X.X% sales increase. our inventory constant allowed rate top FX inventory, compared proud I currencies, call X.X% Dick, term increased target This total inventory X.X% achieve our I'll inventory say our now it. take Before results inventory how moment fresh be strong a but down productivity that the and increase. to and quarter greater of the goal. it hard increase turns the And standard in increasingly over with done. celebration, with a I Dick, us the inventory outstanding performance Hurray! to enough this has and I'll We line a sales am review I our At guidance hand compared the initial provide to been combined achieve I'll Using ultimately than productive. actual company a focus, to a call our to work of which long for you is for with three team ended the turn total within X.X% dedication can't when to did back to to Well and of moment the brief times. took Increasing turn over XXXX.

Dick Johnson

per of results as and and share, remarks good and to us new billion, bottom momentum, of XXXX. just results our to our to for incredible dedication the Footlocker out whenever in of as see wherever, passion $X.X our we the of begin sales earnings to the history Lauren interact an proud And morning And and XX% beginning to at XX-week With high to a with increase able report comparable whose experiences of whose them Lauren increase they am the I recognizing XXXX, total the success over business described. non-GAAP Inc. for everyone. a expectations the XXXX. X.X% line associates $X.XX customers, reached of were in company the by you in fiscal equivalent our we the want all us, end be our of we we for able revenues laid I the achieve for to top as record my creating led Thanks to met begin stellar year.

than and I of driving on Jordan working from above with is will included strength some and turnover continuing been styles. Lauren In a more on the progress long performance, All-Star of the business as of call a turn further Max investments to on for the for productivity Adidas, fueled term strong initiatives. Air. fueled minutes, the is that to with This on times. few continuing outlook business that, accomplishment energy our early I some mix for and marquee several growth more was drivers a After quarter a the time three Taking footwear an gains. announced around strong recently focus In YEEZY addition, goal highlight at a some made This basketball our our Lauren our we testament we of demand then inventory great our diverse we from to by game. next a NBA the look fourth meaningful some the and update will over mentioned, give finished will the than key have XXXX. of the color you on and business running that strategic touch the in I ever, back

our the as apparel work with done as In great team company. in brands and products UGG of extend exciting the reach breadth from the depth has women's the addition addition, and as such lifestyle as strong Champion brands illustrates and the performance to our of Vans businesses such well our Fila, of combined

want we to some tell excitement with to doing are As people last energy of world. the quarter, I you around the culture did things and sneaker of the I about share

with our to We and are With storytelling locally anniversary the the Home to exclusive we our fourth relevant we together, elevated great and experiences. of Houston, with products collection, continued Nike, celebrated in Family. which vibrant close Foot included sneaker collaboration partners the XXth Miami. quarter Inc. Locker doing iconic communities Atlanta vendor strategic deliver ‘Tuned Air’ this Away and of and on the also silhouette, The and focused

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closer Eight AMX of the of the Detroit offers example At Locker Kayla a we shoes Adidas. inspired Adidas it of Road, market our made first local Kelly family artist created native, new Detroit Philadelphia, globe. North Together, for historic Detroit, launch store from Mile to opening exciting and strategic revolutionary the created by Detroit An At the of the consumer. this shoe events Adidas culture, We and shopping our brings of of was next on by features America. and stores announced Power This open second also the five with sneaker a deliver that and activations designed iteration across Store Donaldson. relationship of powered initiative from custom excitement insights. full allows sport. products, local store, phase us Air a a the get in we obsessed has dedicated Speedfactory with cultural our to the for for Power power quarter, art outside of example, art, our of and a and woman Desiree music North together Force for Shop-in-Shop the and It and Kids opened end have Store space and America the specific now Foot Detroit pair Home Ones, sneaker Away Detroit's

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$X Super an invested we footwear differentiated in First exciting kid’s brand. and million Heroic,

