(AOF) – Foot Locker, whose title plunged 18% in pre-market trading, has revised down its annual forecasts for sales and profits in the face of slowing demand. Its competitors Nike and Under Armor are also penalized on the stock market by this warning. The American sports equipment manufacturer now anticipates a decline in its turnover of between 6.5 and 8%, against -3.5 to -5.5% previously, and an adjusted EPS ranging from 2 to 2.25 dollars against an earlier range between $3.35 and $3.65.
Same-store sales could fall by up to 9% over the year, while the gross margin is expected between 26.6% and 28.8% (30.8% to 31% previously).
In the first quarter, the firm recorded an adjusted EPS of 70 cents against 1.60 dollars a year earlier and a consensus of 77 cents.
Same-store sales fell 9.1% against a consensus of -7.9%.
“Our sales have declined significantly given the challenging macro environment, which has forced us to lower our guidance for the year as we conduct more aggressive markdowns to drive demand and manage inventory,” CEO Mary Dillon said. .
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Concerns remain
According to the Federation of Specialized Trade, Procos, in October 2022, activity fell by 1.5% over one year. Nevertheless, the beauty and health (+ 5.2%) and specialized food (+ 3.5%) activity is dynamic compared to October 2021. The frequentation of the points of sale was very impacted by the problems of fuel and bad weather. Compared to October 2019, the pre-covid year, the drop in attendance is very sharp (-20.9% in October). Shopping centers and the outskirts are more impacted than city centers with a difference of four to five points.
Several reasons for concern exist for the future. The players are experiencing a very significant scissor effect given the increase in their operating costs while the evolution of demand is very uncertain. Very few brands can pass on the increase in their costs to their selling prices. The federation therefore asks, among other things, to limit the indexation of the Commercial Rent Index to + 3.5% for the rents of all companies in 2023. It also invokes an absolute urgency: to cap the price of energy for 2023 and retroact on the contracts already signed to prevent the rate of failures from accelerating.