Foot Locker Reports 2.4% Q2 Revenue Drop

Key Points

• Total revenue (GAAP) declined 2.4% to $1,851 million, with North American comparable sales up 1.4% but international weakness dragging overall results.

• Non-GAAP loss per share widened to $(0.27), worse than expectations, as margin and profitability pressures intensified compared to the second quarter of 2024.

• No forward financial guidance was issued due to pending acquisition by DICK’S Sporting Goods, with transaction closure expected September 8, 2025.

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Foot Locker (NYSE:FL), a leading specialty athletic retailer focused on sneakers and sports-inspired apparel, reported its fiscal second quarter 2025 results on August 27, 2025. The key news in the release was a 2.4% decline in revenue compared to the second quarter of 2024, expanding losses per share, and notable strength in its North America banners offset by persistent weakness internationally. The company’s adjusted loss per share of $(0.27) was weaker than the analyst estimate of $0.07. Revenue (GAAP) missed analyst expectations, but profitability and margins slipped compared to the second quarter of 2024. Broadly, the results underscored challenging global retail conditions.

About Foot Locker and Its Business Model

Foot Locker operates as a specialty retailer in the athletic footwear and apparel industry. It oversees a diverse group of store brands including Foot Locker, Kids Foot Locker, Champs Sports, WSS, and atmos. These brands serve different customer groups, ranging from children to dedicated sports and sneaker enthusiasts.

The company’s business leans on both its physical store footprint and its evolving digital presence. Having a strong brand portfolio helps it reach a wide customer base, while its multi-channel approach—giving shoppers the option to buy online, pick up in-store, or shop in person—is seen as key for growth. Foot Locker’s recent focus has centered on refreshing stores, investing in digital platforms, and building loyalty through programs like FLX Rewards.

Q2 Highlights and Financial Developments

The second quarter saw total sales (GAAP) slide 2.4% versus the same period last year, landing at $1,851 million. Declines outside the U.S. weighed on growth, with EMEA (Europe, Middle East, Africa) comparable sales fell 11.4% and Asia Pacific comparable sales declined 6.4%. However, North American comparable sales increased 1.4%, led by core brands. Banner highlights included Kids Foot Locker comparable sales were up 7.6%, Foot Locker comparable sales were up 1.8%, and Champs Sports comparable sales rose 2.0%. WSS, a family athletic footwear retailer, saw comparable sales decline by 8.1%, reflecting soft store traffic, especially internationally.

The company’s gross margin decreased compared to the prior-year period, with gross margin (GAAP) fell 0.5 percentage points compared to the prior-year period, attributed in the filing to lower merchandise margin. Selling, general and administrative (SG&A) expenses as a share of sales increased by 0.2 percentage points compared to the prior-year period, as the fixed costs became harder to absorb on a smaller revenue base despite tight expense control. This pressure contributed to a wider non-GAAP net loss of $(27 million), compared with $(4 million) a year ago, and a non-GAAP loss per share of $0.27 that missed analyst expectations.

The quarter saw ongoing investment in store modernization, with 52 stores refreshed and 14 remodeled or relocated. Two new “reimagined” Champs Sports stores opened. Store count decreased to 2,354 as of August 2, 2025, down from 2,410 as of February 1, 2025. Store square footage contracted as well. Capital expenditures for the year to date were $107 million, down from $132 million in the prior-year period.

Digital initiatives featured in the company update, though management did not break out e-commerce sales figures. Foot Locker rolled out its FLX Rewards Program in Europe, designed to increase customer engagement across its omni-channel strategy—where customers can research, buy, and receive products across both digital and store channels. The CEO cited a strong start to the back-to-school selling season in July.

The release references a “challenging operating environment and soft store traffic” affecting WSS and international banners, further explaining the international drag on performance. Inventory levels (GAAP) rose 3.7% to $1,709 million. Management attributed this to a strategic “pull-forward” of fall product. Year-to-date operating cash flow fell sharply to just $2 million from $126 million in the same period last year, reflecting working capital needs and ongoing losses.

A notable one-time item in the period was a $15 million charge for acquisition and restructuring costs, primarily tied to the pending DICK’S Sporting Goods transaction. Other one-offs this year included $250 million in impairment charges to goodwill and tradenames in Q1 FY2025, as part of total non-cash impairment charges of $276 million, reflecting reduced asset values tied to challenged operations in certain markets.

Looking Forward: Guidance and Key Trends

With the impending acquisition by DICK’S Sporting Goods expected to close September 8, 2025, Foot Locker’s management did not issue any forward financial guidance for fiscal 2025 or the third quarter. The company indicated it would not provide further outlooks due to the acquisition’s closing timeline and related regulatory constraints. As a result, visibility on revenue, profit, and strategic priorities beyond short-term operations will remain limited until after the transaction is complete.

Foot Locker continues to face several operational risks ahead of the acquisition. Persistent international weakness, margin deterioration, inventory build, and declining operating cash flow will be key focus areas for investors and industry observers.

Revenue and net income presented using U.S. generally accepted accounting principles (GAAP) unless otherwise noted.

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