A sign hangs above the entrance of a Foot Locker store on August 02, 2021 in Chicago, Illinois.
Scott Olson | Getty Images
Foot Lockers The stock opened 24% lower on Friday after it reported poor fiscal first-quarter results and cut its outlook just two months after its announcement.
The shoe salesman didn’t meet the top and bottom lines and said it had to add marks to bring in sales.
Here’s how Foot Locker did in the first fiscal quarter compared to Wall Street expectations, based on a survey of analysts by Refinitiv:
- Earnings per share: 70 cents adjusted vs. 81 cents expected
- Revenue: $1.93 billion vs. $1.99 billion expected
The company’s reported net income for the three-month period ended April 29 was $36 million, or 38 cents a share, compared with roughly $132 million, or $1.37 a share, a year ago. .
Sales fell to $1.93 billion, down 11.4% from $2.18 billion last year.
“Our sales have since softened significantly given the difficult macroeconomic backdrop, causing us to lower our guidance for the year as we take more aggressive markdowns to drive demand and manage inventory,” the CEO said. Mary Dillon in a statement.
The company now expects sales to decline 6.5% to 8% for the year, compared with a prior range of 3.5% to 5.5%. It expects comparable sales to fall 7.5% to 9%, compared to a prior range of 3.5% to 5.5%.
Foot Locker expects non-GAAP earnings per share to be between $2 and $2.25, compared to the previous outlook of $3.35 to $3.65.
The company expects gross margin to be between 28.6% to 28.8%, compared to the prior range of 30.8% to 31%.
Foot Locker’s margins are already under pressure. Heavy discounting and theft-related declines shaved four percentage points from its margins in the first quarter compared to the year-ago period. Expected by the company promotions will continue to pressure margins moving forward.
The Bank of America trading desk noted earnings results from retailers such as Batas, TJ Maxx and Walmart this week was better than expected, but 45% of the retail sector has yet to report earnings and the companies yet to come are not as high quality as those reported this week.
Foot Locker’s poor report could signal trouble ahead for other names in the retail sector, as a variety of companies report earnings in the coming weeks.
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