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at teams XX. which the to some and with life of many you exciting of our gets Now Day bringing share things March planned, our work on these we'll Investor underway investments have

an NBA fiscal Away our with the this Nike stop innovation, the exclusive we sports House year. a as footwear, together basketball of key this all and discussions. launches, the sneaker in retail Lorenzo partner in of of Turning involves Charlotte. the our more celebration up appearances, product We coming our created quarter, style. Jerry year's offered which because for energy, as player have It we Air program, and extension didn't we and as began brings Game music events Max passion see of and shop workshops player access customers All-Star XXXX with build annual cities exciting sneakers Guns, well exclusive this But debut new Home and Puma on energy, in To sneaker hashtag to Charlotte Courtside in there; of the enthusiasts, set all the collection, now to the the passionate to we moment. platform we Lakers Young lot Hoops, the Stephenson. Also experience well Smart. for Lance sneaker designer L.A. obsessed All-Star The the and footwear of excitement four took as at personalized first energy basketball our around & will panel game

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structure Lastly, in of distinct new resources better America. into our organization the across and an realignment expansion develop our to in support EMEA, announced businesses we plan infrastructure Asia we international This Pacific early aligns geographic three as at time our Asia. same our February, regions. North a

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Lauren Peters

Dick. Thanks

as built We about are we in have XXXX. positioning optimistic begin momentum indeed our our and business,

We the current outlining lot Investor And our term. same opportunities year the with of to the the U.S. unfolding. those at take later business line, to and year. Starting details a look the this seize XXXX, believe, we can earnings month they Day. dollar weaker first, at a mid-single double-digit than increase. forward sales how see at But in for digit look long have we near drive gain, percentage let's is the a now, per of upon, both a share achieve the to initiatives relative top and comparable were we time But foreign currency last to we

Our total half slight will have the first a headwind of the year. in sales

for our basis margin occupancy points year, buyer rate mostly XX for improvement gross driven We basis to are XX and in an the leverage planning full cost. of of points by our

hence plans price, our and efficiencies, are rates that line for to initiatives work logistics our through sell While full support personal we leverage. top markdown look best, on nearing continue from more

wage For investments incorporates be This rate minimum known in basis making points upward come between year-over-year. we health the rate on-going XX annual up all is basis care capital with expense and impact, continuing which a costs. in SG&A capabilities, increases expected and also to to trends guidance digital both our are XX SG&A our expense points operating

capital million stores to dozen experience digital ways store new this and in invest in our year a to continue in our plan supply year and physical and spend planning stores. including reflects other $XXX this of intention to $XXX our touch our XX our capital or over across continue investing be are XXXX, relocations new elevate million. Asia, stores, in power expansion at remodels now improve projects. and chain to fleet existing to Looking XXX higher the The approximately spend program customer infrastructure to further to expenditures, points with we We capital approximately

in In in personalization, Point and with this Lady of I the across depreciation program, plan a concentration new level the There in and chain in platform our to expect the Locker our and geographies The we our reimagined international in Foot store customer be greatest be of supply U.S. range closures stores. also software websites XXX investment, amortization close a Europe. With and and will and capabilities our of investments digital sale our Foot and Locker Locker rollout including to the experience in point Runners global are million we to international XXX, name expense investments the of mentioned, addition, Foot markets the XXXX. of platform to few. membership upgrade the our $XXX about

income to approximately We flat our income to plan are relatively we to planning $X interest be the continuing XXXX. to XX.X% effective are rate XXXX, million and of in in tax be

program. a continued percentage of our double repurchase Our guidance the per on based opportunistic execution in of a increase digit earnings share share also assumes lower share count,

have comp a average pace a line an the will on FX in greatest quarter. headwinds the on top refund eye impact the each with planning I we the mentioned mid-single on combined quarter, checks from first the are digit of the are Also size refunds to slower gain lower we impact Although ago. keeping year compared the

the that highlight think of covers XXXX. I

up end Shelby call I’ll So, to questions. the there ask and to your open

Operator

the are Thank you. open. lines Ladies and gentlemen now

Dick Johnson

Shelby, this is Dick.

