Foot Locker sales fall 9.9% in Q2

Footwear and clothing retailer Foot Locker reported a 9.9% decrease in sales to $1.8bn (£1.4bn) in Q2, compared with sales of $2bn (£1.5bn) in the second quarter of 2022.

The company also reported a loss of $5m (£3.9m), compared with net income of $94m (£74m) in the corresponding prior-year period.

Gross margin declined by 460 basis points as compared with the prior-year period, driven by an increase in promotional activity, which included higher markdowns, as well as occupancy deleverage and higher shrinkage. 

During the second quarter, the company opened 15 new stores, remodelled or relocated 16 stores, and closed 108 stores.

As of July 29, 2023, the Company operated 2,599 stores in 26 countries in North America, Europe, Asia, Australia, and New Zealand, in addition to 184 franchised stores in the Middle East and Asia. 

Mary Dillon, president and chief executive officer, said: “Our second quarter was broadly in line with our expectations, despite the still-tough consumer backdrop. 

“However, we did see a softening in trends in July and are adjusting our 2023 outlook to allow us to best compete for price-sensitive consumers, while still leaning into the strategic investments that drive our Lace Up plan. Importantly, we are continuing to make progress on our inventory levels and look to best position the business for the upcoming holiday season and into 2024.” 

Dillon continued: “To ensure that we have the flexibility to continue to fund our strategic investments appropriately, we are pausing our quarterly cash dividend beyond our Board’s recently-approved October payout.  We intend to update the market on our go-forward capital allocation plans and the timing around our longer-term financial targets when we report fourth quarter results.”