Sportswear and footwear retailer Foot Locker posted a loss in its first quarter 2023 report after sustaining an 11% decline in revenue.
Foot Locker Retail Inc. (NYSE: FL) fell 25% after losing a big profit in the first quarter of 2023. In the first quarter of 2023, the athletic apparel and footwear retailer reported revenue of $1.93 billion for $1.99 billion, analysts expect. In addition, the company had earnings per share of 70 cents, adjusted versus 81 cents expected.
After Friday’s disappointing first-quarter 2023 report, Foot Locker cut its guidance for the rest of 2023. The company also said it increased writedowns during the bad quarter to boost sales. The lower prices on Foot Locker for products during the quarter were also intended to eliminate excess inventory.
The company’s lower sales were reflected in its most recent quarterly income, which was 11% lower than the $2.18 billion generated in the prior year. Furthermore, net income reported for the period was $36 million, or 38 cents per share, compared to $132 million, or $1.37 per share, in the prior year.
Foot Locker CEO describes the disappointing performance of the first quarter of 2023 due to the bleak economic conditions, but believes that better days await us
In a statement, Foot Locker CEO Marie Dillon reflected on the company’s poor performance, saying:
“Our sales have since declined significantly due to a difficult macroeconomic backdrop, which has prompted us to reduce our guidance for the year as we take more aggressive writedowns to increase demand and manage inventory.”
Despite the bleak outlook for Foot Locker, Dillon remained optimistic, Highlight:
“Despite the challenging near-term trends, we remain committed to our long-term strategy, including making the necessary investments to advance our ligaments plan and maintaining conviction in our ability to execute in accordance with our new strategic requirements.”
The Lace Up plan that Dillon referred to is a multi-pronged strategy to increase the market share of shoe retailers in New York by 2026. In the same time scale, Foot Locker also plans to increase sales to $9.5 billion despite the prevailing macroeconomic conditions.
Under its Lace UP agenda, Foot Locker will diversify its brand portfolio and relaunch its brand with new store formats. The company is also seeking to maximize its customer loyalty program and invest in technology to enhance the customer experience.
Foot Locker expects sales to decline by up to 8% for the year compared to its previous forecast of between 3.5% and 5.5%.
Meanwhile, the company announced the appointment of a new CFO. Foot Locker’s incoming CFO, and former Kohl’s Corp. CEO, Mike Bogen, will take over as Executive Vice President and Chief Financial Officer on June 12.
The retail sector is feeling the economic pressure
Foot Locker’s disappointing quarterly report may not bode well for other retail players ahead of their own 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. Moreover, the analysts indicated that the brand strength of the retailers who scored commendably was an influencing factor. In other words, other upcoming names that are nowhere near as high-quality at being recognizable may not be either.
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Tolu is a cryptocurrency and blockchain enthusiast based in Lagos. He likes to demystify cryptocurrency stories down to the bare essentials so that anyone anywhere can understand without much background knowledge. When not in the depths of cryptocurrency stories, Tolo enjoys music, loves to sing, and is a movie lover.
