Stocks of Foot Locker Are Sliding Despite Upbeat Sales During Thanksgiving Week

Foot Locker Inc. has adjusted its full-year outlook downward in response to cautious consumer spending and a more competitive promotional landscape in the footwear market. The announcement, which coincided with the company’s fiscal third-quarter earnings report, sent shares tumbling 11.7% in Wednesday morning trading.

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The retailer now anticipates a decline in sales of 1% to 1.5% for the fiscal year ending February 1, 2025. This is a shift from its prior forecast, which ranged from a 1% decline to a potential 1% increase in sales. Additionally, Foot Locker revised its expectations for adjusted earnings per share (EPS), now projecting a range of $1.20 to $1.30, compared to the earlier estimate of $1.50 to $1.70.

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Chief Executive Mary Dillon acknowledged the challenges in a statement, explaining that early November trends fell below expectations as consumers delayed spending in anticipation of the holiday season. However, Dillon noted a significant improvement during the critical Thanksgiving shopping week, particularly in physical stores.

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Despite this boost, the company remains cautious, predicting weaker consumer demand outside of peak shopping periods. Dillon also cited a "more promotional environment" as a factor contributing to the lowered forecast, signaling increased pressure to offer discounts to drive sales.

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For the fiscal third quarter, Foot Locker reported a 1.4% decrease in total sales, amounting to $1.96 billion, falling short of the $2.00 billion analysts had anticipated, according to FactSet. Comparable sales, which reflect performance at stores open for more than a year, grew by 2.4%. This result, while positive, also missed analysts’ expectations of 3.2% growth.

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Dillon attributed some of the underperformance to softened consumer spending following the peak back-to-school shopping period in August. She also highlighted a more aggressive promotional environment than the company had anticipated.

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Foot Locker’s profitability also took a hit during the quarter. The company reported a net loss of $33 million, or 34 cents per share, a stark contrast to its net income of $28 million, or 30 cents per share, in the same period a year ago. Adjusted earnings came in at 33 cents per share, falling short of the 40-cent consensus estimate provided by FactSet.

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The updated guidance and mixed quarterly results underscore the challenges Foot Locker faces as it navigates a competitive retail environment and shifting consumer behavior. The holiday season will likely play a critical role in shaping the company’s performance for the remainder of the fiscal year.

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