It has been a challenging year for the Foot Locker sneaker chain, with its shares plunging by 30% to reach $14.8 per share. This represents the company’s lowest point since 2010 and follows the public release of its second-quarter financial report, which indicated a decline. Food Locker experienced a similar setback when it published its first report of the year three months ago. The drop in sales, according to the company, can be attributed to consumer caution in the face of inflation and rising interest rates, robust competition from e-commerce, and the direct sale of sneakers from big brands such as Nike or Adidas.
The uncertain future of the market has pushed the company to revise its year-end forecasts once again. Foot Locker now anticipates a sales decline ranging between 8 and 9%, compared to the previous projection of 6.5% to 8%. The company has also decided to suspend dividends. According to Mary Dillon, president and CEO of the company, this decision is driven by Food Locker’s desire to maintain “the necessary flexibility to continue adequately financing our strategic investments”.
During the second quarter, Foot Locker reported a decrease of 9.9%, with revenues dropping from $2.065m in the same period of 2022 to $1.861m despite the positive currency impact. The company’s profit margins also took a hit, plummeting by 460 basis points as a result of a strategic shift towards increased promotions and sales, and an increase in shrinkage (customer and employee theft). Foot Locker has suffered a total loss of $5m, equivalent to $0.05 per share during the second quarter, compared to the net profit of $94 million in the same period of the previous year.
