Footlocker Stock Price Drops Due to Weak Back-To-School Sales
er the company missed earnings expectations for the third quarter of 2024. The decline was primarily due to weaker-than-anticipated back-to-school sales. According to an earnings report by Foot Locker, total sales fell by 1.4%, amounting to $1.96 billion. Comparable sales only rose by 2.4%, which was below the forecasted projections.
The decrease in sales is attributed to soft back-to-school sales at Foot Locker locations and subsidiary stores like Champs Sports, atmos, and Kids Foot Locker. To attract customers, the retailer increased discounts and promotions outside of the usual seasonal periods, which impacted profit margins. Despite a slight improvement in gross margins by 230 basis points, these marketing strategies did not generate the desired results.
Investors have raised concerns about Foot Locker’s ability to adapt to changing consumer habits, manage inventory efficiently, and compete in today’s highly competitive retail landscape. The company reported a loss of $0.34 per share or $33 million, in contrast to a profit of $0.30 per share or $28 million in the previous year.
One contributing factor to Foot Locker’s diminished stock price is the company’s increased spending on technology and brand-building initiatives. This investment led to a rise in selling, general, and administrative costs by 210 basis points. Despite Foot Locker’s struggles with stock performance, they aim to improve by investing in store updates and digital enhancements.
The company has revised its full-year sales and earnings forecast downward, indicating potential challenges ahead. While Foot Locker saw more stable performance in the second and third quarters, they are adopting a cautious outlook for the remainder of the year. This shift in strategy has raised concerns among investors.
Last year, Foot Locker closed 400 stores and 125 Champs Sports locations but plans to open 400 new concept shops by 2026 as part of their ‘Lace Up’ plan. The company’s future performance will be closely monitored as it navigates these challenges and pursues growth opportunities in the competitive retail industry.