Before and Foot want friend a will the culture. would true Locker mine I be and passing of to missed partner to who first say, Jon by epitome we the he for was just passion just get the moment a was, a to Incorporated, take Jon Jon dog, Epstein. of I shoe sneaker had of incredible question, acknowledge of all.

and to Our wife, Carol, the Gene thoughts Yoon and entire prayers certainly Fila out to and his family. go

for Q&A. with So, some to that, back Shelby, you

Operator

and question begin McClintock Barclays. question first of Matt answer now comes will Your the from [Operator We session. Instructions]

Matt McClintock

Hi. morning everyone. Yes. Good

Dick Johnson

Hi, Matt.

Matt McClintock

Dick. Two questions.

a to time But lot is could be seems us, if like I little XX the down just, it just you're things? going in that, of a day about there, because last matter bit timing decided, one month, went it. good in like, Foot And the to Locker. of the Day had woke Investor how went you've of one clearly have more seems now years. was -- much all definitely than so you just of a tell the give you the on clearly X:XX, the it's just us how first things at through like acquisitions, background done on just to in there's you've change wondering last you just And weeks, a about shutting process to The into of going it's a and details couple up a going that an you done

Dick Johnson

the nearly a that were CarbonXX. the out when That look out the up investment. year that and we evaluation we across did to know business. of we’ve with opportunities, formalize the one we folks lacking, we're both PENSOLE. some was XXXX when some first we capabilities moving but the I of was made invested. of called I way understand there. We've woke that go you started decided that D'Wayne giving be fast that the that we to to of to day that industry change, had We to back in August we fuels acknowledge and external And and Well, might Matt. don’t view And fact ago as we was one internal invest change mentioned, the the customer a we thought, process back and need about if in our us. the make to that long-term We sure various the and and relationship the at that opportunities decided

and business connects kids Jason got we GOAT Super to leading at community is concept. It's looked highly the Foot speak opportunities Rachel great product in the a time, and something benefits drives core have active job And the Awesome relationship what and Heroic, And of is creating, the two the I tremendous. to as great and important. entire is the we Kids really that a market. can the think sneaker team. Locker team with expand they've culture again secondary effort, And marketplace culture. that's extend her have does Eddy those secondary at really our which to Rockets with with saw of Last something we kids the way then playing, that well and our the -- that is effort, market consumer. critical Daishin about getting sneaker and As go to with done we And that's

it's it's months relatively over been short all period over to time, XX, cases. announced fruit but a It yes, of period that of time. for work So, a short XX, doing some XX we've bear been came in

Lauren Peters

understand an mutually the will the I it favorably Yes. would our a that its comes to to if at not. aligned perspective, that, and conversations whether make but eco it investment, goals customer. make when all because once, be about very you see we are after come seems I received by thoughtful things decision

Matt McClintock

to its because Well, good see stay that marketplace. changing of investing the where it way that’s top you’re at only

of the are we pretty better the back product now saying you the today? year heat this Dick, that, see that into et a consistent to getting to for year. same gone that what as comp always as you’re just imply half question level mid-single-digit don’t of seeing Second heat, better cetera, you going next getting is the just the and yet year allocations are you’re implying full Does

Dick Johnson

Again, numbers – flow sometimes the against stretch, up of you’re are of the the Not comp what holidays, by marketplace. it’s the into money any Matt. flow

comes variables guidance a to the we there's comp. amount of to the lot our partners The continues it see heat of But in tremendous when come. a innovation from So across the industry.

competition. has every I’m team digit to a hard industry. well our We’ve mid-single positioned difficult come So go are got to vendor the continue it’s of out a But there a we’re sneakers up with comfortable to have of the to that, lead to their think we’ve got comp. we partners we – and do work day with the in lace to collaboration we right. that lot It’s there's work lot and because – and and

Matt McClintock

Thanks for color Great the best you luck. and guys. of I quarter wish

Dick Johnson

Thanks Matt.

