FL: Quick Call Outs From Conf Call

 

As follow up to our overview this morning on FL and the space in aggregate, here are some notables that mgmt threw out on the conf call, fyi… They support the case for this name (and space) turning on the margin into 2010) as the rest of retail rolls.

 

Balance of commentary out of FL positive - a few notables:

  • Inventory levels are in good shape - as evidenced by sales/inventory ratio and significantly lower markdowns in 3Q
    • Don’t expect the need to increase promotional cadence in Q4
  • Comps expected to improve sequentially, but still negative (reported -8.2% comp in Q3, a -3% comp keeps the 2-yr trend flat)
    • US Sales soft in October - trend continues for November
  • Comps at dot.com down HSD in 3Q
  • Plan to close more stores than originally expected - 160 net closings in FY09 (60 more than origianlly targeted)
    • Implies 120 store closings in the 4Q - 3.3% of total 3600 store base!
  • Despite double digit comp store declines in Athletic footwear and apparel, running turned positive in October
  • Comp store sales trend in Europe improved versus the spring season - October was strong with comps up HSD
  • October sales trends better with meaningful gains in Italy, France, Germany and the UK
  • ASPs in the US increased low single digits - reflecting a stabilization of prices and lower markdown rates
  • Hicks sees apparel as a significant sales and profit opportunity

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