Why Foot Locker Is Plummeting

Foot Locker Inc.' s ( FL ) stock lost about 25% in Friday trading after the company reported second-quarter EPS of 62 cents on revenue of $1.7 billion, coming short of profit estimates by 28 cents per share and revenue expectations by $100 million.

Net income was $51 million, or 39 cents per share, a significant decline from $127 million, or 94 cents per share, in the same period of 2016. Excluding a charge originated by a litigation, which reduced after-tax earnings by 23 cents per share, non-GAAP earnings were 62 cents per share.

Comparable store sales declined 6% while total sales decreased 4.4% to $1,701 million (prior-year period was $1,780 million). Excluding the effect of foreign currency fluctuations, total sales decreased 4.3%. The gross margin rate decreased 340 basis points to 29.6% from 33% a year ago.

At the end of July, the inventories were $1,290 million, 3.7% lower than at the end of the comparable 2016 period. The company deployed $21 million to repurchase 350,000 shares and paid a quarterly dividend of 31 cents per share, a total of $41 million. The company's cash totaled $1,043 million.

Foot Locker continues to expand geographically. During the quarter, it opened 24 new stores, remodeled 38 stores and closed 19 locations. Overall, the company operates more than 3,300 stores in more than 20 countries in North America, Europe, Australia and New Zealand.

Year to date, shares have fallen to $35.79 from $71.73, a 50.1% decline.

Other stocks falling today are Hibbett Sports Inc . ( HIBB ) and Matson Inc . ( MATX ). The sports retailer's revenue of $187.96 million missed expectations by $2.2 million and registered a decline of 9.2% year over year. Further, it lowered its earnings forecast for the full year.

Disclosure : The author holds no positions in any stocks mentioned.

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This article first appeared on GuruFocus .

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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