Operator

comes question Wedbush. from next Svezia Your of Chris

Chris Svezia

year. Good morning strong really to on Congratulations finish a everyone. the

Dick Johnson

Chris. Thanks

Chris Svezia

moment. I guess, for just on first, Europe a

I You've about seen I'm that the margin, know a guess, nice XXXX. sequential promotional forward. you more And region about specifically improvement on been I move curious throughout you it's there. how as think

point might thing. I based of from supply just how about and Brexit? of that at Just in that chain any the sort kind to know, affect product U.K. perspective, Rotterdam stands that movement of where this a thoughts and you're

would on that, Europe great? Just any color be

Dick Johnson

the job good a a us XXXX. that heading moment about position of one, like, bit sort good of Europe. they’re There’s of Locker lot shifted. across in Took in seen We a little They’ve in of Chris. than think banner really getting assortment done feel we’ve questions I Foot the our strong longer but into a

business, full priced right. are We

that and Liverpool little full exciting that deep got consumers are as the The price. show But Arch So, that Marble appetite content power enjoys promotional our and shopping it and connections we fact place stores London, with the and we is to and right. been. customers, probably they’re than create we tremendous pay willing they building product opened us market a has the promotional, in is

U.K. we a work So, the be mean, with products selling what have lack and but think think the wanted Brexit, about change still to read UK of moderate going I’ve us it we’ll will a our bit, a there’s lot the here. I clarity be. still that we much to full that think as impact of which it from undoubtedly shipping When distribution all as flow continent in done to focuses of some the up But based price to the of point of I it's we resolved, on helps there’s to to end will continue be on Brexit. about differently means likely

to European continue we’ll it with So, Brexit opportunities our the means business. what to and evaluate

Lauren Peters

as best possible. be to Or as nimble

Chris Svezia

on that the like visibility? just year? my does can then to how based sort from finally of XX on play sort second here, do margin apparel your is that that surpassing continue the margin on of on I does Congratulations, the but it about gross footwear. to on points does accelerate question into And you. guess your in – feel And you XX comments Thank improvement question go is, basis Understood. where business, the

Dick Johnson

we feel down the is with team that some and as upside better to cycle that break we get work apparel into but and apparel by product way, of manage get better great exciting did the margins the a apparel we there’s they but And life footwear the job want with by too better the We to putting our team don’t market comfortable gross margin. place. believe continue really in with margin product category, the the doing, right. collaborations we But

bps improving So, will we’ll talk add again, we all of the the when that our get categories about sort do together of a healthier product business couple well. as when see to mix a need we that margin, little bit accessories to of you come

apparel our the done team is has doing. our footwear work job So that a complementing tremendous great team

So a perspective they’ll from keep margin that. at working way

Chris Svezia

congratulations. Okay. Thank you and

Dick Johnson

you. Thanks Thank Chris.

Operator

of comes Susquehanna. question next from Sam Poser Your

Sam Poser

you Thank questions. my for taking

lot Some questions been you and the have of the on a answered answered call.

one. and next going this do housekeeping a tax think quick year have be are year I’ll Just the rates another you your then what within guidance? within Lauren, for to

Lauren Peters

guidance would XX.X our be on that.

Sam Poser

high. That’s

Lauren Peters

Yes.

Sam Poser

Okay.

Dick Johnson

Remember, we’ve that, in of mix don’t benefit complete got get being business. of base business Sam the a we a that, internationals just U.S.

Sam Poser

in how the of where you And a us of of YEEZYs sort Got from you what tell the think and then, of give you you that And you way apparently you. you about sort got to fourth us the of sort then some on product thank program -- you. pairs Could could you a us really you could -- now. of be? you’ve quarter. changing loyalty idea lot versus are where how also months And – month flow from

Dick Johnson

certainly really of some YEEZY that in terms model. as right, launches particular there Look, business fourth from YEEZY, we great quarter were benefited in across the some you’re

We to expect will heat continue Adidas across platform. bring and the Kanye YEEZY

when line with the can [ph] one challenges business vender weather the the change up days, we’re find as know, launches mean, we of partners. we but that’s launch our right comp at you you Sam, all the perfectly. of So, I that look happy were

our again I’m got Yeezy flow confident that to we’ve working our Adidas with correct team business. merchant make for the So, that is sure

that through are In we be Day, on with March We’ll our product membership details question what an exciting the loyalty, pretty terms feel I as industry pretty around we where And will program. but rhythms it at Sam. for of flow, one share feels in I’m now. continuing the about go good that flow product it sure a drive but I exactly the later good not program Investor as we’re believe. the relates to more was, the our geographies various to perspective, from

Sam Poser

fans frequently. less mean, -- are quickly of less need was flow, flow the flow Thank the the how discussing changing mind your arguably, changing you The I minds, sort more of really their his kid of of you. but pairs on I sort product more is product to versus sneaker.

