Foot Locker (FL) Stock Plummets 26% On Poor Earnings, Drags Down Other Sport Retailers

Shares of Foot Locker (NYSE:FL) are falling 26% in morning trading on Friday after the company reported worse-than-expected second quarter fiscal 2017 results.

The athletic apparel retailer reported adjusted earnings of $0.62, missing the Zacks Consensus Estimate of $0.90. The company’s earnings are down 34% year-over-year. Foot Locker also reported revenue of $1.701 billion, missing our estimate of $1.813 billion, and are down 4.44% year-over-year.

Foot Locker stated that same-store sales fell 6% year-over-year. CEO Richard Johnson said that “sales of some recent top styles fell well short of our expectations and impacted this quarter’s results. At the same time, we were affected by the limited availability of innovative new products in the market.”

“We believe these industry dynamics will persist through 2017,” said Johnson, “and we expect comparable sales to be down three or four percent over the remainder of the year.”

The company was also hurt by a $50 million pre-tax litigation charge related to a lawsuit regarding Foot Locker’s conversion of former employee’s pension plans.

Foot Locker’s poor report falls in a bad week for athletic retailers. This past Tuesday, Dick’s Sporting Goods (NYSE:DKS) sank to a new 52-week low after reporting weaker earnings and revenue than investors expected. Dick’s poor performance caused a variety of sports retailers’ stock to fall, including shares of Foot Locker by 4%.

In reaction to Foot Locker’s poor report today, fellow athletic retailers have fallen again. Shares of Nike (NYSE:NKE) fell 5% and Under Armour (NYSE:UAA) stock is down 3% in morning trading. Shares of Adidas (DE:ADSGN) AG (OTC:ADDYY) and Puma (V:PUM) also fell marginally, each falling about 1%.

FL remains a Zacks Rank #3 (Hold), with a VGM score of ‘A.’

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