Sportswear and footwear retail company Foot Locker beat its Q1 2023 report after maintaining an 11% decline in revenue.
Foot Locker Retail Inc (NYSE:FL) plunged 25% after a big Q1 2023 outing. For the first quarter of 2023, the sportswear and footwear retailer reported revenue of $1.93 billion, while analysts expected $1.99 billion. In addition, the company realized adjusted earnings per share of 70 cents, compared to the expected 81 cents.
Following Friday’s disappointing Q1 2023 report, Foot Locker lowered its guidance for the rest of 2023. The company also said it increased markdowns during the disappointing quarter to boost sales. Foot Locker also discounted prices for products during the quarter to clear excess inventory.
The company’s sales decline is reflected in its latest quarterly earnings, which are down 11% from the $2.18 billion it received a year ago. In addition, reported net income for the period was $36 million, or 38 cents per share, compared to $132 million, or $1.37 per share, a year earlier.
Foot Locker CEO cites poor Q1 2023 performance as gloomy economic situation
In a statement, Foot Locker CEO Mary Dillon reflected on the company’s poor performance, saying:
“Our sales have since softened given the tough macroeconomic backdrop, leading us to lower our guidance for the year as we take more aggressive markdowns to drive demand and manage inventory.”
Despite Foot Locker’s bleak prospects, Dillon remained upbeat, Thrown light on,
“Despite challenging near-term trends, we remain committed to our long-term strategy, including making the investments necessary to drive our lay-up plan and maintaining strong confidence in our ability to execute against our new strategic imperatives.” is included.”
The Lace Up plan is a multipronged strategy to increase the New York-based shoe retailer’s market share through 2026, Dillon noted. Over the same time scale, Foot Locker plans to increase sales to $9.5 billion, regardless of macroeconomic conditions.
As part of its LESS UP agenda, Foot Locker will diversify its brand portfolio and relaunch its product brands with new store formats. The company is looking to maximize its customer loyalty scheme and invests in technology to enhance the customer experience.
Foot Locker expects a sales decline of up to 8% for the year, compared to a previous expectation of between 3.5% and 5.5%.
Meanwhile, the company announced a new chief financial officer. Incoming Foot Locker finance chief, and former Cole Corp executive, Mike Bon, will assume the position of EVP and CFO on June 12.
Retail sector feeling the economic strain
Foot Locker’s weak quarterly report may not bode well for other players in the retail space ahead of their earnings reports.
Although Bank of America analysts identified better-than-expected sales from retailers, including walmart (NYSE: WMT) and Target (NYSE: TGT), 45% of the retail sector has yet to report earnings. Furthermore, analysts pointed out that the brand strength of retailers posting commendable results was an influential factor. In other words, other up-and-coming names that aren’t nearly as high-quality in recognition may not fare as well.
Tolu is a cryptocurrency and blockchain enthusiast based in Lagos. He likes to strip crypto stories down to the basics so that anyone anywhere can understand without a lot of background knowledge. When he is not delving deep into crypto stories, Tolu enjoys music, loves to sing and is an avid movie lover.
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