Foot Locker (NYSE:FL)shares tumbled Friday after the retailer said it expects revenue to drop in 2022 as it anticipates it will no longer be able to sell as many products from its top vendor, Nike (NYSE:NKE)
Beginning in the fourth quarter of 2022, Foot Locker said no single vendor will represent more than 55% of its supplier purchases, compared with 65% in the year-ago period. On an annual basis, purchases from Nike won’t exceed 60% of total purchases this year, it said, down from 70% in 2021 and 75% in 2020.
Foot Locker said the adjustments reflect the accelerated shift by Nike to sell more of its sneakers and apparel directly to consumers. In turn, Foot Locker said it is ramping up its own direct to consumer efforts, by launching a number of private label brands including in clothing.
Sneaker brands such as Nike and Under Armour (NYSE:UAA) have been very clear about their efforts to reduce reliance on wholesale partners. By selling through their own brick-and-mortar stores and websites, these brands hope to reap higher profit margins. That has forced wholesalers, such as Foot Locker and Dick’s Sporting Goods (NYSE:DKS), to launch more of their own lines.
Foot Locker shares were recently falling more than 34% after they hit a 52-week low of $26.82. Its stock is down about 5% year to date, as of Thursday’s market close.
Foot Locker’s net income for the three-month period ended Jan. 29 shrunk to $102 million, or $1.02 per share, from $123 million, or $1.17 a share, a year earlier. Excluding one-time items, it earned $1.67 per share, topping analysts’ estimates for $1.44, based on a Refintiv survey.
Sales grew 6.9% to $2.34 billion from $2.19 billion a year earlier. That beat expectations for $2.33 billion.
Foot Locker shares dwindled $14.37, or 34.7%, to $27.04.
Related Stories
