Shares of Foot Locker fell almost 17 percent to close out the after the sneaker shop reported earnings and same-store sales did not meet expectations. Same-store sales are particularly important as it is a crucial metric that investors watch. These numbers were up—nearly 5 percent—but that was still not enough to satisfy investor expectations.
In all, the company reported earnings of $1.53 per share, on revenue of $2.1 billion. Wall Street analysts had been expecting slightly higher earnings of $1.60 per share on $2.1 billion in revenue. And this revenue is about $30 million short of what had been expected.
Foot Locker is struggling right now in a retail environment that has been very difficult for brick-and-mortar stores, particularly specialty shops like the sneaker retailer. With sales continuing to trend towards online transactions, retail has been quite disruption.
In fact, Foot Locker CEO Richard Johnson comments, “The disruption that has characterized the retail industry recently is not going away. Consumers want experiences, they want cool products, and they want it all—fast.”
But despite the many challenges the company faces, it should be noted that they did slightly increase first quarter revenue, year-over-year. Closing 34 stores during that quarter, though, might have been a major contributor.
Johnson goes on to say, “To build on this momentum and create even deeper connections with our customers, we continue investing in our digital capabilities, store fleet, and infrastructure, which we believe will deliver returns on both the top-line and bottom-line, creating shareholder value in the short and long term.”
Unfortunately, this dismal start to the year may not improve right away. Johnson also notes that coming changes to the company’s merchandise plans are not going to brighten outlook; at least, for now. The biggest shift they anticipate for the second quarter, he says, relates mostly to products that are shifting out of rotation over the next few months.
Still, the company’s major product categories experienced respectable volume growth, even as the top line did not see much boost from current pricing. And with 4.6 percent comps only trailing by a single percent, Foot Locker still has much to look forward to through the rest of the year.