Third quarter total sales increased 5.1% to $1,886 million from $1,794 million in the third quarter of 2015, and comparable store sales increased 4.7%.
Gross margin increased slightly to 33.9 percent of sales compared to 33.8 percent of sales in the prior year, and the SG&A expense rate improved 20 basis points to 19.4% of sales.
Net income increased to $157 million, or $1.17 per share, compared to net income of $80 million, or $0.57 per share, in the previous year.
“Our outstanding track record of meaningful sales and profit growth over several years is a strong testament to Foot Locker, Inc.’s solid position at the center of sneaker culture,” said Richard Johnson, Chairman of the Board and Chief Executive Officer. “Our associates work hard every day to make our Company the sneaker lover’s preferred destination for the best footwear and apparel assortments across our array of outstanding athletic vendors. That work translated once again into an exceptional quarterly sales and profit performance.”
Also in the third quarter, Foot Locker performed a scheduled reassessment of its intellectual property driven by the success of the Foot Locker business in Europe. The new valuation resulted in increased deductions that reduced tax expense by $10 million. Excluding the new valuation, a pre-tax impairment charge of $6 million, and $100 million pension litigation charge, Foot Locker non-GAAP earnings increased 13% to $1.13 per share versus $1.00 per share in 2015.
The positive performance of Foot Locker Europe opens up opportunity for the sneaker retailer. On November 17, Foot Locker announced the addition of global leadership experts Ulice Payne, Jr. and Kimberly K. Underhill to its Board of Directors, effective December 1, 2016.
Lauren Peters, Executive Vice President and Chief Financial Officer, added, “The Company continued to execute its strategic initiatives and produce excellent financial results in the quarter, with solid, consistent top-line growth, as well as incremental improvements in both gross margin and SG&A rates. Our inventory is fresh and well-positioned as we prepare for the important holiday selling season, and we remain well on track to achieve our annual guidance of a mid-single digit comparable-store sales gain and double-digit earnings per share growth.”
The company reported $128 million in debt from cash totaled $865 million. $76.3 million was spent repurchasing 1.15 million shares, and year-to-date, the company invested $193 million in its stores, websites and infrastructure, tracking to approximately $290 million.
Year-to-date sales increased 4.6% to $5,653 million from $5,405 million, and year-to-date comparable sales increased 4.0%. Net income also increased to $475 million, or $3.50 per share, from $383 million, or $2.71 per share.