Sportswear and footwear retailer Foot Locker was hit hard in its first quarter 2023 report after suffering an 11% revenue decline.
Footlocker Retail (NYSE:FL) plummeted 25% after missing a big profit in its first-quarter 2023 earnings. Sportswear and footwear retailer sales for the first quarter of 2023 were reported at $1.93 billion, compared with analysts’ expectations of $1.99 billion. In addition, the company delivered his adjusted earnings per share of 70 cents versus the expected 81 cents.
After Friday’s disappointing first quarter 2023 report, Footlocker lowered its outlook for the rest of 2023. The company also said it increased its price cuts during the dismal quarter to boost sales. Footlocker also offered product discounts during the quarter to eliminate excess inventory.
The company’s decline in revenue was reflected in its latest quarterly earnings, which were 11% below its $2.18 billion performance in the same period last year. Additionally, net income for the period was reported to be $36 million, or 38 cents per share, compared to net income of $132 million, or $1.37 per share, for the year-ago quarter.
Footlocker CEO believes tough economic conditions may have prevented Q1 2023 performance from being overwhelming, but believes better days lie ahead
In a statement, Footlocker CEO Mary Dillon reflected on the company’s underperformance, saying:
“Since then, our sales have declined significantly given the challenging macroeconomic backdrop, and we have lowered our full-year guidance to take more aggressive price cuts to both drive demand and manage inventories. rice field.”
Despite Foot Locker’s bleak outlook, Dillon remained bright. highlight:
“Despite the challenging near-term trends, we remain committed to our long-term strategy, including advancing our Race-Up plan and making the necessary investments to maintain confidence in our ability to deliver on our new strategic imperatives. ”
The lace-up plan, mentioned by Dillon, is a multifaceted strategy to increase the New York-based shoe retailer’s market share by 2026. On the same timescale, Footlocker also plans to boost sales to $9.5 billion, despite prevailing macroeconomic conditions.
Under Lace-Up’s plans, Footlocker plans to diversify its brand portfolio and relaunch its product brands in new store formats. The company also strives to maximize customer loyalty schemes and invest in technology to improve the customer experience.
Footlocker expects annual sales to fall by up to 8%, compared with previous estimates of 3.5% to 5.5%.
Meanwhile, the company announced a new chief financial officer. Mike Bourne, incoming Foot Locker financial officer and former Coles Corp executive, will become vice president and chief financial officer effective June 12.
The retail industry feels the financial burden
Footlocker’s underwhelming quarterly report may not bode well for the rest of the retail industry as it prepares to report its own earnings.
Bank of America analysts said sales at retailers such as Walmart (NYSE:WMT) and Target (NYSE:TGT) beat expectations, but 45% of retailers were still profitable. not reported. Analysts also attributed the impact of the brand strength of the retailer, which performed well. In other words, other upcoming names with less recognition may not fare as well.
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