Executive Summary

Q4 delivered above revised expectations: sales $2.243B (-5.8% YoY; +2.6% comps), gross margin expanded 300 bps to 29.6%, GAAP EPS $0.57 and non-GAAP EPS $0.86, with strength in Foot Locker and Kids Foot Locker (+3.6% combined comps) and Champs positive comps (+1.8%) .
FY25 guidance: sales -1.0% to +0.5%, comps +1.0% to +2.5%, gross margin 29.3%-29.7%, SG&A 24.3%-24.5%, EBIT margin 2.6%-3.1%, non-GAAP EPS $1.35-$1.65; capex $270M (adj. $300M) prioritizing customer-facing investments .
Management highlighted continued cost savings ($35M in Q4; $100M in FY24) and strong cash-on-cash returns from reimagined stores (~50%) and refreshes (35%-45%), while moderating non-customer-facing tech spend amid a cautious consumer start to FY25 .
Stock narrative drivers: positive comps/gross margin recapture, clear FY25 guardrails, brand diversification beyond Nike, but tempered near-term demand and promotional backdrop, with earnings weighted to 2H per management .

What Went Well and What Went Wrong

What Went Well

Comps strength and margin recapture: comps +2.6% led by global Foot Locker and Kids Foot Locker (+3.6%); gross margin +300 bps YoY to 29.6% despite elevated promotions .
Multi-brand momentum and basketball leadership: double-digit growth in adidas, New Balance, ON, HOKA, ASICS, Saucony, Crocs, UGG, Timberland; major NBA All-Star activation drove engagement (“20,000 visitors…3 billion media impressions”) .
Cost optimization and returns on capital: $35M Q4/ $100M FY24 savings; reimagined stores ~$4–$5M Y1 sales, ~20% EBITDA, ~50% cash-on-cash; refreshes 35%-45% returns with sales/profit lifts .

What Went Wrong

Topline down YoY and promotional intensity: sales -5.8% YoY (lapping 53rd week); elevated promotions across DTC/wholesale pressured topline despite margin recovery .
Apparel softness and WSS pressure: apparel comps down mid-teens; WSS comps -3.3% with inflationary and regional headwinds (e.g., Los Angeles fires) .
Cautious consumer and tariff overhang: softer start to February; sensitivity to tax refund timing and between-key-event lulls; management noted tariff uncertainty and modest direct China exposure .

Financial Results

Core P&L and KPIs vs Prior Quarters

Metric	Q2 2024	Q3 2024	Q4 2025
Sales ($USD Billions)	$1.896	$1.958	$2.243
GAAP EPS (from continuing ops) ($)	($0.13)	($0.34)	$0.57
Non-GAAP EPS ($)	($0.05)	$0.33	$0.86
Comparable Sales (%)	+2.6%	+2.4%	+2.6%
Gross Margin YoY Change (bps)	+50	+230	+300
Gross Margin Rate (%)	—	—	29.6%
SG&A YoY Change (bps)	+130	+210	+10
SG&A Rate (%)	—	—	22.3%
Cash & Equivalents ($USD Millions)	$291	$211	$401
Total Debt ($USD Millions)	$445	$445	$446
Inventory ($USD Billions)	$1.648	$1.744	$1.525

Notes: “—” indicates the rate was not disclosed in that period; Q4 2025 refers to period ended Feb 1, 2025 reported March 5, 2025.

Banner and Region Sales – Q4

Banner/Region	Q4 2025 Sales ($USD Millions)	Q4 2023 Sales ($USD Millions)	Constant Currency YoY (%)	Comparable Sales (%)
Foot Locker	$945	$961	(1.1)%	+5.5%
Champs Sports	$334	$372	(9.9)%	+1.8%
Kids Foot Locker	$207	$214	(3.3)%	+4.0%
WSS	$178	$182	(2.2)%	(3.3)%
North America Total	$1,665	$1,729	(3.4)%	+3.6%
EMEA Total	$451	$495	(6.1)%	+1.9%
Asia Pacific Total	$127	$156	(14.1)%	(7.6)%
Total Company	$2,243	$2,380	(4.6)%	+2.6%

Additional KPIs – Q4

KPI	Q4 2025
Digital Penetration (% of sales)	21.8%
Loyalty (FLX) Sales Capture – North America	49%
Stores Opened / Closed (Q4)	7 / 47
Store Base (End of Q4)	2,410 stores; 224 licensed
Inventory Turn (FY24)	~2.8x (5% YoY improvement)
Free Cash Flow (FY24)	$105M

Guidance Changes

Metric	Period	Previous Guidance	Current Guidance	Change
Sales Change (%)	FY25	—	-1.0% to +0.5%	New
Comparable Sales Change (%)	FY25	—	+1.0% to +2.5%	New
Gross Margin (%)	FY25	—	29.3% to 29.7%	New
SG&A Rate (%)	FY25	—	24.3% to 24.5%	New
EBIT Margin (%)	FY25	—	2.6% to 3.1%	New
Net Interest ($M)	FY25	—	~$12M	New
Non-GAAP Tax Rate (%)	FY25	—	32.5% to 33.0%	New
Non-GAAP EPS ($)	FY25	—	$1.35 to $1.65	New
D&A ($M)	FY25	—	$200 to $210	New
Capital Expenditures ($M)	FY25	—	$270	New
Adjusted Capex ($M)	FY25	—	$300 (incl. ~$30M SaaS in OpEx)	New
Store Count Change (%)	FY25	—	Down ~4%	New
Square Footage Change (%)	FY25	—	Down ~2%	New
Licensing & Other Revenue ($M)	FY25	—	~$24	New

Note: Company provides forward guidance on a non-GAAP basis and does not reconcile to GAAP due to forecasting difficulty .

