Foot Locker’s stock plunges 32% as sneaker retailer blames drop in results on ‘consumer softness’.
Foot Locker shares have plummeted 58% so far this year, and are down 80% from an all-time high of $80 per share in late 2016. They’ve far underperformed the benchmark S&P 500 consumer discretionary sector, which is up 30% this year.
The sneaker giant’s adjusted fiscal second-quarter earnings were in line with Wall Street’s expectations, but fell short of analysts estimates on sales and saw another quarter of slimmer margins due to promotions and higher shrink.
Here’s how Foot Locker did in the three-month period that ended July 29 compared with what Wall Street was anticipating, based on a survey of analysts by Refinitiv:
Earnings per share: 4 cents adjusted vs. 4 cents expected
Revenue: $1.86 billion vs. $1.88 billion expected.
Foot Locker President and CEO Mary Dillon acknowledged a tough consumer backdrop, and said the company is “adjusting its 2023 outlook to allow it to best compete for price-sensitive consumers.”
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Foot Locker lowered its full-year outlook for the second time in just five months. The company now projects sales will fall between 8% and 9% this year, more than a previous estimate of 6.5% to 8%. Same-store sales are forecast to drop 9% to 10%, versus an earlier projection of 7.5% to 9%.
The company swung to a loss of $5 million, or 5 cents per share, compared with a profit of $94 million, or 99 cents a share, a year earlier. Excluding one-time items, the company reported earnings of 4 cents per share.
Sales declined to $1.86 billion, down 9.9% from $2.07 billion a year earlier.
The dismal quarter prompted Foot Locker to lower its forecast again – just five months after introducing it. The company also paused its quarterly cash dividend beyond its board’s recently approved October payout of 40 cents per share.
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