Foot Locker (NYSE:FL) slumped to a loss in the second quarter and said it would close stores in Asia and Europe, overshadowing better-than-expected sales and sending its shares down more than 8% in premarket trading. The company also gave a weaker sales outlook for fiscal year 2024.
For the second quarter, the sportswear retailer reported an adjusted loss of $4 million, or $0.05 per share, beating expectations by 2 cents. This compared to a profit of $4 million, or $0.04 per share, in the same period last year. Total sales increased 1.9% year over year to $1.9 billion, beating expectations by $10 million.
Company-wide same-store sales increased 2.6 percent, driven by strong same-store sales at the Foot Locker and Kids' Foot Locker divisions worldwide.
The shares' weakness in pre-market trading was also due to the company's plans to close 30 of its 140 stores in Asia Pacific and 629 stores in Europe as part of its Race Up initiative, and its ongoing efforts to simplify its business model by focusing on core brands and geographies. The closures are scheduled to be completed in mid-2025.
Additionally, in order to reduce costs and increase its presence in Florida, Foot Locker (FL) will relocate its headquarters from New York City to St. Petersburg, Florida.
Foot Locker (FL) reiterated most of its full-year guidance for fiscal 24, including revenue down 1% to up 1%, same-store sales up 1% to up 3%, and non-GAAP earnings per share of $1.50 to $1.70 (within the consensus estimate of $1.54). However, it lowered its gross margin forecast to 29.5% to 29.7%, down from its initial guidance of 29.8% to 30.0%.
