Dive Brief:

• Shares of Foot Locker rose 4.1% in pre-market trading Friday after the sportswear and footwear retailer reported better-than-expected sales and earnings for the second quarter of 2016. Q2 earnings were $127 million, or 94 cents per share, up from $119 million, or 84 cents per share, a year ago, beating FactSet consensus expectations of 90 cents per share.

• Foot Locker's Q2 revenue increased to $1.78 billion from $1.70 billion a year ago, beating the FactSet consensus estimate of $1.76 billion. Q2 same-store sales rose 4.7%, beating expectations of a 3.8% rise. 

• Inventories rose 1.7% year over year to $1.34 billion, Foot Locker said. In the second quarter, the company opened 23 new stores, remodeled or relocated another 64 stores, and closed 18 stores.  

Dive Insight:

Foot Locker has seen dramatic changes in how consumers use sports apparel and gear, with much of the most profound change coming from women, who are not only participating in fitness and athletic pursuits in greater-than-ever numbers, but are also wearing well-designed fitness apparel in their casual work and leisure moments.

That has forced Foot Locker to take its “Lady Foot Locker” approach beyond an afterthought to keep pace with the competition. The retailer has been working to create the right mix of merchandise and store concepts, struggling against headwinds not just in retail and sports retail, but also in malls, where most of its stores are based. Foot Locker CFO Lauren Peters said Friday that "substantial and thoughtful investments in its stores, digital sites and infrastructure" have paid off in increased productivity.

Foot Locker is also highly dependent upon sneaker trends, and often rises and falls based on which basketball shoe or other release from Nike, Under Armour or Adidas hits big. CEO/Chairman Richard Johnson noted those relationships in his statement Friday.

“Foot Locker has strong leadership positions in the athletic industry, with the most important being our deep understanding of the core customer for each of our banners," Johnson said. "We share this understanding with our key vendors, which enables us to partner with them to deliver the trend-right, premium footwear and apparel assortments our customers seek, which in turn has led to consistently outstanding financial results such as we announced today.”

Foot Locker drove comparable sales gains across basketball, running and classic footwear as well as apparel in Q2, Johnson noted. The company also posted gains in all regions and channels in which it operates, he added.