Specialty athletic retailer Foot Locker Inc (NYSE: FL) reported first-quarter FY23 sales decline of 11.4% year-on-year to $1.93 billion, missing the analyst consensus estimate of $1.99 billion.
Adjusted EPS of $0.70 missed the analyst consensus of $0.81.
Comparable store sales decreased by 9.1% versus last year.
The gross margin contracted 400 basis points, driven by a combination of higher markdowns compared to historically low levels in the prior year, and occupancy deleverage, as well as an increase in theft-related shrink.
Selling, general and administrative expenses fell 6.9% Y/Y to $431 million.
The operating margin was 3.2%, and operating income for the quarter declined 72% to $61 million.
The company held $313 million in cash and equivalents as of April 29, 2023. Merchandise inventories were $1.76 billion, a 25% Y/Y increase.
The Board of Directors declared a quarterly cash dividend on the company’s common stock of $0.40 per share, payable on July 28, 2023, to shareholders of record on July 14, 2023.
Foot Locker announced the appointment of Mike Baughn as Executive Vice President and Chief Financial Officer, effective June 12, 2023.
“However, our sales have since softened meaningfully given the tough macroeconomic backdrop, causing us to reduce our guidance for the year as we take more aggressive markdowns to both drive demand and manage inventory,’ said CEO Mary Dillon.
Outlook: Foot Locker cuts FY23 comparable sales guidance from down 3.5% – 5.5% to down 7.5% – 9%.
It also cut FY23 sales guidance from down 3.55% – 5.5% to down 6.5% – 8%.
FL lowered FY23 gross margin guidance from 30.8% – 31% to 28.6% – 28.8% citing more aggressive markdowns and higher shrink.
It cut the Adjusted FY23 EPS outlook from $3.35 – $3.65 to $2.00 – $2.25, versus the consensus of $3.45.
Price Action: FL shares are trading lower by 23.0% at $31.98 in premarket on the last check Friday.
Photo via Wikimedia Commons
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