Foot Locker Inc.’s stock (FL, -4.80%) experienced a significant drop of 26% during premarket trade on Wednesday, following the sporting goods retailer’s announcement of a loss in the second quarter. Additionally, the company fell short of revenue estimates and adjusted its full-year guidance. This news comes just one day after a disappointing report from rival company Dick’s Sporting Goods Inc. (DKS, -24.15%), which attributed its own downfall to a surge in shoplifting incidents.
In the second quarter, Foot Locker reported a net loss of $5 million, or 5 cents per share, compared to an income of $94 million, or 99 cents per share, during the same period last year. The adjusted per-share earnings came to 4 cents, meeting the FactSet consensus. However, sales dropped to $1.891 billion from $2.065 billion, falling short of the $1.879 billion FactSet consensus.
Chief Executive Mary Dillon acknowledged the challenging consumer environment but expressed confidence in the company’s performance despite softening trends in July. Dillon stated, “Our second quarter was broadly in line with our expectations, despite the still-tough consumer backdrop. However, we did see a softening in trends in July and are adjusting our 2023 outlook to allow us to best compete for price-sensitive consumers, while still leaning into the strategic investments that drive our Lace Up plan.”
Due to the changing market conditions, Foot Locker has revised its full-year guidance. The company now expects adjusted earnings per share (EPS) to range from $1.30 to $1.50, lower than the previous guidance of $2.00 to $2.25. Additionally, it anticipates sales to decline by 8.0% to 9.0%, compared to the previous guidance of a 6.5% to 8.0% decrease.
In an effort to conserve cash for strategic investments, Foot Locker has decided to pause its quarterly cash dividend following the October payout, as announced earlier. The company also plans to provide updates on its capital allocation plans and long-term financial targets when reporting fourth-quarter results.
Year to date, Foot Locker’s stock has plummeted by 39%, while the S&P 500 index (SPX, -0.28%) has experienced a 14% gain.