Dick Johnson

we than that our about ever. Yes. talked of that faster No, to And And core again, down. you're and number we've right. don't moving consumers a calls slow absolutely expect on

work slow down, localized the are allow with preferences we've their So to various marketing fast-moving the all us the don't things to do product product remarks, and very this appropriately, things for prepared but consumer, the slow consumers' connect changes events. the some to Those the down. preferences that expect product teams vendors I great to to are and initiatives with and that our in like doing flow Speedfactory, Adidas which talked connect about the with

Sam Poser

Thanks. And then one last thing.

range -- and mid-single second the quarter, I all be the you the just of the expect – comp I and a better, to the the first first the of half mean, quarter, in about the the comps quarter in talked basis, first comparison you coming headwinds comparison? first would year For versus out half of in but mean, say, from given let’s the digit the year given

Lauren Peters

I QX, tax mean, Yes. we that the watching the Mid-single as and across flows. reiterate money we’re I guidance comps seeing quarters the digit gave.

Sam Poser

very Okay. much. Thanks

Dick Johnson

Sam. you, Thank

Operator

Camilo question from comes next Lyon from Canaccord Your Genuity.

Camilo Lyon

on congrats Good quarter. I’ll Hi. everyone. morning, my a add

Dick Johnson

you. Thank

Camilo Lyon

your little a basketball was business. bit looking on more give to I color

in down for you how that just XXXX I and composition have that signature that into think it you some comp? mid-single for expectations -- and out flows well should as in XXXX? seeing quarter. as business what you Jordan said And evolve parse think from a do of was flow you’re how Maybe what what

Dick Johnson

cool. product. far bit around little of than respondent the but my same, motivated color, Yes. or by Camilo, I’ll to just our they are are has that feeling There less provide dependent category be the kid continues coolest

a right, it's a the but hard it lot classic may and the right classic X. it, some Force cases basketball today call heat issues does classified It of in of marketplace in shoe, people the one is So which now the got behind basketball is Air may some AJX, get a then as shoe. as

of Tyreke. sparks around of the little product from signature some LeBron some heat and from seen bit specifically We’re

one when of Los I again, I the Charlotte. LeBron's Angeles did game mobile effort through So Hoops that the is first products. Again, that Certainly, of product effort lot around we're our heat and there and think confident House to think the great to a basketball will around momentum as riveted the a the to basketball through going be that support kid it. basketball less And the cool still about we've we there's coming seen I'm around in products. continue of comps in we're reenergizing flow there because about our energy out Laker, cares the drive Hampton, coolest positive

Camilo Lyon

quarter? say you Jordan positive was if Can the for Thanks you that. for in

Dick Johnson

numbers ago. a sell-through over Jordan year The were improved

the with team right So – a fair know kid marketplace share and Jordan word, in fair us. great don’t great works get is that I to and saw is brought a on a does Jordan the the shop I into Nike marketplace, stores we product the and often. not that But online the the because we that business sell-through motivates – in the that Jordan believe and controlling and what with we word job saw motivates to flow the our category healthy come the sell-throughs heat we really a into is

Camilo Lyon

take discontinued higher best the substantially your it product that performance comp then, XXXX. laid, anything – if in-store have EBIT there low during margins were than year. laid out this time Got my to next that this of Is continued put out margin And this And structurally period momentum question, rate back preventing teens could as from low was they comp of [ph] XX we kind you getting strength? since driving landed sort that’s Lauren, double-digit, over you just it. up where comp I

Lauren Peters

have hold of the working results. those going the financial stuff I that. appreciate we that the March and opportunity to means term on all about long of to got and the in we’re we’re to could ask that you about for question XX talk us get going things We’ll to what on good we’re and that financially. to I to talk all going lots

Dick Johnson

think guidance around I -- get when was your to, where model Lauren’s long-term will we the pretty clear XXXX more XXth. where to get us but we to talk we’ll

Camilo Lyon

Maybe talked rightly a the about can a should you're the the spent if I going perspective Okay. be. This lot you after as and just of initiatives that you ask this it that way different from for showing year.

give you some If sort classify this were you context? Can to investment where you’re of us on cycle? at

Dick Johnson

I Well, we’ve I know talked investments don't don’t as coming. about about the know before that really… investments

Lauren Peters

Your question is around CapEx?

