Foot Locker stock skidded lower Friday after a disappointing first-quarter report. The New York-based shoe retailer doubled its expected full-year sales decline, rattling retail partners and other footwear stocks during trading.
Foot Locker announced Q1 adjusted earnings plummeted 56% to 70 cents per share on an 11.4% drop in sales to $1.93 billion. Analysts polled by FactSet expected earnings of 76 cents per share on $1.99 billion in sales.
"Our sales have since softened meaningfully given the tough macroeconomic backdrop, causing us to reduce our guidance for the year as we take more aggressive markdowns to both drive demand and manage inventory," CEO Mary Dillon said in the release.
Foot Locker reported merchandise inventory totaled $1.758 billion as of April 29, spiking 25% over year ago levels.
Meanwhile, comparable store sales fell 9.1%, driven by macroeconomic headwinds, lower income tax refunds in the U.S., a changing vendor mix and its repositioning of its Champs Sports subsidiary, Foot Locker said.
The company reported gross margins decreased by 400 basis points due to higher markdowns compared to historic low levels from last year, occupancy deleverage and an increase in theft-related shrink.
Foot Locker Slashes Guidance
Foot Locker slashed its adjusted earnings guidance to range from $2 to $2.25 per share for the year, from its prior estimates of $3.35 to $3.65 per share. Sales are expected to fall 6.5% to 8% for the year. The company previously guided a 3.5% to 5.5% decline.
Foot Locker guided a 7.5% to 9% decline in comparable sales based on a softer sales forecast for the industry for the rest of the year. It previously expected a 3.5% to 5.5% decline. Meanwhile, gross margin is now projected to range from 28.6% to 28.8%, down from the prior 30.8% to 31% range, due to more aggressive markdowns and higher inventory shrink.
Shoe Stocks
FL stock dove 27.3% Friday following the results. Foot Locker shares are down nearly 32% over the past three months and down 20% so far this year.
Meanwhile, the miss-and-cut results from Foot Locker tripped up many of its retail partners including Nike, Under Armour, Adidas and Crocs.
Nike slid 3.5% while Adidas weakened 3% in trading. CROX stock retreated 5.5% and Under Armour fell 4.2% after the Foot Locker announcement Friday.
Deckers Outdoor, maker of the popular HOKA brand carried by Foot Locker, fell 3.7% ahead of its earnings report Thursday.
On Holding slumped another 3% Friday. ONON stock tumbled nearly 19% this week on softer sales growth expectations despite earnings tripling for its Tuesday report.
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