Foot Locker Expects Sales, Profit to Fall in Coming Year
Foot Locker Inc.
FL -5.56%
forecast a year of declining sales and a 30% drop in profit as the company closes stores, exits businesses and spends more in areas such as technology and wages.
The sneaker and athletic-wear retailer said the changes are part of a reset year under new Chief Executive
Mary Dillon
that is expected to yield higher profit and sales starting in 2024.
For the coming year, Foot Locker expects its sales to decline between 3.5% and 5.5%. Adjusted earnings, meanwhile, are projected to be $3.35 a share to $3.65 a share for the year, short of analyst expectations for $4.11 a share, according to FactSet.
Shares in Foot Locker, based in New York, were down 6.5% at $39.50 on Monday afternoon.
Ms. Dillon, the former CEO of beauty-products retailer
Ulta Beauty Inc.,
ULTA 0.83%
took the helm at Foot Locker in August as the retail chain tried to shift out of shopping malls and lessen its dependence on
Nike Inc.
She also planned to improve Foot Locker’s digital operations.
“We are clear-eyed about the actions that we need to take to simplify and make our business more efficient,” Ms. Dillon said Monday during a meeting with analysts. “That said, we are just as clear about the possibilities ahead.”
Nike has previously made up as much as 70% of Foot Locker’s overall sales. That figure began to decline in 2022 as the shoe company provided Foot Locker with fewer of its most popular products, such as Air Jordan sneakers.
In the coming years, Foot Locker is aiming for Nike to account for as much as 60% of its sales.
In addition to rebuilding its relationship with Nike, Foot Locker plans to continue diversifying its brand portfolio, saying that Adidas, New Balance and
Puma
are among brands that could make up a larger portion of its sales by 2026. The company expects to incur costs to exit some brands, such as paying $25 million to wind down its Sidestep banner in Europe by mid-2023.
Foot Locker also plans to step up technology investments this year, and spend an additional $40 million on wages for front-line workers.
The retailer said the changes planned for this year would result in strong growth. For fiscal years 2024 through 2026, the company said it is targeting sales growth of 5% to 6% annually.
The outlook came after Foot Locker reported a steep decline in net income for the fourth quarter, even as comparable-store sales rose 4.2%. The bottom line was hit by higher markdowns needed to clear inventory. Net income came in at $19 million, or 24 cents a share, for the quarter ended Jan. 28, down from $102 million, or $1.02 a share, a year earlier.
Overall sales fell slightly to $2.33 billion, largely because of the stronger dollar.
Write to Dia Gill at [email protected]
Copyright ©2022 Dow Jones & Company, Inc. All Rights Reserved. 87990cbe856818d5eddac44c7b1cdeb8
Foot Locker Inc.
FL -5.56%
forecast a year of declining sales and a 30% drop in profit as the company closes stores, exits businesses and spends more in areas such as technology and wages.
The sneaker and athletic-wear retailer said the changes are part of a reset year under new Chief Executive
Mary Dillon
that is expected to yield higher profit and sales starting in 2024.
For the coming year, Foot Locker expects its sales to decline between 3.5% and 5.5%. Adjusted earnings, meanwhile, are projected to be $3.35 a share to $3.65 a share for the year, short of analyst expectations for $4.11 a share, according to FactSet.
Shares in Foot Locker, based in New York, were down 6.5% at $39.50 on Monday afternoon.
Ms. Dillon, the former CEO of beauty-products retailer
Ulta Beauty Inc.,
ULTA 0.83%
took the helm at Foot Locker in August as the retail chain tried to shift out of shopping malls and lessen its dependence on
Nike Inc.
She also planned to improve Foot Locker’s digital operations.
“We are clear-eyed about the actions that we need to take to simplify and make our business more efficient,” Ms. Dillon said Monday during a meeting with analysts. “That said, we are just as clear about the possibilities ahead.”
Nike has previously made up as much as 70% of Foot Locker’s overall sales. That figure began to decline in 2022 as the shoe company provided Foot Locker with fewer of its most popular products, such as Air Jordan sneakers.
In the coming years, Foot Locker is aiming for Nike to account for as much as 60% of its sales.
In addition to rebuilding its relationship with Nike, Foot Locker plans to continue diversifying its brand portfolio, saying that Adidas, New Balance and
Puma
are among brands that could make up a larger portion of its sales by 2026. The company expects to incur costs to exit some brands, such as paying $25 million to wind down its Sidestep banner in Europe by mid-2023.
Foot Locker also plans to step up technology investments this year, and spend an additional $40 million on wages for front-line workers.
The retailer said the changes planned for this year would result in strong growth. For fiscal years 2024 through 2026, the company said it is targeting sales growth of 5% to 6% annually.
The outlook came after Foot Locker reported a steep decline in net income for the fourth quarter, even as comparable-store sales rose 4.2%. The bottom line was hit by higher markdowns needed to clear inventory. Net income came in at $19 million, or 24 cents a share, for the quarter ended Jan. 28, down from $102 million, or $1.02 a share, a year earlier.
Overall sales fell slightly to $2.33 billion, largely because of the stronger dollar.
Write to Dia Gill at [email protected]
Copyright ©2022 Dow Jones & Company, Inc. All Rights Reserved. 87990cbe856818d5eddac44c7b1cdeb8
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