Earnings Call Themes & Trends

Topic	Previous Mentions (Q2 2024)	Previous Mentions (Q3 2024)	Current Period (Q4 2025)	Trend
Digital & Mobile App	FLX relaunch in US; tech investments; reaffirmed FY24 EPS	New mobile app launch referenced; elevated promotions; lowered FY24 outlook	New Foot Locker app drove conversion; enterprise digital comps +12.4%; targets ~25% e-comm by 2026	Improving execution and penetration
Loyalty (FLX)	Non-recurring FLX charge in Q2 ($11M sales headwind; $0.09 EPS drag)	Ongoing adoption; cautious consumer outside peak periods	49% sales capture in North America; adding 3.2M members; Europe rollout in 2025	Accelerating adoption
Store Portfolio & ROI	Streamlining footprint; HQ move; refresh program	167 refreshes in Q3; closures continue	160 refreshes in Q4; plan ~300 in 2025; reimagined stores with ~50% cash-on-cash returns	Strong returns; pivot to reimagined
Brand Mix & Nike	Diversification across brands; international simplification	Promotions elevated; holiday acceleration	Nike partnership “fully reset”; Jordan/launch strength; double-digit growth in non-Nike brands	Diversified growth; Nike innovation pipeline
Regional Trends	Asia Pacific weakness, exits; EMEA stabilization	NA comps +2.1%; EMEA +6.4% CC; APAC down	NA comps +3.6%; EMEA +1.9% comps; APAC comps -7.6%	NA strength; EMEA choppy; APAC pressured
Macro & Tariffs	Promotional pressure in international; tech spend	Softer demand outside peaks; cautious FY24 reset	Cautious consumer, tax refund timing, tariff uncertainty; modest direct China exposure	Near-term headwinds acknowledged

Management Commentary

“We delivered fourth quarter results above our previously revised expectations… positive comparable sales and meaningful gross margin improvement… our Lace Up Plan is working.” — Mary Dillon, CEO .
“Gross margin… expanded 300 basis points… to 29.6%… ahead of our revised expectations… merchandise margins up… occupancy flat.” — Mike Baughn, CFO .
“We achieved $100 million in savings… targeting incremental $60–$70 million in 2025.” — Mary Dillon .
“Our partnership [with Nike] is strong and fully reset… sequential top line and gross margin recovery… bullish on innovation and storytelling later in the year.” — Mary Dillon / Frank Bracken .
“Average reimagined location… ~$4–$5M in sales and 20% EBITDA margins in year 1… ~50% cash-on-cash returns.” — Mike Baughn .

Q&A Highlights

Consumer tone: January strongest; February softer with sensitivity to tax refund timing and between-event lulls; comps still supported by activations (NBA All-Star, launches like Jordan Retro 12) .
Nike/promotions: Elevated DTC promotions caused halo effects; FL expects sequential improvement as franchise health is restored and innovation pipeline ramps (Shox, Max Air refresh) .
Tariffs exposure: Direct China exposure low single-digit of sales; ~half of private label imports; minor fixtures exposure across China/Mexico/Canada .
SG&A leverage: Underlying modest leverage excluding incentive comp normalization; structural work continues to bring SG&A down from ~24% .
Capex reallocation: Prioritizing customer-facing projects (refresh/reimagined) with high returns; elongating back-of-house IT investments; ~300+ refreshes in 2025 then shift to reimagined scaling .
WSS and Europe: WSS cautious consumer; double-down on value/workwear/football; Europe comps +1.9% in a choppy, promotional market; heavy refresh focus in Western Europe/UK in 2025 .

Estimates Context

Wall Street consensus EPS and revenue estimates via S&P Global were unavailable at time of analysis due to data-access limits; therefore, explicit beat/miss vs consensus cannot be shown. Management indicated non-GAAP EPS of $0.86 vs their guidance of $0.70–$0.80 for Q4, representing an internal beat versus revised outlook .
Given FY25 guidance (EPS $1.35–$1.65; comps +1.0% to +2.5%; GM 29.3%–29.7%), street models likely need to reflect back-half weighted earnings and moderated SG&A leverage, with gross margin recapture tempered by consumer and marketplace uncertainty .

Key Takeaways for Investors

Q4 print validated margin recovery and comps resilience; internal EPS beat versus revised guidance underscores execution on cost and merchandising despite promotions .
The FY25 framework points to modest topline growth and margin recapture; earnings weighted to 2H as store investments and innovation cadence build—position sizing should account for near-term volatility .
Capital deployment is shifting toward high-return store projects; reimagined/refresh returns and brand-standard penetration are tangible drivers of productivity and cash generation .
Brand diversification mitigates Nike dependence; watch Nike franchise health restoration and storytelling in H2 alongside continued double-digit momentum from non-Nike partners .
Monitor WSS and international (Europe promotional, APAC inflation) as key swing factors; expect disciplined openings and localized value propositions to stabilize banners .
Liquidity improved (cash $401M; debt $446M) and inventories well-positioned; pulled-forward spring receipts support Q1 flows but consumer caution may pressure early-quarter trends .
Near-term trading: catalysts include incremental margin recapture, mobile/FLX penetration gains, and brand launch calendars; risks center on promotional intensity, tariff headlines, and timing of tax refunds .

FOOT LOCKER, INC. (FL)·Q4 2025 Earnings Summary