The Business of Fashion
Agenda-setting intelligence, analysis and advice for the global fashion community.
Agenda-setting intelligence, analysis and advice for the global fashion community.
Shares of Foot Locker Inc plunged 25 percent premarket on Friday after the footwear retailer cut its annual sales and profit forecasts, reeling under a sharp drop in demand and a hit from heavy discounts aimed at clearing excess inventories.
The company also missed Wall Street estimates for its first-quarter results and named former Kohl’s Corp executive Mike Baughn its new finance chief, effective June 12.
US consumers have sharply cut back discretionary spending, worn thin by persistent inflation. This dented sales at a wide range of companies, including big-box retailer Target Corp and home improvement chain Home Depot.
Foot Locker doubled down on promotions and markdowns to drive demand at its stores, which, coupled with a rise in theft-related inventory “shrink,” dealt a 400-basis-point hit to its quarterly gross margin.
ADVERTISEMENT
Organised retail crime has been a growing problem for retailers, with Target earlier this week also saying it could take a more-than-$500 million hit to profitability this year.
Foot Locker’s gloomy report dragged shares of sportswear companies on Friday, with Nike Inc and Under Armour Inc dropping 3 percent each.
The company adjusted its forecast for full-year comparable sales to a fall of 7.5 percent-9 percent. It had expected a drop of 3.5 percent-5.5 percent earlier.
It also expects adjusted earnings of between $2.00 to $2.25 per share, much lower than the $3.35-$3.65 range estimated previously.
The company’s revenue fell more than 11 percent to $1.93 billion in the quarter ended April 29, missing analysts’ average estimate of $1.99 billion, according to Refinitiv IBES data.
Excluding items, Foot Locker earned 70 cents per share, which was also below estimates of 81 cents per share.
By Deborah Sophia; Editor Janane Venkatraman
Learn more:
ADVERTISEMENT
Foot Locker Surges After Ex-Ulta Beauty Chief Mary Dillon Named CEO
Foot Locker Inc. jumped after naming retail industry veteran Mary Dillon to be its next chief executive officer in a move that one analyst called a “huge win” for the company.
Antitrust enforcers said Tapestry’s acquisition of Capri would raise prices on handbags and accessories in the affordable luxury sector, harming consumers.
As a push to maximise sales of its popular Samba model starts to weigh on its desirability, the German sportswear giant is betting on other retro sneaker styles to tap surging demand for the 1980s ‘Terrace’ look. But fashion cycles come and go, cautions Andrea Felsted.
The rental platform saw its stock soar last week after predicting it would hit a key profitability metric this year. A new marketing push and more robust inventory are the key to unlocking elusive growth, CEO Jenn Hyman tells BoF.
Nordstrom, Tod’s and L’Occitane are all pushing for privatisation. Ultimately, their fate will not be determined by whether they are under the scrutiny of public investors.