Foot Locker (NYSE: FL) shares legged lower Friday after falling short of Q1 expectations and cutting full-year guidance.
For the first quarter of fiscal 2023, the New York-based retailer reported an 11.4% year over year drop in sales to $1.93 Billion and $0.70 in adjusted earnings per share for the quarter. Analysts had anticipated $0.78 in earnings per share on $1.99B in revenue. Comparable-store sales decreased 9.1%, outpacing the 7.9% fall expected by the Street.
Gross margin declined by 400 basis points as compared to Q1 2022 due to promotional activity “as well as an increase in theft-related shrink.” Inventory levels rose 25% year over year to $1.76 Billion.
According to CEO Mary Dillon, “Our sales have since softened meaningfully given the tough macroeconomic backdrop, causing us to reduce our guidance for the year as we take more aggressive markdowns to both drive demand and manage inventory. Despite the challenging near-term trends, we remain committed to our long-term strategy, including making the necessary investments to drive our Lace Up plan, and maintain conviction in our ability to execute against our new strategic imperatives.”
Nonetheless, management tempered expectations for the year ahead by cutting sales and earnings guidance. Management now foresees a year over year sales decline of between 6.5% and 8% as compared to a prior forecast of 3.5% to 5.5%. Comparable sales forecasts were also dimmed, with a 7.5% to 9% drop now expected, steeper than the 3.5% to 5.5% decline indicated in prior guidance.
FL tumbled $10.92, or 26.3%, to $30.60.
