Executive Summary

Q3 2025 sales were $1.96B (-1.4% YoY) with comps +2.4%; GAAP EPS was -$0.34 and non-GAAP EPS was $0.33, reflecting gross margin expansion of +230 bps to 29.6% but an elevated promotional environment and higher SG&A rate (+210 bps) .
Management lowered full-year 2024 guidance: sales change to -1.5% to -1.0%, non-GAAP EPS to $1.20–$1.30, and gross margin to 28.7%–28.8% amid persistent promotions and cautious consumer demand outside peak periods .
Banners showed progress: Global Foot Locker/Kids FL comps +2.8%, Champs +2.8%, WSS +1.8%, with EMEA comps +6.4% offset by APAC -7.3% and apparel weakness; inventory was down 6.3% YoY, providing flexibility for holiday .
Call tone: Lace Up Plan execution driving conversion and margin recapture, but Q3 fell short of expectations; Q4 guided to non-GAAP EPS $0.70–$0.80 with continued promotional intensity; longer-term EBIT margin target remains 8.5–9% by 2028 .
Key catalyst: the downward revision of FY outlook and below-prior internal EPS expectations (non-GAAP EPS of ~$0.40 guided for Q3 vs actual $0.33) amid heightened promotions across DTC and wholesale channels, including Nike .

What Went Well and What Went Wrong

What Went Well

Comps +2.4% led by Global Foot Locker and Kids Foot Locker +2.8%; Champs +2.8% and WSS +1.8% returned to positive territory, aided by back-to-school strength .
Gross margin expanded +230 bps YoY to 29.6% on fewer markdowns; merchandise margin recapture accelerated vs Q2 .
Lace Up initiatives drove operational KPIs: store refreshes (167 in Q3), higher conversion and basket sizes in reimagined stores; digital comps +3.6% and loyalty penetration reached 27% in NA .

Quote: “Our team’s continued focus on execution drove positive comparable sales trends and meaningful gross margin expansion in the quarter.” — Mary Dillon, CEO .

What Went Wrong

Top and bottom line fell short of internal expectations; GAAP net loss was -$33M (vs +$28M prior year) and non-GAAP EPS of $0.33 missed the previously indicated ~$0.40 for the quarter; SG&A rate deleveraged +210 bps on tech and brand investments .
Elevated promotional intensity across DTC and wholesale channels in North America and Europe constrained margin recapture; apparel comps declined low-20s .
APAC comps -7.3% with Australia consumer headwinds; atmos faced -11.2% comps amid strategic shift away from third-party platforms; non-cash charges (atmos tradename $25M; minority investment impairment $35M) impacted GAAP .

Financial Results

Metric	Q1 2025	Q2 2025	Q3 2025
Revenue ($USD Millions)	$1,788	$1,857 (includes $6M other revenue)	$1,961 (includes $3M licensing)
Sales ($USD Millions)	$1,788	$1,851	$1,958
YoY Sales Change (%)	-4.6%	-2.4%	-1.4%
GAAP EPS ($)	-$3.81	-$0.39	-$0.34
Non-GAAP EPS ($)	-$0.07	-$0.27	$0.33
Gross Margin (%)	— (decreased 40 bps YoY)	— (decreased 50 bps YoY)	29.6% (+230 bps YoY)
SG&A Rate (%)	— (+100 bps YoY)	— (+20 bps YoY)	24.6% (+210 bps YoY)
Comparable Sales (%)	-2.6%	-2.0%	+2.4%

Segment/Banner and Region Performance (Q3 2025):

Segment/Banner	Sales ($MM)	Constant Currency YoY %	Comparable Sales %
Foot Locker	$769	-3.3%	+1.6%
Champs Sports	$286	-8.0%	+2.8%
Kids Foot Locker	$183	-3.2%	+3.2%
WSS	$167	+2.5%	+1.8%
North America total	$1,405	-3.7%	+2.1%
EMEA	$445	+6.1%	+6.4%
Asia Pacific	$108	-11.8%	-7.3%
atmos (APAC/Other)	$31	-18.4%	-11.2%
Total	$1,958	-2.2%	+2.4%

Selected KPIs (Q3 2025):

KPI	Value
Gross Margin	29.6%
SG&A Rate	24.6%
Digital Penetration	17.6% of sales
Loyalty Penetration (NA)	27%
Exclusives % of Sales	15% (down 100 bps YoY)
Off-Mall % of NA Sq Ft	41%
New Concepts % of Sq Ft	17%
Cost Optimization Savings (2024 YTD)	~$90M; ~$25M flowed through Q3 COGS
Inventory YoY	-6.3% to $1.74B
Store Actions (Q3)	Opened 10; Closed 24; Refreshed 167

Balance Sheet Snapshot (Q3 2025):

Cash and equivalents: $211M; Total debt: $445M .
Shareholders’ equity: $2.868B; Total liabilities: $3.994B .

