(CNN) — Consumers have more money in their pockets thanks to government stimulus checks — and apparently many are using it at malls and online to buy new sneakers, which is good news for Foot Locker.
The sneaker chain previewed its second-quarter results Monday ahead of the official release, saying sales were much better than expected and added it will actually report a profit.
Shares of Foot Locker gained more 7% on the news. And Nike shares were up 4%, helping the Dow surge almost 300 points.
Foot Locker, which will release its full results on August 21, indicated that sales at stores open at least a year surged 18% in the quarter, thanks to the reopening of many locations in June following closures in March because of the Covid-19 outbreak. Analysts had been expecting a drop of more than 20% for those so-called same-store sales.
Sales were so strong because of “pent-up demand and the effect of fiscal stimulus,” Foot Locker chairman and CEO Richard Johnson said in a news release Monday.
“While these undoubtedly remain challenging times, we are nonetheless pleased by the health of our category,” Johnson added, saying that sales were strong for both physical stores in malls and online.
The company also said it anticipated it would report quarterly earnings of between 66 cents and 70 cents a share. Wall Street was predicting a significant loss.
CFO Lauren Peters said in the release that the company was able to generate a profit thanks to “disciplined expense management” and stronger sales — despite what she referred to as “a highly promotional environment.” That phrase typically means retailers slashing prices to get customers in the door.
Foot Locker stock is still down more than 25% this year, however. Sneaker industry leader Nike has posted a big drop in sales. Nike rivals Adidas and Under Armour are also struggling.
Foot Locker added in its statement Monday that the company has no plans to provide an outlook for the rest of 2020, after previously withdrawing its guidance in March.
The company cited “the uncertainty surrounding the evolving Covid-19 pandemic and its potential impact on the back-to-school season, team sports participation and additional government stimulus packages.”
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