Foot Locker, Inc. (NYSE:FL) stock continued falling at the open on Monday, after crashing 25% on Friday after it reported a sharp decline in first-quarter sales and profits and lowered its full-year guidance.
The New York-based athletic retailer reported total sales of $1.93 billion for the three months to April 29, 2023, an 11.4% decrease. It attributed a 9.1% fall in comparable-store sales to macroeconomic headwinds, including lower income tax refunds in the US, as well as the changing vendor mix and the repositioning of its Champs Sports subsidiary.
Foot Locker said a combination of higher markdowns compared to historically low levels in the prior year, and occupancy deleverage, as well as an increase in theft-related shrink, resulted in a 400 basis point decline in its gross margin from a year earlier.
Net income fell 73% to $36 million, while non-GAAP net income declined by 57% to $155 million. Non-GAAP earnings per share (EPS) came in 56% lower at $0.70.
It ended the quarter with cash and cash equivalents of $313 million and $451 million of debt on its balance sheet.
"We are making early progress in building a strong foundation to return to sustainable growth beyond this year," president and CEO Mary Dillon said in a statement. "However, our sales have since softened meaningfully given the tough macroeconomic backdrop, causing us to reduce our guidance for the year as we take more aggressive markdowns to both drive demand and manage inventory."
The company now expects full-year sales to be 6.5% to 8% lower, down from previous guidance for a 3.5% to 5.5% decline.
Non-GAAP EPS are expected at between $2 and $2.25, down from $3.35 to $3.65 previously.
Its shares were 5.5% down at $28.79 in late morning trade.
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