Warning Signs Ahead: Foot Locker’s Disappointing Quarterly Results
A Rough Quarter for Foot Locker
Foot Locker’s latest quarterly results have sent shockwaves through the market, with the company slashing its full-year guidance and blaming soft consumer demand and elevated promotions. The sneaker giant’s shares plummeted 15% in premarket trading, sparking concerns about the health of its largest brand partner, Nike.
Missing Expectations
Foot Locker’s third fiscal quarter results fell short of Wall Street’s expectations, with a loss of $33 million, or 34 cents per share, compared to earnings of $28 million, or 30 cents per share, a year earlier. Sales dropped to $1.96 billion, down about 1.4% from $1.99 billion a year earlier.
CEO Mary Dillon Weighs In
According to CEO Mary Dillon, “Consumer spending trends softened following the peak Back-to-School period in August, and the promotional environment was more elevated than anticipated.” Despite a strong performance during the Thanksgiving week period, Foot Locker is taking a cautious approach, citing a more promotional environment and softer consumer demand outside of key selling periods.
Gloomy Holiday Outlook
For the holiday quarter, Foot Locker expects sales to decline between 1.5% and 3.5%, compared to a gain of about 2% in the year-ago period. The company’s outlook is worse than the 1.6% decline analysts had expected.
Full-Year Guidance Slashed
Foot Locker now expects sales to fall between 1% and 1.5% for the full year, compared to previous guidance of down 1% to up 1%. The retailer also cut its comparable sales outlook for the full year, anticipating comps will grow between 1% and 1.5%, compared to previous guidance of 1% to 3%.
Earnings Outlook Revised Downward
Foot Locker lowered its full-year earnings outlook, expecting adjusted earnings per share to be between $1.20 and $1.30, below Wall Street expectations of $1.54.
Bright Spots Amidst the Gloom
Despite the disappointing results, there were some positive signs. Foot Locker’s comparable sales grew 2.4% compared to the previous year, marking the second quarter in a row of growth. Champs and WSS also posted positive comparable sales, with growth of 2.8% and 1.8%, respectively.
What’s Next for Foot Locker?
As Foot Locker navigates a challenging retail landscape, investors will be watching closely to see if the company can regain its footing. With a gloomy holiday outlook and slashed guidance, the road ahead looks uncertain.
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