New York-based sports retailer Foot Locker reported a 10% fall in sales in the second quarter of the year impacted by “ongoing consumer softness, changing vendor mix and the repositioning of Champs Sports”.
In a trading update for the three months ending July 2023, Foot Locker posted a loss of $5m (£3.94m) compared with the net income of $94m (£74m) the business reported during the same time last year.
Total sales fell 9.9% and 10.2% in constant currency terms to $1.86bn (£1.47bn) in the same period, with like-for-like sales decreasing 9.4%.
The global sportswear brand said it now expects sales to be down between 8% and 9% for the full fiscal year, down from the previous expectation of sales dipping between 6.5% to 8%.
Foot Locker stocks plunged by 32.8% on the New York Stock Exchange after it cut its profit guidance for the full fiscal year.
In a further hit to the footwear sector, JD Sports shares fell for the second day in a row by as much as 6.6% after a profit warning from Dick’s Sporting Goods impacted the retailer, which trades through 147 stores in the US.
Mary Dillon, president and chief executive officer of Foot Locker, said: “Our second quarter was broadly in line with our expectations, despite the still-tough consumer backdrop. However, we did see a softening in trends in July and are adjusting our 2023 outlook to allow us to best compete for price-sensitive consumers, while still leaning into the strategic investments that drive our Lace Up plan.
“Importantly, we are continuing to make progress on our inventory levels and look to best position the business for the upcoming holiday season and into 2024.”
“We remain committed to our Lace Up plan, as introduced at our March 2023 investor day, and we are encouraged by the progress we are making against our strategic priorities heading towards the holiday season.
“To ensure that we have the flexibility to continue to fund our strategic investments appropriately, we are pausing our quarterly cash dividend beyond our board’s recently approved October payout.
“We intend to update the market on our go-forward capital allocation plans and the timing around our longer-term financial targets when we report fourth-quarter results.”
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