Foot Locker shares plummet 33% as revenues weaken

The company warned in May that revenue had slowed as US shoppers reined in discretionary spending

Foot Locker expects to see revenue declines worsening to as much as 9%, after sales softened in July. 

Shares in Foot Locker slumped by almost a third after the retailer posted earnings that fell short of analyst expectations amid concern over weakening spending patterns. The retailer also suspended its dividend.

The footwear chain now expects to see revenue declines worsening to as much as 9%, after sales softened in July. 

The company warned in May that revenue had slowed as US shoppers reined in their discretionary spending. That came after the retailer had been struggling, which pushed it to use aggressive promotions to increase demand and keep excess goods from piling up too high. Stock levels rose 11% to $1.8bn (€1.6bn) in the quarter.

'Price-sensitive customers'

“Our customer remains price-sensitive and discerning,” especially lower- to middle-income shoppers, said Foot Locker chief executive Mary Dillon. “We expect that pressure to continue, and it’ll require us to get ahead of that.” 

The results add to the woes of the athletic goods sector and raise doubts about the strength of consumer spending in the US. 

Foot Locker said that inventory shrink, an industry term that refers to factors such as shoplifting and employee theft, has increased over time, but it wasn’t one of the top impacts on margins. Other US retailers have in the past said that theft played a “large part” in its earnings falling short. 

Foot Locker shares fell 33% at one stage in New York trade in the latest session. The shares had already fallen sharply this year. 

• Bloomberg