- Foot Locker missed profit and sales forecasts, and lowered its full-year guidance.
- Lower tax refunds for consumers and theft impacted results.
- Sales "softened meaningfully" since it launched a new strategy in March.
Foot Locker (FL) shares cratered on Friday after the shoe retailer reported earnings and revenue that were well below forecasts and slashed its outlook.
The company posted first quarter profit of $0.70 per share, 14% less than estimates. Sales slumped 11.4% to $1.93 billion. Comparable store sales sank 9.1%.
Foot Locker pointed to lower tax refunds, as well as a changing vendor mix and repositioning of its Champs Sports subsidiary for the slide in sales. In addition, it said operating margins fell 400 basis points (bps) because of higher markdowns, reduced store occupancy, and theft.
Foot Locker CEO Mary Dillon said that the retailer was making progress in building a strong foundation for growth beyond this year following the launch of its Lace Up Strategy in March. However, she said “sales have since softened meaningfully given the tough macroeconomic backdrop.” She added that led the retailer to reduce its guidance for 2023, “as we take more aggressive markdowns to both drive demand and manage inventory.”
Foot Locker now forecasts full-year sales to sink 6.5% to 8%, down from the previous drop of 3.5% to 5.5%. Comparable store sales are expected to dip 7.5% to 9%, as compared to the earlier decline of 3.5% to 5%. Earnings per shares (EPS) are anticipated to be $2 to $2.25, versus the former $3.35 to $3.65.
Shares of Foot Locker tumbled more than 27% on Friday in the biggest daily decline since 2018. The losses sent Foot Locker shares into negative territory for the year, with shares down about 20% year-to-date.