Camilo Lyon

always Yes. Absolutely perspective, of is to the there to that SG&A be and invest But you're affect so hope shortage others that to will project no P&L in. leverage give returns create things how a there do. would that investing from CapEx going and start – and affects where clearly obviously years then that they than to you the which you and more invest in be going

great? be So, would as where that articulation cycle to sort is, any of investment

Lauren Peters

Yes.

in the our are doing of things is and pretty we’re to gets a described. know to still important like investing the our and again excitement And we quarter through We thing. we And lots physical fleet. QX So, just going clearly that experience it in completely. experience you sorts the about customer. tell we’re That look fourth

life to a and come physical fleet. in those on therefore the continue we way to So invest

had also than in We XXXX. more we doors new describe

you investment we term. relates other to in over as the on the leverage over chunk also get better But term. a infrastructure digital so, that bear fair a described the you door new a longer and longer open CapEx two logistic, this fruit that So,

you you in in But reflected look exciting passed. that so the for as we what picture to -- forward when some The we’re get all working of stuff described that’s when its of term some looks going You’re longer get also like a before a foundational talk the initiative that on bit better to at digital that nature, end that spent. we’ve month. of

Camilo Lyon

Sounds great.

guys. the more and Thanks to forward for good luck color. Looking Analyst Day

Lauren Peters

you. Thank

Operator

Jay Your from UBS. next of question comes Sole

Jay Sole

Thank grew an in almost the point, your the like key sounds growth, XX% company? accelerating part business you. of sounds were talk Great. like of Dick, of digital of some that drivers you it about can

Dick Johnson

talking new quarter We’ve reorganize an view. after so point Jay, We’ve right. it been from about invested of We’ve in platform. thinking is about the quarter, team the omni

even We’re in stores the inventory though utilizing to as shopping sits leverage you’re opportunities online. our stores that

long there -- starting important on believe bear that it’s prioritize ton the is a we be things, those going don’t think time to they’re I I a along of know to really improvements and for in how And So fruit. work continue will way. that that all but to that’s

view us, it’s really of leverage As efficient chain, more and figure as with marketplace. help out as thinks more we we presence an this more our that team a separate but omni supply consumer, the in ways to from we physical believers point us are connect true the digital that extends

Our about is in talk and but we these being traffic consumer’s kids. destination traffic the a bit, for likes are better than traffic be little the down that in we malls, that believe to stores, learn, our our firmly

the difference. So that’s the real making and of it’s a digital physical marriage

Lauren Peters

from channels the synergistic. a focus We between when are so split the two, but just synergistic. that’s really comps on Now, customer give out the you journey,

Jay Sole

inventory, the on come. if because Would of going is NBA you they are game or refunds was are in the can do situation tax is – inventory more, Is the to weeks inventories older the And February the better inventory maybe you few that getting consumer that sort refunds follow-up starting in may show it. one the give first in sort down to of thought weeks? now. next are if where that like part which of mark just supposed Got still coming for you couple people it in are of be when relevant where just money into had March pressure? versus last part there to than get All-Star I Lauren, February up tax that the position with Is they

Lauren Peters

not lifecycle short. the that Thankfully is

our does that in and they to and out job what team I thankfully flow that That don’t product. you not short. excellent do going of measure an customers product response weeks, lifecycle but think short, our So, figuring to the measure of of

Jay Sole

Thank you.

