Foot Locker Source: Peter Dazeley / Getty
Foot Locker’s stock reportedly took a 30% drop after its Q2 earnings report revealed slow sales and an interesting alleged reason why.
This month all the big box retailers will be dishing out their Q2 earning reports to their investors and someone might need to check on the Foot Locker investors because their news was reportedly far from positive.
Q2 earnings revealed the retailer’s sales had decreased by 9.9% to $1.8M compared to 2022 which had a strong $2.1M in Q2.
According to CNBC, Foot Locker’s CEO blamed “consumer softness”s for the decline. For the last two quarters, Foot Locker has been forced to rely on promotions to drive sales because its primary customer, which skews lower to middle income, has pulled back on spending for discretionary goods like shoes and clothes, reported the publication.
“Our second quarter was broadly in line with our expectations, despite the still-tough consumer backdrop,” explained Foot Locker CEO Mary Dillon. “However, 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 that drive our Lace Up plan. Importantly, we are continuing to make progress on our inventory levels and look to best position the business for the upcoming holiday season and into 2024.”
The company also announced that it will suspend its usual dividend payout for stockholders. As expected, after this news hit, the stock market reaction was swift and Foot Locker’s stock reportedly tumbled by 30%, Ideally, the retailer could turn things around, but it sounds as though that will be especially difficult.
Earlier this year the retailer revealed it would not welcome Kanye West’s Yeezy sneakers back into its stores, unlike its competitors. In retrospect, perhaps that was the wrong decision given the recent news. Those revenue dollars certainly would have helped and brought more traffic to the website. This holiday season will be more important than ever for Foot Locker. May the odds be in their favor.