Foot Locker plummets, drags down peers, on forecast cut, dividend pause By Reuters

© Reuters. FILE PHOTO: The Foot Locker store in Broomfield, Colorado is seen on November 17, 2016. REUTERS/Rick Wilking/File Photo

(Reuters) – Shares of Foot Locker (NYSE:) cratered over 30% in premarket trading on Wednesday, and dragged down those of its rivals, after the retailer lowered its annual forecasts as it reels from weaker consumer demand in the face of still-high inflation.

The athletic-wear retailer also missed expectations for quarterly sales, said it would pause its dividend payouts and flagged softer demand in July, which is typically when back-to-school shopping starts.

“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,” CEO Mary Dillon said.

The shares of the company’s larger rivals Nike (NYSE:), Dick’s Sporting Goods (NYSE:) and Under Armour (NYSE:) fell between 2% and 4% in premarket trade. Shares of European peers Adidas (OTC:) and Puma skidded 4% to 6%.

Foot Locker’s warnings kept the pressure on sportswear retailers after they tumbled on Tuesday when Dick’s Sporting Goods also cut its full-year profit targets, slammed by hits to its margins from retail theft.

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Foot Locker also said its quarter was hit by inventory shrink, or retail theft, and steeper discounts. Its second-quarter gross margins slumped 460 basis points.

It now expects sales to fall 8.0% to 9.0% this year, compared with its previous forecast of a drop of 6.5% to 8.0%.

The company trimmed its annual earnings per share forecast to $1.30-$1.50 from $2.00-$2.25.

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