Foot Locker follows other Sportswear retailers in reporting weaker-than-expected sales
The New York-based chain also said it would close about 130 stores this year, more than previously announced
Foot Locker Inc. followed other sportswear retailers in reporting weaker-than-expected sales for its latest quarter, a sign that the athleisure market may be running out of steam.
Its sales at stores open at least a year slid 6 %, compared with a 1.7 % growth forecast by Consensus Metrix. The decline was Foot Locker’s first for the key industry metric since 2009, according to Citi Research. The New York-based chain also said on August 18, 2017 that it would close about 130 stores this year, more than the 100 it previously announced.
Foot Locker’s shares tumbled 28 % to USD 34.38 on August 18, 2017. Share prices fell as well for other sportswear and footwear companies, including Nike Inc., Under Armour Inc., Finish Line Inc., DSW Inc. and Dick’s Sporting Goods Inc.
Weakening sales at athletic-gear retailers suggest that the once-hot athleisure trend is cooling. The popularity of yoga pants and other workout clothing worn in nonathletic settings has boosted several of these retailers for years, as have brand collaborations with celebrities like Kanye West and Rihanna, instead of athletes. But a lack of new products is hurting sales.
“We were affected by the limited availability of innovative new products in the market,” Foot Locker Chief Executive Richard Johnson said on a call with analysts.
Meanwhile, major vendors are looking to expand their sales to big-box retailers as well as online, efforts that pose a threat to traditional chains like Foot Locker. Over the past year, Under Armour began selling goods to department store Kohl’s Corp., and in June Nike announced plans to sell directly through Amazon.com Inc.
Johnson moved to tamp down concerns that the Nike-Amazon deal could harm business at his chain. “We don’t believe our vendor selling directly on Amazon is an imminent threat,” he said, adding that Foot Locker is working with brands to ensure its access to premium sneakers and shopping experiences that lure customers to stores. “All of us are trying to move at the speed of our customer. The supply chain, the delivery cycles, all of those have to move faster,” he said.
The company said it expects weaker sales for the remainder of its fiscal year with same-store sales likely down between 3 % and 4 % for the next two quarters.
Earlier this week other sports retailers posted similarly downbeat same-store sales. Dick’s reported a 0.1 % increase in comparable sales, after projecting growth between 2 % and 3 %. Hibbett Sports Inc., a smaller regional chain, posted a 12 % slide after previously saying it expected a 10 % decline.
Foot Locker’s sales disappointment is particularly concerning for the industry because it indicates weakness in premium sneakers, a category that had been more resilient to the sector’s woes. Trendy sneakers are able to draw shoppers even as they skip other mall-based stores.
In all for its July 29-ended second quarter, Foot Locker reported earnings of USD 51 million, or 39 cents a share, down from USD 127 million, or US 94 cents a share, a year earlier. Excluding the impact of a pre-tax litigation charge, the company reported earnings of 62 cents a share, well below the 90 cents analysts expected. Total revenue fell 4.4 % to USD 1.7 billion.