Foot Locker lowers 2024 forecast despite fourth-quarter beat

(Sharecast News) - Foot Locker surpassed expectations in its fourth-quarter 2023 results on Wednesday, but disappointed investors after it lowered its profit outlook for the 2024 financial year. The athletic retailer's stock price plunged in pre-market trading due to these tempered expectations and delayed targets.

Despite increased markdowns reducing inventory, total sales for Foot Locker increased 2% in the final quarter of last year.

However, comparable sales faced a slight 0.7% decline due to brand mix changes and consumer softness.

Gross margins fell as a result of those markdowns to clear inventory, leading to a decline in adjusted earnings per share.

"We are making important progress strengthening our brand partnerships, increasing customer engagement, transforming our real estate footprint, and driving growth in digital," said chief executive officer Mary Dillon, expressing optimism in the company's direction despite the revised timeline.

Foot Locker said it expected adjusted earnings per share between $1.50 and $1.70 for 2024, lower than analyst expectations.

Revenue for the year was projected to range from a 1% decline to a 1% increase.

While still confident in its 'Lace Up' strategic plan, the retailer had delayed its target of achieving an 8.5% to 9% EBIT margin to 2028.

Foot Locker's finance chief Mike Baughn emphasised the company's commitment to investing in its business, despite pausing its dividend in 2024 to rebuild cash reserves.

The primary focus remained on achieving long-term strategic objectives and shareholder value, he said.

At 0826 EST, shares in Foot Locker were down 11.83% in pre-market trading in New York, at $30.25.

Reporting by Josh White for Sharecast.com.