Foot Locker Sees Women's Lift From Nike Rival Under Armour

Running and basketball shoes propelled Foot Locker's second-quarter earnings past views, but as women's activewear continues to be trendy, Under Armour could prove to be a bright spot for the sportswear retailer.

"We think Under Armour (UA) will play a significant role in our women's business," said Foot Locker (FL) CEO Richard Johnson during a conference call Friday.

"They've got some great assets with Gisele (Bundchen), Misty Copeland, people that have real resonance with our female consumers. We see them having a big impact in the business going forward, across banners.

Foot Locker stock fell 3.8% to 69.02 amid a sharp market selloff. Under Armour lost 6.8%. Nike (NKE), which also sells through Foot Locker, skidded 4.8%.

Gains from women's offerings could deepen the companies' ties. In June, Foot Locker's Champs Sports opened an Under Armour shop-in-shop, The Armoury, in Maryland.

Jefferies analyst Edward Plank noted Friday that he was "encouraged" by Foot Locker's five straight quarters of positive Lady Foot Locker comp sales.

"Women's is shaping into a real growth story," he noted, adding that "this portends further gains ahead as the company refines and prepares to scale Six:02, a concept we view as the bigger/better/modern evolution of LFL.

Foot Locker's handful of Six:02 stores are designed to appeal to millennial women.

The casual running trend and stronger brands of apparel from companies like Nike have fueled women's sales over the last four quarters, FBR analyst Susan Anderson told IBD.

Foot Locker's Q2 EPS grew 31% to 84 cents, 15 cents above analyst forecasts. Revenue rose 3% to $1.7 billion, beating estimates for $1.66 billion. Same-store sales grew 9.6%. Anderson noted Friday that the view-topping comps were "impressive.

Basketball and running footwear "continue to perform," she said, achieving low double-digit gains in Q2.

In Q2, the company opened 21 locations, closed 21 stores and remodeled or relocated 65 stores, leaving it with a total of 3,419 stores globally as of Aug. 1.

"This was a solid report, which we believe exceeded heightened expectations," wrote Anderson in a Friday note.

"We believe that FL is executing at a high level, with strong athletic footwear market growth as a secular tailwind.

Teens could help boost Q3 results. Retail Metrics' Ken Perkins said August store checks have pegged Foot Locker as "one of the busiest locations in the mall this back-to-school season."