Foot Locker stock plunges after issuing disappointing outlook
Shares of Foot Locker (FL) plummeted 30% after issuing full-year guidance that fell short of Street estimates. The athletic-shoe retailer also announced it was going to take longer to reach the financial goals set as part of its "Lace Up" growth plan.
Yahoo Finance's Julie Hyman and Josh Lipton discuss the stock's moves.
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Editor's note: This article was written by Stephanie Mikulich
Video Transcript
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JOSH LIPTON: Checking out a few trending tickers. We are under 20 minutes away now to the closing bell on Wall Street. Let's start with Foot Locker. As you can see, that stock is nosediving in today's trade. The big news here is that the shoe chain saying it's going to push back its plan to expand sales to 9.5 billion by two years.
So now the plan, which includes things like new store formats, loyalty programs, that's expected to be achieved in 2028. Company also did offer a forecast for adjusted earnings. They're looking for between 150 to 170 for this fiscal year. That is not good enough. That does undershoot what analysts had expected. And this comes after a rough year here for Foot Locker. Annual sales in the fiscal year ended in February, they actually fell, Julie, by about 7%.
JULIE HYMAN: Yeah. And the shares have been all over the place over the past year or so. We've seen a lot of volatility here and some of the analysts, including Paul Lejuez over at Citi, is saying that the way they got to comps last quarter ahead of estimates is they had to put more things on sale. And so that's been problematic for the margins there.
And we've really seen, as we have come out of the inventory correction within retail, there's been more dispersion. It was that everybody was seeing inventory build, everybody was discounting. And now you're seeing more normalization here, but Foot Locker is still in the discounting camp. And so there you get the pressure on the margins.
JOSH LIPTON: Yeah. I also thought interesting commentary on the consumer by [INAUDIBLE]. CEO talking about how his shoppers have been hit with a lot of headwinds. Inflation, food costs, rents, he says, all reducing savings he noted.
