Foot Locker shares crash 14% as Nike sales disappoint consumers

Foot Locker, a prominent shoe retailer based in the United States, experienced a significant decline in its stock value, dropping 14.3% on December 4, 2024. This downturn came in response to the company's disappointing earnings report which revealed that they had missed analysts' expectations and had revised their yearly forecasts downward. The firm’s CEO, Mary Dillon, attributed the challenges primarily to lackluster demand for Nike products, a brand that comprises 60% of Foot Locker's sales. She noted that the brand-specific issues with Nike were compounded by a highly promotional environment in the overall retail sector. In addition to Nike's weaker performance, Dillon indicated that consumers have been increasingly frugal, especially during the traditionally busy holiday shopping season. The holiday period compressed between Thanksgiving and Christmas this year had fewer days, leading to Foot Locker projecting a staggering $100 million loss in sales as compared to previous forecasts. Additionally, the company anticipates a 1.5% to 3.5% decline in sales for the crucial holiday quarter, compared to a modest gain of 2% in the same quarter the previous year. The earnings report showed that Foot Locker's adjusted earnings per share fell to $31 million, or 33 cents per share, reflecting slight growth from the previous year’s earnings of $28 million or 30 cents per share. Despite these unfavorable figures, Dillon expressed confidence in the company's strategy moving forward, particularly with their plan dubbed “Lace Up”, which aims to revitalize store concepts, close underperforming locations, and highlight key store brands like Champs Sports and WSS, which have reportedly seen comparable sales increases. The retailer's revised expectations now foresee comparable sales growth between only 1% and 1.5% for the full year, down from earlier projections of 1% to 1.3%. The lowered expectations come amid broader struggles across retail, with many retailers encountering cautious consumers and short shopping windows. Foot Locker remains optimistic about future sales improvements and has faith in its relationship with Nike and its leadership team tasked with enhancing Nike sales, believing that these changes could eventually lead to recovery in the brand’s performance and overall sales growth at Foot Locker.