Foot Locker craters as earnings and same-store sales come up short
- Foot Locker shares plunged on Friday after the sneaker retailer missed expectations for both earnings and same-store sales.
- The company's shares were down nearly 17%.
- Watch Foot Locker trade live.
Foot Locker shares dropped nearly 17% after the sneaker retailer reported earnings and same-store sales that were below expectations. Same-store sales, a crucial metric for investors, increased by nearly 5% but also fell short of investor expectations.
The company reported earnings of $1.53 a share on revenue of $2.1 billion. Wall Street analysts surveyed by Bloomberg were expecting earnings of $1.60 a share on revenue of $2.1 billion.
Foot Locker has struggled amid the "retail apocalypse," as sales continue to shift online. "The disruption that has characterized the retail industry recently is not going away," CEO Richard Johnson said. "Consumers want experiences, they want cool products, and they want it all - fast."
In spite of these challenges, the company managed to slightly increase first quarter-revenue from a year ago despite closing 34 stores during the quarter.
"To build on this momentum and create even deeper connections with our customers, we continue investing in our digital capabilities, store fleet, and infrastructure, which we believe will deliver returns on both the top-line and bottom-line, creating shareholder value in the short and long term," Johnson said
Jefferies analyst Janine Stichter sees the recent sell-off in Foot Locker shares as a buying opportunity.
"FL remains our favorite way to play Nike's resurgence in N. America, while we view concerns over Nike's shift to a direct strategy as overblown," she said. "Better promo control, both industry-wide and on FL's part, should help support margin expansion."
Steichter has a "buy" rating price target of $75 - more than 70% above the $44 where shares are currently trading.
Foot Locker is down 18% this year.