One of the biggest casualties in Friday’s trading session was another retailer that you’ve likely heard of before. Foot Locker (NYSE: FL) ended up falling by almost 20 percent over the course of the day as the company reported its fiscal second-quarter financial figures that were quite disappointing.
It’s definitely not surprising to see another retailer struggling to meet up with the already reduced Wall Street expectations. Niche retailers, in particular, seem to be having the biggest problem handling the ongoing ‘retail apocalypse’ as online shopping continues to chip away at physical, brick-and-mortar retail chains. Foot Locker tumbled significantly after it reported that its second-quarter figures were not what analysts were expecting. Net income came in at only $60 million, or 55 cents per share, well below the $88 million or 75 cents per share seen from last year. Adjusted EPS came in at 66 cents per share, just below the 67 EPS analyst consensus. Overall sales were down slightly to $1.77 billion, below the $1.82 billion expected.
“Our accelerating comparable sales and improving bottom line reflect the strategic partnerships with our vendors, as well as our efforts to inspire and empower youth culture and create deeper connections with local communities,” said Richard Johnson, Chairman and Chief Executive Officer of Footlocker in a press release on Friday. “We believe we are well positioned to produce even stronger results in the all-important holiday selling season and the fourth quarter overall.”
For many niche retailers, there is not much they can do to change the situation as they continue to hemorrhage cash.. Other companies like GameStop (NYSE: GME), a gaming retailer which has been suffering from similar issues to other retailers, has seen its share prices get devastated over the past year with there seeming to be little hope for any meaningful turnaround. Investors at this point should stay clear from most brick-and-mortar retail chains save for a few exceptions that have thrived in this changing environment, as is the case with Walmart (NYSE: WMT).
Shares of Foot Locker fell by almost 19 percent on Friday in response to the news and are expected to continue falling a little once the markets on Monday open up. Over the past few months, the near four-billion-dollar company has seen its stock price fall by a fair margin, declining from almost $60 per share earlier this year to its current trading price at $34, around a 40 percent decline. In comparison, most major indexes have gained significantly during the same period, further exacerbating Foot Locker’s decline.
Foot Locker Company Profile
Foot Locker operates thousands of retail stores throughout the United States, Canada, Europe, Australia, and New Zealand. It also has one franchisee in the Middle East and one in South Korea, each of which operates multiple stores in those regions. The company mainly sells athletically inspired shoes and apparel. Foot Locker’s merchandise comes from only a few suppliers, with Nike providing the majority. Store names include Foot Locker, Champs, and Runners Point. The company also has an e-commerce business selling through Footlocker.com, Eastbay, and Final-Score. – Warrior Trading News
