Foot Locker is cutting its full-year outlook again and pausing its quarterly dividend as sales dropped in its fiscal second quarter with consumers continuing to be more cautious about their purchases.
Shares tumbled more than 33% in morning trading Wednesday.
The footwear and clothing retailer said quarterly sales declined to $1.86 billion from $2.07 billion. That's short of the $1.88 billion that analysts polled by Zacks Investment Research were calling for.
Same-store sales, a key indicator of a retailer's health, dropped 9.4% in the quarter.
“We did see a softening in trends in July and are adjusting our 2023 outlook to allow us to best compete for price-sensitive consumers,” President and CEO Mary Dillon said in a statement. Dillon joined the company as CEO last August.
Consumers being more selective in their purchases due to inflation concerns is an issue plaguing the retail sector. Macy's has heavily discounted its spring goods to make room for fall and holiday merchandise in the face of customers’ cautious spending. Meanwhile, Target reported its first quarterly sales decline in six years, dragged down by cautious spending in addition to backlash by some customers to its Pride merchandise.
Foot Locker now anticipates full-year sales will fall 8% to 9%. Its prior guidance was for a 6.5% to 8% decline. It predicts same-store sales will now drop 9% to 10%. Previously, it forecast a 7.5% to 9% decline.
Full-year adjusted earnings are now predicted to be in a range of $1.30 to $1.50 per share. The New York-based company's previous outlook was for adjusted earnings between $2 and $2.25 per share.
Foot Locker Inc. previously lowered its full-year sales and earnings outlooks in May when it reported its first-quarter financial results.
For the second quarter, the company moved to a loss of $5 million, or 5 cents per share, for the period ended July 29. That compares with a profit of $94 million, or 99 cents per share, a year earlier.
Its adjusted earnings were 4 cents per share. That's a penny shy of what Wall Street expected.
During the quarter Foot Locker opened 15 new stores, remodeled or relocated 16 stores, and closed 108 stores, leaving it with nearly 2,600 stores in 26 countries. The closures are part of the company's plan to get rid of underperforming locations.
The company said its second-quarter dividend of 40 cents per share, or a total of $37 million, will be paid in October.