Foot Locker Shares Spiral Downwards At Gloomy Earnings Beat

3 min readAug 24, 2023

Key takeaways

Foot Locker missed its sales target, downgraded its full-year forecast and stopped its dividend
The shoe and sportswear retailer cited “price-sensitive consumers” for weak sales
Foot Locker shares spiraled as much as 36% down at the earnings beat

Foot Locker is the latest retailer to announce a dismal earnings report, with plenty of other brands now feeling the heat as consumer spending switches towards value above all else. The results sent Foot Locker’s share price plunging, knocking down rivals’ share prices in an unfortunate halo effect. Here’s the latest.

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What happened with Foot Locker’s earnings?

What didn’t happen might be a better question. The shoe and sportswear company missed Q2 sales expectations, downgraded its full-year forecast again and paused its dividend. Yikes.

Foot Locker reported earnings of 4 cents a share based on $1.86 billion in revenue; while the earnings aligned with analyst expectations, the sales missed the $1.88 billion consensus estimate.

Unfortunately, it didn’t stop there. Foot Locker has also downgraded its full-year forecast for the second time in a row, with the business anticipating earnings per share to arrive at $1.30 to $1.50, way down from the former outlook of $2 to $2.25.

The company also halted its dividend beyond the approved October payout, which is 40 cents a share. Foot Locker’s CEO, May Dillon, blamed “price-sensitive consumers” as the reason for softer sales, a persistent trend during earnings season this time around.

How did Wall Street react?

Investors ran for the hills at the disappointing earnings beat. Foot Locker shares plummeted as much as 36% during Wednesday trading, hitting a 13-year low for the stock. Shares closed 28% lower at $16.69, the worst performance for Foot Locker’s share price since February 2022. The stock has plunged 56% in value this year.

The dramatic plunge in Foot Locker’s share price had a knock-on effect for its competitors. Nike fell 3.4% in the premarket trading session, continuing a ten-day losing streak for the stock. Dick’s Sporting Goods, which had already suffered a 24% drop in its share price due to its own poor earnings beat, fell as much as 2.2%.

The bottom line

With the average American household feeling the squeeze, retailers that don’t specialize in budget-friendly goods struggle to cope. It’s a tough road ahead as long as inflation and high interest rates persist, and with neither looking to disappear soon, retailers will need to hunker down to survive.

Retailers aren’t having a great time on the market right now, which is a reminder to diversify away from individual stocks. Unlock hidden treasures in the stock market with Q.ai’s Value Vault Kit. It zeroes in on companies with robust financials and attractive valuations, all guided by an AI that’s a pro at finding diamonds in the rough. Let the algorithm handle the analysis to help build wealth without the hassle.