Shares of Foot Locker Inc. (FL, Financial) were down 10.09% at $47.50 in pre-market trading on Friday after missing first-quarter non-GAAP earnings estimates by 7 cents. It posted earnings of $1.53 per share, up 5.5% from the prior-year quarter.
GAAP earnings of $1.52 per share, which were up 10.1% year over year, fell 9 cents short of expectations.
Revenue grew 2.5% from the prior-year quarter to $2.08 billion, but missed analysts' projections by $30 million.
Foot Locker recorded a 4.6% increase in comparable store sales, a 30 basis point jump in the gross margin to 33.2% and a 100 basis point rise in the selling, general and administrative expenses rate to 20%. The SG&A expenses were higher due to strategic investments in infrastructure and digital capabilities.
The New York-based footwear and accessories company recorded a 10 basis point decline in the operating margin to 11% and a 0.1% expansion in merchandise inventories to $1.21 billion. The store count declined by 83 locations to 3,201.
“We continue investing in our digital capabilities, store fleet and infrastructure, which we believe will deliver returns on both the top-line and bottom-line, creating shareholder value in the short and long term," Executive Vice President and Chief Financial Officer Lauren Peters said.
Based on the current share repurchase program, the company expects high single-digit growth in earnings per share for full fiscal 2019, versus $4.79 posted for 2018 and compared to consensus estimates of $5.19.
In addition, as of May 4, the company has $1.126 billion in cash on hand and equivalents and $123 million in total debt.
During the quarter, Foot Locker invested $1.8 million in buying back 32,100 shares of its stock and distributed $43 million in dividends.
Foot Locker closed at $52.83 per share on Thursday for a market capitalization of $5.3 billion. The stock has fallen 5% over the 52 weeks through May 23 to below the 100- and 50-day simple moving average lines. The share price is still above the 200-day line.
The closing price on Thursday was 18.7% above the 52-week low of $44.47 and 28.8% below the 52-week high of $68.
Foot Locker has underperformed the S&P 500 index by 13.3% so far this year.
Disclosure: I have no positions in any securities mentioned.
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