Foot Locker store location on 34th Street in New York City.
Courtesy: Foot Locker
Foot locker The company lowered its full-year guidance on Wednesday after announcing a rough set of quarterly results.
The sneaker giant fell short of Wall Street's expectations for its top and bottom line results and blamed weak consumer demand and high promotions across the market.
Foot Locker shares fell 7% in pre-market trading after it reported results.
Here's what Foot Locker did in its fiscal third quarter compared to what Wall Street expected, based on a survey of analysts conducted by LSEG:
Earnings per share: 33 cents adjusted vs. 41 cents expected Revenue: $1.96 billion vs. $2.01 billion expected
In the three months ended Nov. 2, Foot Locker had a loss of $33 million, or 34 cents per share, compared with a profit of $28 million, or 30 cents per share, the previous year. Excluding one-time items related to impairment charges for its atmos brand and other expenses, Foot Locker reported earnings of $31 million, or 33 cents per share.
Sales fell to $1.96 billion, down about 1.4% from $1.99 billion the previous year.
“Consumer spending trends softened after the back-to-school peak in August, and the promotional environment was more elevated than expected,” CEO Mary Dillon said in a press release. “We saw a tangible and positive acceleration during the key Thanksgiving week period, especially in stores. Despite this strong performance, we are taking a more cautious view and lowering our full-year sales and earnings forecasts due to a more promotional and softer consumer demand environment outside of key selling periods.” ”
For the holiday quarter, Foot Locker expects sales to decline between 1.5% and 3.5%, compared with gains of about 2% in the same period last year. The company said the previous fiscal year saw an additional week of sales.
Foot Locker's outlook is worse than the 1.6% decline that analysts had expected, according to LSEG. It expects comparable sales to rise between 1.5% and 3.5%, well below the 3.4% growth forecast, according to StreetAccount.
For the full year, Foot Locker now expects sales to decline between 1% and 1.5%, compared to previous guidance of 1% to 1% decline. Analysts had expected a 0.4% decline, according to LSEG.
The retailer also lowered its full-year comparable sales forecast and now expects comps to grow between 1% and 1.5%, compared to previous guidance of 1% to 3%. Analysts expected the measure to rise 1.8%, according to StreetAccount.
Foot Locker also lowered its full-year earnings forecast and now expects adjusted earnings per share to range between $1.20 and $1.30, below Wall Street's forecast of $1.54. Foot Locker previously expected earnings to range between $1.50 and $1.70 per share.
The company attributed the revised guidance, in part, to higher promotions and a shorter year, which is expected to impact sales by about $100 million.
Despite the lower guidance and gloomy holiday outlook, there were some bright spots during this period. For the second quarter in a row, Foot Locker sales increased compared to the previous year, an increase of 2.4%. That's lower than analysts' expectations of 3.2%, according to StreetAccount, but it's an indication that Dillon's turnaround plan continues to show signs of life.
Champs, which dragged down Foot Locker's overall business, also posted positive comparable sales growth of 2.8%, as did WSS, which saw a 1.8% increase.
