Dana Telsey, chief research officer at Telsey Advisory Group, reveals retail expectations for the holiday season on “Barron's Roundtable.”
Foot Locker stock fell Wednesday after the company significantly missed Wall Street's quarterly profit expectations and lowered its full-year sales and profit forecasts.
The company's shares fell as much as 16% in morning trading after the company announced a loss of $33 million, or 34 cents per share, for the three months ended Nov. 2. This is a significant drop from $28. In the same period last year, the number was 1 million.
Total sales for the quarter fell 1.4% to $1.96 billion, below Wall Street expectations of $2.01 billion. Foot Locker reported adjusted earnings of 33 cents per share, also below Wall Street expectations of 41 cents.
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Foot Locker CEO Mary Dillon blamed the decline on weak consumer spending.
“Third quarter sales and bottom line were lower than expected, as consumer spending trends slowed after the back-to-school peak in August, and the promotional environment was stronger than expected,” Dillon said.
A view of the “home court” of the Foot Locker Melbourne Central Concept Store in Melbourne, Australia on October 23, 2024. (Kelly Defina/Getty Images)
Dillon said the company saw a “meaningful positive acceleration” in consumer spending in stores during the critical Thanksgiving week.
However, the company is taking a more cautious outlook “due to an enhanced promotional environment and slower consumer demand outside of key sales periods,” Dillon said.
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He noted that he is optimistic about the company's ability to increase shareholder value with strategies such as revamping its stores and digital experiences, recently launching a new mobile app, and enhancing its FLX Rewards program.
The Foot Locker logo appears in a San Francisco store on May 19, 2023. (/Getty Images)
Foot Locker now expects full-year sales to decline 1% to 1.5%. The previous forecast was for a decline of 1% to an increase of 1%.
The company also expects adjusted earnings per share to be in the range of $1.20 to $1.30, lower than previously expected earnings of $1.50 to $1.70 per share.
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The report comes as rival Nike also works to ensure its long-term survival. Nike, which fired CEO John Donahoe in September, reported a 10% drop in revenue to $11.6 billion in its last earnings report.
“We are working aggressively to shift our product portfolio, create a better balance for our business, and reinvigorate the momentum of our brand through sports. However, a resurgence of this scale will take time. And while there have been some early wins, it's not yet a turnaround,'' Nike CFO Matthew Friend told analysts.
