It's gotta be the shoes? Not for Foot Locker
The sneaker and athletic apparel retailer reported a big drop in sales and a weak outlook for the year. That's bad news for the likes of Nike and its top rivals.
Foot Locker? More like the Hurt Locker for investors today. Shares of the sneaker seller plunged more than 25% Friday after the retailer reported dismal first quarter results and cut its guidance for the full year. Overall sales fell 11% from a year ago and same-store sales (revenue at locations open at least a year) tumbled 9%.
Mary Dillon, the former Ulta Beauty CEO who joined Foot Locker as its top exec last year, said in the company’s earnings release that its sales have “softened meaningfully given the tough macroeconomic backdrop” and that has led Foot Locker to “take more aggressive markdowns to both drive demand and manage inventory.” Foot Locker’s inventories were a whopping 25% higher than the first quarter of 2022.
That’s potentially a bad sign for the big sneaker companies. (Maybe Ben Affleck should do an Air 2 sequel about the industry’s challenges.) Shares of Dow component Nike tumbled more than 3% Friday morning. Under Armour was down 3% as well while Germany’s Adidas sank 4%. Smaller footwear makers Skechers and Decker Outdoor, which owns the increasingly popular Hoka brand, fell 4% and 5% respectively.
Foot Locker’s tale of woe is the latest bit of bad news in the world of retail. Home Depot and Target reported disappointing numbers this week. (Walmart seems to be the exception in the industry.) If more companies warn of a consumer pullback, the recession alarm bells will just grow louder.