Guidance Changes

Metric	Period	Previous Guidance	Current Guidance	Change
Sales Change	FY 2024 (52 weeks to Feb 1, 2025)	-1.0% to +1.0%	-1.5% to -1.0%	Lowered
Comparable Sales Change	FY 2024	+1.0% to +3.0%	+1.0% to +1.5%	Lowered (narrowed)
Licensing Revenue	FY 2024	~$17M	~$16M	Lowered
Gross Margin	FY 2024	29.5%–29.7%	28.7%–28.8%	Lowered
SG&A Rate	FY 2024	24.1%–24.3%	24.0%–24.1%	Slightly improved range
D&A	FY 2024	$210–$215M	~$203M	Lowered
EBIT Margin	FY 2024	2.8%–3.2%	2.3%–2.5%	Lowered
Net Interest	FY 2024	~$10M	~$8M	Lowered
Non-GAAP Tax Rate	FY 2024	33%–34%	~34%	Maintained
Non-GAAP EPS	FY 2024	$1.50–$1.70	$1.20–$1.30	Lowered
Capital Expenditures	FY 2024	$275M	$270M	Lowered
Adjusted Capex (incl. SaaS)	FY 2024	$330M	$320M	Lowered
Q4 Commentary	Q4 2024	—	Non-GAAP EPS $0.70–$0.80; GM 29.0%–29.2%; SG&A 22.3%–22.5%	New quarterly guide

Earnings Call Themes & Trends

Topic	Previous Mentions (Q-2 and Q-1)	Current Period (Q3 2025)	Trend
Promotional intensity	Q2: softness in WSS and international; promotions impacting margins; GAAP/non-GAAP losses	Elevated promotions across DTC and wholesale; moderating margin recapture; cautious consumer outside peaks	Intensified; continued through holiday
Nike partnership	Q2 press focused on brand partnerships broadly	Return to growth in Q4 allocations; DTC promotions pressuring marketplace; optimism on new Nike leadership/products	Near-term pressure; medium-term constructive
Apparel category	Q2: margin pressure and promotions; overall challenges	Comps down low-20s vs footwear strength; innovation lag cited	Worsened in Q3
Lace Up Plan execution	Q1/Q2: refresh/reimagined store rollout; digital/app upgrades; FLX program	Higher conversion/basket sizes in reimagined; 167 refreshes in Q3; loyalty penetration 27%	Steady progress; operational KPIs improving
Regional trends	Q1: International weakness (EMEA)	EMEA comps +6.4%; APAC -7.3%; Australia consumer headwinds	Mixed: EMEA improved; APAC challenged
WSS consumer	Q2: tougher macro; value emphasis; capital moderated	Comps +1.8%; value focus (sub-$80 footwear); pressure on lower-income cohorts	Slight improvement with continued caution
Digital & loyalty	Q2: FLX EU launch; app upgrades (Champs/Kids)	Digital comps +3.6%; mobile app relaunch in U.S.; loyalty penetration up 4 pts YoY	Building momentum
M&A context	Q1/Q2: pending acquisition by DICK’S, approvals obtained; no calls held	Not central to Q3 call; operational focus	Deal context recedes in Q3 call

Management Commentary

“We are taking a more cautious view and are lowering our full-year sales and earnings outlook due to a more promotional environment and softer consumer demand outside of key selling periods.” — Mary Dillon, CEO .
“Our non-GAAP earnings per share in the quarter were $0.33 up from $0.30 last year, but below our guidance of approximately $0.40.” — Mary Dillon .
“We remain committed to reaching our longer term EBIT target of 8.5% to 9% by 2028.” — Mike Baughn, CFO .
“In all [reimagined] locations, we’ve generally seen higher conversion levels, basket sizes and increased penetration of women’s footwear compared to the balance of chain.” — Mary Dillon .
“We do return to growth on an allocation basis during the holiday season with Nike and have a favorable launch calendar.” — Franklin Bracken, CCO .

Q&A Highlights

Margin vs sales trade-off: Elevated promotions limited margin recapture despite comps and GM improvement; SG&A investments continued, partially offset by cost savings .
Apparel pressure: Innovation lag vs footwear and heavier promotions drove low-20s comp declines; inventories are clean and aligned to trend .
Champs/WSS progress: Champs first positive comp since repositioning; WSS comps turned positive with value focus; lower-income consumer remains pressured, California exposure notable .
Nike cadence: Short-term DTC promotional pressure; Q4 expected allocation/launch tailwinds; confidence in partnership and product pipeline .
Loyalty/digital: New FLX program and app are lifting conversion, basket size, and enrollment; early signs of improved frequency .

Estimates Context

S&P Global consensus data could not be retrieved at this time; therefore, Wall Street revenue/EPS consensus comparisons are unavailable. Management indicated non-GAAP EPS of ~$0.40 for Q3 heading into the quarter; actual non-GAAP EPS was $0.33, implying a miss versus management’s prior internal expectation .
Q4 non-GAAP EPS guided to $0.70–$0.80 with GM 29.0%–29.2% as apparel markdowns lap 2023, but with ongoing promotional pressure across channels .

Key Takeaways for Investors

Sequential improvement in sales (Q3 $1.96B vs Q2 $1.85B) and GM recapture to 29.6% signal Lace Up execution, but promotions and apparel weakness constrain earnings power near term .
Positive comps in core banners (FL/Kids, Champs, WSS) and EMEA strength (+6.4%) offset APAC/Australia headwinds; inventory down 6.3% YoY supports agility into holiday .
FY 2024 outlook reset (EPS $1.20–$1.30; GM 28.7%–28.8%) sets a lower bar; Q4 guide calls for the year’s most meaningful YoY margin improvement even as promotions persist .
Strategic KPIs (loyalty, digital penetration, off-mall mix, reimagined stores) are trending up, improving conversion and basket size—critical levers for sustained margin recovery .
Watch near-term catalysts: holiday allocation/launch calendar (Nike), apparel innovation cadence, promotional intensity in DTC/wholesale, and regional traffic trends; these will drive Q4 delivery vs guidance .
Longer-term thesis hinges on Lace Up Plan execution to reach 8.5–9% EBIT margin by 2028; store portfolio optimization, cost savings, digital/loyalty scale, and multi-brand diversification are core drivers .
Trading implications: post-guide-down risk balanced by margin recapture potential and holiday launch tailwinds; expect volatility tied to weekly holiday sell-through and promotional activity updates .

FOOT LOCKER, INC. (FL)·Q3 2025 Earnings Summary