Foot Locker, Inc. (NYSE: FL) stock had already declined 30 percent in the past three months ahead of Friday’s second-quarter earnings report. Unfortunately for Foot Locker stock owners, huge earnings and revenue misses, as well as negative commentary from management sent shares tumbling yet another 25 percent in early Friday trading.
Foot Locker reported adjusted earnings per share of 62 cents on revenue of $1.7 billion. Wall Street analysts had expected 90 cents and $1.8 billion, respectively.
Same-store sales also declined 6 percent on the quarter, well short of analyst expectations of a 1 percent gain.
In a statement, CEO Richard Johnson says little to reassure concerned FL stock owners.
“We believe these industry dynamics will persist through 2017, and we expect comparable sales to be down 3 to 4 percent over the remainder of the year,” Johnson says. “We are obviously disappointed in the results for the quarter, and our team is working quickly to adjust our operations to a changed retail landscape in which we are seeing our consumers move faster than ever from one source of inspiration or influence to another.”
Foot Locker’s disappointing numbers are just the latest in what has been a terrible earnings season in the athletic apparel and sporting goods space. In the past month alone, Nike (NKE) stock is down 4.7 percent, Under Armour (UA, UAA) stock is down 15.2 percent, Dick’s Sporting Goods (DKS) stock is down 29.2 percent and Hibbett Sports (HIBB) stock is down 51.6 percent.
Investors weren’t the only ones caught off-guard by Foot Locker’s disappointing quarter. Earlier this month, Barclay’s analyst Matthew McClintock said Foot Locker stock is so undervalued that the company doesn’t even need to grow its business to deliver long-term upside for investors.
“In a scenario where Foot Locker does not experience any growth in perpetuity, we achieve a $51 valuation, higher than its current price,” he says. “This scenario assumes flat comp store sales and flat square-footage growth over the next 10 years.”
Unfortunately, with earnings, revenue and same-store sales all on the decline, it seems even Barclay’s no-growth scenario was…
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