(AOF) – In the second quarter of 2023, Foot Locker’s revenue fell 9.9% to $1.86 billion, compared to revenue of $2.06 billion a year ago. a year. In addition, the American distribution company specializing in sports recorded a loss of 5 million dollars in the quarter, against a net profit of 94 million dollars a year earlier. Over this period, the group recorded a net loss of 5 cents per share, compared to a profit of 99 cents per share in the second quarter of 2022.
Gross margin decreased by 460 basis points from the prior year, due to increased promotional activity, which included higher markdowns, as well as reduced occupancy.
During the second quarter, Foot Locker paid a quarterly dividend of 40 cents per share for a total of $37 million. The company did not repurchase any shares during the second quarter. Bad news, Foot Locker has announced its intention to suspend its dividend payment in order to increase balance sheet flexibility to support its long-term strategic priorities.
The bad surprises don’t stop there. The group lowered its annual targets. Foot Locker is targeting adjusted earnings per share of between $1.30 and $1.50 versus $2 to $2.25 previously. Revenues are expected to fall by 8% to 9% against 6.8% to 8% previously. On a comparable basis, they are expected to fall by 9% to 10% against 7.5% to 9% previously.
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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.