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Foot Locker (FL) stock crashed early Wednesday, falling as much as 32% in pre-market trade as the company slashed its full-year outlook for the second straight quarter and suspended its quarterly dividend as a “still-tough consumer backdrop” weighs on the footwear retailer.
“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 while still leaning into the strategic investments,” Foot Locker CEO Mary Dillon said in the company’s earnings release.
The retailer now sees sees full-year comparable sales falling in a range of 9%-10%, a steeper drop than its initial forecast for a 7.5%-9% decline.
Three months ago, Foot Locker’s stock fell more than 25% in a day when the company also warned the “tough macroeconomic backdrop” would impact full-year sales during its first quarter earnings call. Foot Locker hasn’t seen same-store sales decline more than 6% for the year since 2010.
Foot Locker also slashed it’s full-year outlook for earnings per share down to a range of $1.30-$1.50 after previously guiding to a range of $2.00-$2.25.
Through Tuesday’s close, Foot Locker shares had lost 38% so far this year. With Wednesday’s pre-market decline, losses will be closer to 57% for the year.
In the most recent quarter, the company’s earnings per share of $0.04 was down 96% from the same quarter the year prior, reflecting Foot Locker’s worst quarter since the first quarter of its fiscal year 2021.
Sales for the second quarter, fell nearly 10% from the same period a year prior to $1.86 billion. Wall Street analysts had expected $1.87 billion, according to Bloomberg data.
Like other retailers, the company also said “shrink” weighed on margins during the quarter.
Foot Locker’s struggles over the past several months could span beyond its own business too.
After last quarter’s disappointing results, Wall Street analysts warned Foot Locker’s downturn could impact Nike (NKE), which has historically accounted for more than half of Foot Locker’s total sales.
Nike shares were down more than 3.5% in pre-market trading on Wednesday. On Tuesday, Nike shares registered their ninth-straight day of declines.
After successfully building up Ulta (UTLA) for eight years ending in 2021, Dillon was named the Foot Locker CEO in August 2022 and assumed the position in January.
Led by Dillon, Foot Locker is in the midst of its turnaround strategy dubbed ‘Lace Up.’ The footwear chain that became a staple in brick and mortar malls plans to close 400 underperforming stores, mostly in lower-tier malls, and focus more on off-mall locations.
Foot Locker said in its release that in order to keep executing that plan, it will no longer be offering its quarterly cash dividend.
“To ensure that we have the flexibility to continue to fund our strategic investments appropriately, we are pausing our quarterly cash dividend beyond our Board’s recently-approved October payout,” Dillon said in the release. “We intend to update the market on our go-forward capital allocation plans and the timing around our longer-term financial targets when we report fourth quarter results.”
Josh Schafer is a reporter for Yahoo Finance.
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