Foot Locker shares drop after expectations drop and dividend is suspended

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foot locker

The share price fell on Wednesday as investors traded in a slew of bad news. The sportswear and apparel retailer missed forecasts for second-quarter sales, cut its full-year forecast again, and paused its earnings.

foot locker

The company (Ticker: FL) reported earnings of 4 cents a share on revenue of $1.86 billion for the quarter ended July 29. While earnings per share were in line with analyst expectations, sales beat estimates of $1.88 billion.

Even worse, the retailer cut its sales and earnings forecasts for the fiscal year again – after lowering its guidance after the May earnings – and halted its dividend. The stock was down 32% in pre-market trading. The news seems to have hit stocks

Nike

(NKE) too, with this stock down 3.4% in the pre-market session and on track to extend its longest losing streak ever.

foot locker

Fiscal sales are now seeing a decline of 8% to 9% annually, which is even lower than previous guidance of a decline of 6.5% to 8%, while the company expects earnings per share to be in the range of $1.30 to $1.50, down from the previous forecast of $2 to $1.50. $2.25. The Company has also suspended the distribution of its quarterly cash dividend beyond the already approved October dividend; The company paid a dividend of 40 cents a share in the second quarter.

“The second quarter was largely in line with our expectations, despite still challenging consumer conditions. However, we saw a softening of trends in July and we are adjusting our 2023 forecast to allow We can better compete with price-sensitive consumers.” “We intend to update the market on our future capital allocation plans and the timing around our long-term financial goals when we report our fourth quarter results.”

Foot Locker, at the end of its most recent fiscal year, expected sales to fall by up to 3.5% in 2023, with earnings per share of $3.65. The stark departure from those estimates, made in late March, may be representative of the consumer slowdown facing retailers outside of Foot Locker.

Moreover, there are worrying signs that the shoe seller’s efforts to fight the prevailing downtrend are only adding to his problems. The company’s gross margin decreased by 460 basis points, or 4.6 percentage points, compared to last year, largely due to increased promotional activity and higher writedowns.

A number of retailers have sounded the alarm about the sick consumer, most recently with

Messi

(m) f

Dick’s Sporting Goods

(DKS) which noted this in earnings earlier this week and was punished by double-digit share price declines.

like Barron As I mentioned, even strength at some retailers reads negatively relative to the industry:

Walmart

(WMT), TJ Maxx Player

Cos TJX.

(TJX) and other budget brands have performed well precisely because consumers are watching their wallets.

shares in

Messi

It was 0.5% in pre-market trading, with your 2.2% in the red. Even the names of the budget were not spared

Walmart

down 0.2% and TJX down 0.5%.

the

S&P Retail Select Index
It has gained only 3% so far this year, while the broader range

Standard & Poor’s 500
It has risen by 14%. It seems that investors do not yet believe that retail stocks have enough discount to buy in bulk.

Write to Jack Denton at jack.denton@barrons.com