On Wednesday, Nike Inc. (NYSE:NKE) shares experienced a downturn, trading lower in sympathy with Foot Locker Inc. (NYSE:NYSE:FL), following the latter's announcement of reduced full-year sales and profit forecasts. Foot Locker's decision to revise its outlook is a consequence of increased discounting and a general pullback in consumer spending, particularly as the critical holiday season approaches.
Foot Locker reported that U.S. shoppers exhibited frugality in the last quarter, actively seeking out the most advantageous deals. This behavior has impacted the retailer's performance and its ongoing efforts to stage a business revival. CEO Mary Dillon remarked on the consumer's selective and savvy shopping habits, which have led to a more promotional landscape and prompted the company to adopt a conservative stance in its guidance.
The sneaker chain's shares saw a significant drop, plunging about 16% in premarket trading on Wednesday. Prior to this, the stock had already experienced a 22% decline throughout the year. Dillon, who took the helm as CEO over two years ago, has been spearheading initiatives to rejuvenate Foot Locker, including store renovations, a focus on a rewards program, and enhancements to digital platforms.
Foot Locker's efforts to strengthen its relationship with Nike, a key supplier, have included the introduction of a new basketball section in stores, dubbed Home Court. This feature is set to be implemented in 100 Foot Locker locations globally by 2026. Despite these efforts, the company's third-quarter results fell short of expectations, with comparable store sales growth of 2.4%, missing the anticipated 2.8%.
For the full fiscal year, which concludes on February 1, Foot Locker anticipates a sales decline of up to 1.5%, adjusting its forecast down by 0.5 percentage points. Additionally, the company has adjusted its earnings per share projection to a range of $1.20 to $1.30, a decrease from the previously estimated $1.50 to $1.70. This revised outlook has reverberated through the market, adversely affecting Nike's stock performance as well.
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