Foot Locker, Inc. (NYSE:FL) stock lost more than a third of it value after the company reported a fall in sales, reduced guidance for 2023 and paused its dividend.
The footwear retailer reported a 9.9% drop in sales to $1.86 billion, below Street expectations of $1.88 billion, and now expects 2023 sales to fall by 8-9%, compared to a previously issued forecast of a 6.5-8% decline.
The company swung to a loss of $5 million, or 5 cents per share, compared to a profit of $94 million, or 99 cents a share, a year earlier.
Foot Locker said it had seen a “softening in trends in July”, and is adjusting forecasts to “allow us to best compete for price-sensitive consumers”.
Gross margin declined by 460 basis points compared with the prior-year, driven by an increase in promotional activity, which included higher markdowns, as well as occupancy deleverage.
The firm followed sports retailer, Dick’s Sporting Goods, in reporting higher shrinkage - a retail industry term that refers to merchandise lost by theft and damage – although it didn’t specify a particular number.
In New York, the stock was down US$7.92 or 34.1% this morning trading at US$15.28 per share.