Foot Locker (FL) earnings Q4 2023

Shares of Foot Locker plummeted about 30% on Wednesday after the sneaker retailer reported a holiday-quarter loss, issued weak guidance for the current year and said it’s behind on meeting its financial goals.

Given how poorly its past fiscal year went, the company is now expecting the profitability goal it laid out during its March 2023 investor day to be delayed by two years, Foot Locker’s Chief Financial Officer Mike Baughn said. It now anticipates reaching an EBIT margin of 8.5% to 9% by 2028, said Baughn.

Here’s how the company did in its fiscal fourth quarter, compared with estimates from analysts surveyed by LSEG, formerly known as Refinitiv:

  • Earnings per share: 38 cents adjusted vs. 32 cents expected
  • Revenue: $2.38 billion vs. $2.28 billion expected

The company swung to a loss in the three-month period that ended Feb. 3. Foot Locker lost $389 million, or $4.13 per share, compared with income of $19 million, or 20 cents per share, a year earlier. Excluding one-time items, Foot Locker reported earnings of 38 cents per share.

Sales rose slightly to $2.38 billion, up about 2% from $2.34 billion a year earlier.

In the current fiscal year, Foot Locker is expecting profit to be worse than analysts had expected. It anticipates adjusted earnings per share will be between $1.50 and $1.70, compared with estimates of $1.40 to $2.30, according to LSEG. It’s expecting sales to be between down 1% to up 1%, compared with estimates of down half a percent, according to LSEG.

With the plunge Wednesday, Foot Locker has lost more than half its market value since May 2021.

CEO Mary Dillon said in a statement that Foot Locker managed to drive full-price sales “in addition to compelling promotions” during its holiday quarter. But as the retailer wound down its fiscal year, Foot Locker marked down more items to clear out excess inventory, primarily in its apparel category. As a result, “higher markdowns” drove Foot Locker’s gross margin down by 3.5 percentage points.

“As we continue evolving into a modern, omnichannel retailer for ‘all things sneakers,’ we are making important progress strengthening our brand partnerships, increasing customer engagement, transforming our real estate footprint, and driving growth in digital,” said Dillon.

It has been a little over a year since Dillon took the helm of Foot Locker. During her tenure, sales have consistently fallen as the retailer grappled with a changing mix of sneaker brands and a target consumer that has felt the brunt of inflation more acutely than those in higher-income brackets. 

Foot Locker has also been repositioning its Champs Sports brand and has grappled with high inventory levels that, unlike its peers, it has struggled to curb. During the quarter, Foot Locker relied on markdowns to reduce inventory levels by 8.2% compared with the prior year.

In her past life as Ulta Beauty’s chief executive, Dillon skillfully won over buzzy beauty brands and turned the company into a powerhouse cosmetics retailer. When she took…

Read More: Foot Locker (FL) earnings Q4 2023

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