Send me real-time posts from this site at my email

Why Foot Locker Dropped 13% Friday

What happened

Shares of Foot Locker (NYSE: FL), a leader in footwear and accessories, declined as much as 13% Friday, after the company released disappointing first-quarter results.

So what

COVID-19's impact on Foot Locker was substantial during the first quarter. Foot Locker's first-quarter sales declined 43.4% to $1.18 billion from the prior year's $2.08 billion. The company also reported a net loss of $98 million, or $0.93 loss per share, compared with the prior year's net income of $172 million, and its gross margin declined from 33.2% to 23%.

Image source: Getty Images.

"Against the backdrop of the pandemic and our global store closures, our team has focused intently on controlling what we can in order to protect our business," said Richard Johnson, chairman and CEO, in a press release. "We have taken full advantage of the investments we have made in technology in recent years in order to stay connected with our customers and serve them online, worked aggressively to protect our financial position and flexibility, and taken actions to ensure we are well positioned to drive our business forward."

Now what

For many retailers it's a waiting game: waiting to see how quickly consumers and the economy bounce back. Foot Locker will reopen stores in a phased approach and already has 1,400 open locations. Management also suspended its dividend to save cash, increased its liquidity by drawing from its credit facility, and reduced its full-year capital expenditures. The near-term outlook remains grim for the company, but once COVID-19 is under control, Foot Locker's long-term story remains intact.

10 stocks we like better than Foot Locker
When investing geniuses David and Tom Gardner have a stock tip, it can pay to listen. After all, the newsletter they have run for over a decade, Motley Fool Stock Advisor, has tripled the market.*

David and Tom just revealed what they believe are the ten best stocks for investors to buy right now... and Foot Locker wasn't one of them! That's right -- they think these 10 stocks are even better buys.

See the 10 stocks

*Stock Advisor returns as of April 16, 2020

Daniel Miller has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.


Popular posts

Welcome! Is it your First time here?

What are you looking for? Select your points of interest to improve your first-time experience:

Apply & Continue