Foot Locker Stumbles: Q3 Loss Prompts Retail Giant To Slash Outlook

Shoe retailer Foot Locker released third-quarter earnings that disappointed Wall Street. For the three months that ended Nov. 2, Foot Locker reported $1.96 billion in revenue, below analysts’ expectations of $2.01 billion, and lower than last year’s $1.99 billion. The company took a loss of $33 million in the quarter versus the $28 million profit realized in Q3 last year.

The resulting poor numbers are being blamed on weaker demand for Nike products and less consumer spending. According to Foot Locker leadership, customers are only showing up for sales and timed events like back-to-school shopping, but otherwise, they aren’t interested in buying new shoes.

“While our trends in early November landed below our expectations as consumers held back their spending ahead of the holiday season, we saw a meaningful and positive acceleration over the key Thanksgiving week period, especially in stores,” said CEO Mary Dillon, per MarketWatch.

On a recent conference call, Chief Commercial Officer Frank Bracken noted that Nike’s current struggles are adversely affecting Foot Locker. Until Nike gets its product mix right and boosts inventories, Foot Locker will need to lean on other brands like Adidas and New Balance, which still sell relatively well at stores.

Foot Locker’s Financial Future

The financial situation for Foot Locker continues to look dire. Fearing a flailing 2024 holiday shopping season, the sneaker giant is being cautious about earnings projections.

The retailer predicts a 1.5%-3.5% decline in total sales for the holiday period. Last year, the company reported a 2% uptick.

Foot Locker’s annual guidance was adjusted lower as well. The company is looking at a potential overall sales drop of between 1% and 1.5% for fiscal 2024, compared to a previous projection between 1% growth and 1% decline. Comparable sales, which measure revenue generated by stores open at least one year, will likely rise 1% to 1.5%, less than the previous expectation of a 1% to 3% increase.

As part of a plan to hopefully turn the company around, Foot Locker introduced a “store of the future” concept earlier this year. The new format includes a revamped storefront, increased footwear and accessory choices, a focus on sustainability as well as “other technological advances.”