Foot Locker (FL) earnings for the second quarter of 2023

foot locker On Wednesday, it reported another quarter of declining sales and slashed its forecast for the second time this year as inflation-stricken consumers think twice before spending their money on shoes and apparel.

The sneaker giant’s fiscal second-quarter adjusted earnings were in line with Wall Street expectations, but fell short of analyst estimates on sales and saw another quarter of thin margins due to promotions and higher contraction.

The shares were down 30% in pre-market trading.

Here’s what Foot Locker did in the three-month period ended July 29 compared to what Wall Street was expecting, 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

The company turned in a loss of $5 million, or 5 cents per share, compared to a profit of $94 million, or 99 cents per share, in the previous year. Excluding one-time items, the company reported earnings of 4 cents per share.

Sales fell to $1.86 billion, down 9.9% from $2.07 billion a year earlier.

This dismal quarter prompted Foot Locker to lower its forecast yet again – just five months after it was submitted. The company also paused its quarterly cash dividend payment beyond the board’s recently approved October dividend of 40 cents a share.

The sportswear retailer now expects sales to fall 8% to 9% for the year, compared to a previously released forecast of a 6.5% to 8% decline. It expects same-store sales to decline by 9% to 10%, compared to its previous guidance of a decline of 7.5% to 9%.

The company lowered its adjusted earnings guidance to $1.30 to $1.50 per share, down from $2.00 to $2.25 per share.

“We saw trends soften in July and are adjusting our outlook for 2023 to allow us to better compete for price-sensitive consumers, while still leaning towards the strategic investments that drive our plan,” Marie Dillon, CEO of LaceUp, said in the news. launch.

Over the last couple of quarters, Foot Locker has had to rely on promotions to boost sales because its core customer, which skews from low-to-middle incomes, has cut back on spending on discretionary goods like shoes and clothes.

These significant writedowns affected Foot Locker margins, which were down 4.6 percentage points compared to the same period last year.

Foot Locker said “shrink,” a retail term for merchandise lost due to theft, damage or other means, also affected earnings. It did not disclose the amount of reduction in its margins compared to promotions.

Similar-store sales fell 9.4% during the quarter, which the retailer attributed to “continued consumer softness” and changes in its vendor mix. It is not clear what sellers or brands of sportswear are changing hands. But Foot Locker is trying to reduce its dependence on it Nike and balancing its vendor mix.

Nike, long the biggest sales engine in Foot Locker, was in the midst of its own strategic shift toward a direct-to-consumer model and had been pulling out of wholesalers for several years.

The company said Foot Locker inventories remain high — they rose 11% year-over-year to $1.8 billion — but levels have improved sequentially compared to the first quarter of 2023.