Foot Locker shares fell on Wednesday after the retailer severely missed Wall Street’s quarterly earnings estimates and cut its full-year sales and earnings forecast.
The retailer’s stock fell by as much as 16% during morning trading as the company reported that it incurred a loss of $33 million, or 34 cents per share, for the three-month period ending on Nov. 2. That’s down significantly from the $28 million it reported in the same period a year ago.
Total sales for the quarter slipped 1.4% to $1.96 billion, which was below Wall Street estimates of $2.01 billion. Foot Locker reported adjusted earnings per share of 33 cents, which was also below Wall Street’s expectations of 41 cents.
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Foot Locker CEO Mary Dillon blamed the miss on softer consumer spending.
“Our third quarter top- and bottom-line performance fell short of our expectations. Consumer spending trends softened following the peak Back-to-School period in August, and the promotional environment was more elevated than anticipated,” Dillon said.
Dillon said the company did see “a meaningful and positive acceleration” in consumer spending in stores over the key Thanksgiving week period.
However, the company is taking a more cautious outlook “due to a more promotional environment and softer consumer demand outside of key selling periods,” Dillon said.
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She noted that the company is optimistic about its ability to drive shareholder value with its strategies, including revamping stores and its digital experience, the recent launch of its new mobile app and enhanced FLX Rewards Program.
Foot Locker now expects full-year sales to fall between 1% and 1.5%. Its previous guidance was down 1% to up 1%.
The company also expects adjusted earnings per share to be between $1.20 and $1.30, below previous expectations of between $1.50 and $1.70 per share.
The report comes as its rival Nike also works to ensure long-term viability. Nike, which ousted CEO John Donahoe in September, reported in its prior earnings report that revenue fell 10% to $11.6 billion.
“We are moving aggressively to shift our product portfolio, create better balance in our business, and reenergize brand momentum through sport. That said, a comeback at this scale takes time. And while there are some early wins, we have yet to turn the corner,” Nike CFO Matthew Friend told analysts.
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