From CNBC: 2025-03-05 06:48:29

Foot Locker anticipates another year of widespread discounts in the sneaker industry due to Nike’s reset strategy relying on markdowns. Despite beating earnings expectations for the holiday quarter, sales fell short. The company expects lower profits for fiscal 2025, with adjusted earnings per share between $1.35 and $1.65, below Wall Street estimates of $1.77.

In the fiscal fourth quarter, Foot Locker reported adjusted earnings per share of 86 cents, surpassing the expected 72 cents, while revenue reached $2.25 billion, falling short of the $2.32 billion forecast. Net income was $49 million, a significant improvement from the previous year. Sales dropped by nearly 6% due to promotional pressures in the sneaker marketplace.

CEO Mary Dillon highlighted the success of Foot Locker’s Lace Up Plan in driving positive comparable sales growth and gross margin expansion in fiscal 2024. However, the company expects promotional pressures to persist in 2025, impacting margins. Foot Locker is still facing challenges with Nike, its largest brand partner, as the sneaker giant implements deep discounts to clear inventory.

Nike’s CEO Elliott Hill is working on a turnaround strategy to drive full-price sales and reduce reliance on discounts. The company aims to clear out old inventory through less profitable channels before focusing on full-price sales. Despite Nike’s discounted prices on its website, Foot Locker continues to sell certain models at full price, creating competition between the two platforms.

Foot Locker’s website selling certain Nike models at full price while Nike’s site offers discounts poses a challenge for the retailer. The company’s multi-brand approach faces competition from direct-to-consumer sales by brands like Nike. The discrepancy in pricing strategies could impact Foot Locker’s sales and customer loyalty in the long run.



Read more at CNBC:: Foot Locker (FL) Q4 2024 earnings