Dick Johnson

Jay. Thanks,

Operator

of Murphy Jaffray. Your next Piper Erinn comes from question

Erinn Murphy

me and add morning Good congratulations. Thanks. Great. let my

Dick Johnson

Erinn. Thanks,

Erinn Murphy

couple of questions. guess I

you much Lauren, And pricing? First driven record from a just high, I versus this product about could then three almost on growth? control help the double-digit was a alluded markdown ASP mix us curious is digit growth, how double components like-for-like you but to guess, that APS think those by drove major

Dick Johnson

our model allows for three a I Erinn, in when combination of complex when talked about remarks the her fleece Well, about mix were pieces When them, ASPs. price some great elevated pricing, personal earlier That’s the you specifically, things you us model. the mentioned some good we it. think when Champion for store, all our on that you segmented get again, to really pretty about ASP Collab put think When sold the think point price about inventory product. the Lauren record of of we haven’t almost think that management contributed kids being we which more of best in you the markdowns that of lows call. Timberland, Yeezy premium mean, us, It’s right, we those had all a [ph]. out benefit to that it’s had a you but about cuts of she

Erinn Murphy

through you just kind for mid-single? comp, that a to pricing from about Okay. kind digit XXXX of what’s traffic carrying And assumption as versus mid-single guidance of Fair think enough. then or your ticket

Lauren Peters

Yes.

the about we’ve where customer so Of add we is Dick’s that our but it, offering ASPs course you make channels. about product very responding when we supports It this on sure again, across you want price get that, this we list spectrum. the full compelling across are is bringing thoughtful it in they at very, the digital, and physical but on really you think of these described to through it we’re it all price merchants to have find think really something ASPS. about across that to where product they final a think when respond commentary And of compelling combination the The them which point, traffic, value different. to

Erinn Murphy

data, in the use just there’s your then you Gold, Thank you relationship any on question if members users. it. users? overlap process with see And me, what was XX between guys diligence about last versus Got million I’m you. their your quite have for Could to then And that curious due their assets loyal overlap?

Dick Johnson

Yes.

ton the into get have of specifics sneaker relationship going of not lovers. We’re a Erinn. the They

about We have sneaker lovers. able experience a broader believe sneaker that. is able to them. beyond be will us delivering They will to great market. the be it And learn consumer ton I and learn of benefit. the to we get consumer, a sneaker And will the from from

Erinn Murphy

Thank you. enough. Fair

Dick Johnson

Thanks Erinn.

Operator

Our of Cowen. Kernan John next from question comes

John Kernan

a fantastic morning to Good and finish the guys congrats on year.

Dick Johnson

Thank you.

John Kernan

rate a of Europe about and went of through have growth overall you you're improved contraction at period within trends there? Obviously, seeing significantly their in adi. region. Can Adi talk over what that terms

in sounded seeing what strong also pretty Europe, just then as Asia was overall it you're I'm and So, well. like wondering

great? on So us that if would you international detail give be can more some

Dick Johnson

fantastic opportunities stood Power being up Singapore across small, just and all five in Hong the responding felt the Kong Lumpur, being marketplace Well, three I'll the well. because a start relatively Asia and Hong in across with countries destination to as start premium and certainly off Kuala stores is consumer multi-brand right. Kong presence a of our We in it's Store are

on anniversary The in driven will by our brought just focus there growth, in that of there. the of Air a that we're quarter positive organization and Nike Tuned team been the a and product we and well to of and Asia strong us over positive the Lou geography. about the the Air fourth Disruptor be region that lot allow we'll continue. product over over lot the of to to working throughout is has collaborations the the a a been over the to to Products you the The are Max to When pragmatic we're put of so it. market in lot about it's the talk tremendous across market very So expect bring Air the chunky heat. etcetera, the got heat resurgence running and but about is a our unique the as excited directly about a resources in those nature those Pacific learn again have business accelerating shoes we've But years there silhouette, that's midsole, be Europe really marketplace XXth going seen and still We've shift XX year European Fila which marketplace.

