Foot Locker (FL) reports Q4 2021 earnings
On August 2, 2021, a sign is displayed above the foot locker store in Chicago.
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Foot LockerPremarket trading fell Friday as the retailer stated that it expected revenue to fall in 2022 because it doesn’t expect to be able sell as many products as its main vendor. Nike.
Foot Locker announced that starting the fourth quarter in 2022, no one vendor will account for more then 55% of the supplier purchases. That compares with the 65% of the prior year. According to Foot Locker, Nike purchases won’t exceed 60% annually this year. That is a decrease of 70% and 75% respectively in 2021, according to the company.
Foot Locker explained that these adjustments are due to Nike’s faster shift in selling apparel and shoes directly to consumers. Foot Locker stated that it has launched a variety of private labels, including clothing, to increase its direct-to-consumer efforts.
Nike, among others, are two of the most popular sneaker brands. Under ArmourTheir efforts to decrease dependence on wholesale partners have been clear. These brands are hoping to make higher profits by selling their products through brick-and mortar stores or online. This has led wholesalers like Foot Locker to become more competitive. Dick’s Sporting GoodsTo launch additional lines.
Foot Locker stock shares fell more than 16% during premarket trading. The stock has fallen 5% over the past year.
Foot Locker lost $1.17 per share and saw its net income drop to $102million for the period Jan. 29-29, from $123million in the previous year. It earned $1.67 per shares, surpassing analysts’ estimates of $1.44 based on Refintiv surveys.
From $2.19billion a year ago, sales grew 6.9%. This was higher than the $2.33 billion expected.
It said that same-store sales increased 0.8% with apparel revenues significantly exceeding footwear.
The grim outlook for 2022 by Footlocker was even more concerning. Foot Locker announced Friday that sales were expected to decrease by 4%-6% this year and sales in same stores are forecast to plummet by 8%-10%.
According to Refinitiv, analysts had been expecting a 2% increase in revenue year over year.
Foot Locker said that this year, it would be spending extra money to help consumers.
Company announced Friday that it would implement a cost reduction program. It will begin in the coming days to trim approximately $200 million annually. Foot Locker’s Board also approved a new $1.2 million share repurchase program.
Foot Locker’s complete financial press release is available here here.