Foot Locker Faces Challenges with Slashed Yearly Guidance #

Foot Locker has reduced its full-year guidance following disappointing quarterly results, citing weaker consumer demand and increased marketplace promotions as reasons for its underperformance. Despite efforts, the sneaker giant missed Wall Street’s expectations both in revenue and earnings.

In the three months ending November 2, Foot Locker reported a loss of $33 million, or 34 cents per share, compared to a profit of $28 million, or 30 cents per share, the previous year. After excluding one-time items related to impairment charges for its atmos brand and other costs, adjusted earnings were $31 million, or 33 cents per share. Sales decreased by 1.4%, dropping to $1.96 billion from $1.99 billion.

“Consumer spending trends softened following the peak Back-to-School period in August, and the promotional environment was more elevated than anticipated.” The company noted a positive sales boost during the key Thanksgiving week, especially in physical stores, but remains cautious going forward. For the holiday quarter, Foot Locker anticipates sales will decline between 1.5% and 3.5%, contrasting with a 2% increase in the prior year when the fiscal calendar included an extra sales week.

Foot Locker expects full-year sales to decrease between 1% and 1.5%, a revision from its earlier guidance of a range from a 1% decline to a 1% increase. Comparable sales are expected to grow between 1% and 1.5%, down from previous guidance of 1% to 3%.

Earnings per share for the full year are now anticipated to be between $1.20 and $1.30, a reduction from prior expectations of $1.50 to $1.70. This revised outlook considers heightened promotional activity and a shorter fiscal year impacting sales by approximately $100 million.

Despite challenges, there were positives. Foot Locker recorded a 2.4% growth in comparable sales for the second consecutive quarter. Champs, which had been a laggard in performance, saw a 2.8% increase in comparable sales, and WSS reported a growth of 1.8%. These signs indicate some progress in the company’s strategic turnaround efforts.