Foot Locker Inc. shares fell in pre-market trading on Friday after the retailer reported weak sales for the first quarter.
Total sales for the first quarter were $1.93 billion, down 11.4 percent over the prior year and slightly short of the $1.99 billion expected by analysts surveyed by Yahoo Finance. Net income was $36 million compared with $133 million in the prior year. Non-GAAP earnings per share decreased to 70 cents per share, short of analysts’ expectations of 81 cents.
Foot Locker shares were down more than 25 percent before markets opened on Friday.
The sales dip came amid foreign exchange rate fluctuations and a general “tough macroeconomic backdrop,” chief executive officer Mary Dillon said in a statement. As a result of the miss, Foot Locker reduced its full-year guidance as it implements “more aggressive markdowns to both drive demand and manage inventory.”
Foot Locker Inc. in March rolled out a multipronged strategy to help it increase market share and grow sales to $9.5 billion by 2026. Dubbed its “Lace Up” plan, this strategy hinges on Foot Locker diversifying its brand portfolio, relaunching the Foot Locker brand with new store formats focused on an off-mall presence, maximizing its loyalty program and investing in technology to enhance the customer journey.
Comparable-store sales in the first quarter were also down 9.1 percent, due to lower income tax refunds in the U.S. and the repositioning and vendor changes at Champs Sports. Foot Locker said last quarter it would close 400 underperforming stores, including close to 125 underperforming Champs locations. These stores are mostly older and in non-priority markets. In the first quarter, Foot Locker opened 13 new stores and closed 35.
“Despite the challenging near-term trends, we remain committed to our long-term strategy, including making the necessary investments to drive our Lace Up plan, and maintain conviction in our ability to execute against our new strategic imperatives,” said Dillon.
Foot Locker on Friday also announced the appointment of Mike Baughn to the role of executive vice president and chief financial officer, effective June 12. He joins the athletic retailer from Kohl’s, where he served as EVP of finance and treasurer.
Given the slow start to the year, Foot Locker now expects sales for fiscal-year 2023 to be down between 6.5 percent and 8 percent, compared with a previously outlined guidance of down 3.5 percent to 5.5 percent. Non-GAAP EPS is expected to be between $2 and $2.25, compared with a prior expectation of between $3.35 and $3.65.