Foot Locker swings to Q3 loss; slashes guidance
Foot Locker reported disappointing third-quarter results for its top and bottom lines amid softening consumer trends and an “elevated” promotional environment.
“While our trends in early November landed below our expectations as consumers held back their spending ahead of the holiday season, we saw a meaningful and positive acceleration over the key Thanksgiving week period, especially in stores,” stated CEO mary Dillon.
Despite the encouraging trend, the sneaker giant lowered its full-year sales and earnings outlook, citing a “more promotional environment and softer consumer demand outside of key selling periods.”
On the company’s earnlngs call, executives said Foot Locker’s results also were affected by softness at Nike, which is its largest brand partner. Nike has struggled in recent quarters, with critics citing a lack of product innovation. In October, former Nike CEO Elliott Hill retook the reins of the company.
Foot Locker reported a net loss of $33 million, or $0.34 a share, for the quarter ended Nov. 2, compared to earnings of $28 million, or $0.30 a share, in the year-ago period. Adjusted earnings came to $0.33 per share, lower than the $0.40 per share analysts had expected.
Total sales fell 1.4% to $1.96 billion, missing estimates of $2.0 billion.
On the positive side, comparable sales increased by 2.4%, including global Foot Locker and Kids Foot Locker comparable sales growth of 2.8%. The Champs Sports and WSS banners saw positive comparable sales growth of 2.8% and 1.8%, respectively.
In her statement, Dillon said Foot Locker has continued to demonstrate progress with its Lace Up turnaround strategy, which includes opening new formats, refreshing existing locations, shifting off mall and closing underperforming stores. During the quarter, the company remodeled or relocated 20 stores and refreshed 167 stores to its updated design standards.
"We remain focused on unlocking opportunities through our new reimagined stores and refresh program, revamped digital experience, including the recent launch of our new mobile app, and stronger customer engagement through our enhanced FLX Rewards Program,” Dillon said.
[READ MORE: First Look: Foot Locker unveils ‘store of the future']
Foot Locker now expects a 1% to 1.5% drop in full-year sales compared to its previous forecast of a 1% drop to a 1% increase. It also expects 1.20 to $1.30 in adjusted earnings per share, versus its previous forecast of $1.50 to $1.70 before.
As of November 2, 2024, Foot Locker operated 2,450 stores in 26 countries in North America, Europe, Asia, Australia and New Zealand. In addition, 214 licensed stores were operating in the Middle East and Asia.