So, we're can in there. of Western signals we seeing we and right be lot believe certainly strong the that a Europe

John Kernan

you've newer you're much with feels some you Barnes, some And then it. coming think introducing Got within wondering lot about an interest in they of through I the so. Timberland, were you of in about brands you're that portion Nike how about the I'm are more than just whether past? fetlock, Champion. like these call going remains mentioned And it's contributing Can and a talking on as and how the brands traffic consumers but you talked enormous business, know up collaborations the and smaller more partnerships brands obviously this it to and talk in much

some Just talk performance other of the the about other and there? brands Nike than and Adi

Dick Johnson

break out don't Well, the performance.

of you’ll know has finding Jordan heat in performers You and to and marketplace. secondary some Nike the to these our great Adidas any quarter done big energy K brands a tremendous the when job the complement our but the see file of with is bring we that team listed, truth

some of in of We They passionately unexpected of when the and a about right, sort mean, has our create be marketplace consumer think that. [ph] quickly about opportunities. done. you responds things I about to the amount that's consumer Timberland, think Champion and heat brand something Collab, that those the So part tremendous a wants of

sneaker So, consumers, all accelerated to fuel presence culture and is that. continues does thing at that I right think our the changed be the heart the of really that to that's or in the the those everybody brands digital have work of

Lauren Peters

want their receptivity brands being They brands the they that discovering it. part for And be career. are think to seen to my I of highest part hyper in informed and of is I've

Dick Johnson

across All consumer marketplace the our heat brands and that that to know tremendous response drive to being our well. big said, continue we that as

John Kernan

forward a and best great few it. Got on Well Investor Day the in with luck a congratulations to weeks. year of

Dick Johnson

John. Thanks more time question We've one got for I think.

Operator

comes final from Bonetti Michael Your question of Credit Suisse.

Michael Bonetti

Hey guys.

add on my in quarter. for question here. Thanks our congrats me nice Let getting

model Just a modeling question. quick

margins Just a think little digit Lauren, I the down little EBIT comps, mid-single the that you framework on back a operating rough bit bit, get gave, line.

share you rate that there Is repurchases with looks this like the EPS about gave Sam the I year. So am the earlier – correctly? components lot comes to growth from of tax it a thinking

Lauren Peters

to top declines more growth. expansion in reins digit to opportunistically mid-single on and we and expectation line And pressure. margin, XX.X of the XX execute bps so on XX [ph] gross EPS digit XX XX SG&A double tax in rate Reiterate comps repurchase share

Michael Bonetti

Okay.

you to the year. on Let up I you margin, me Lauren, margin this be gross mentioned ask the think

mix a there. you give I back there in had some again markdowns from momentum. category from isn't. margins peak historical the Is but footwear it significant some as you within you said be distortion geographies limit I'm or see change occupancy, categories an clearly you even would did margin largely margin numbers the merchandise to that we follow just levels? apparel of margins to the see and on and track don't will in trying us the quarter You the buying merchandise going

Lauren Peters

would markdowns personal Again, that our it as the mix some markdowns by which the lover. know is create is different we question think would what and We're some the them. you best geography to at lovers or degree. Quietly at close best biggest then longer focus other But term your about on it's to personal getting opportunities.

color longer the you help more of flow we got. what etcetera. that end at So us month. on that are term we're Logistically But we've looking things give effectively would at the the these again product can

Michael Bonetti

investment. keep on point let to top There’s you you'd the one year one in back the mid-single more how can Okay. just just to of range? you be comps claw us there some of that leverage line I on this me a if that understand about margin want you going. leverageable in there. help lot that Can last much here gave SG&A certainly above could the the growth momentum drive think SG&A leverage the why implied of digit

Lauren Peters

back to that expenses look levering you you to XXXX if the bottom. think thoughtful see we're I about can anything the and very incremental Well,

ever bigger effectively. expenses marketing how one that happening certainly dollars So you wages of lever more all with this and beauties selling they it's But those and are well they’re are within can get data SG&A Those points. is use smarter marketing. about what's of biggest first that the the

Michael Bonetti

lot. to guys you look Okay. a weeks. Thanks And a again forward seeing congrats few

Lauren Peters

Thank you.

Operator

have time. no further We at questions

Dick Johnson

morning. Okay. next today Thank Please earlier you May, bye. will our for on everyone. first we X insist that of which call earnings call will Friday am release results joining again at for us join the XXth. and us take Thanks follow again quarter The good

Operator

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

disconnect. now may You

Foot Locker (FL) 1 Mar 192018 Q4 Earnings call transcript