Foot Locker Shares Slump on Holiday Supply-Chain Concerns

(Bloomberg) -- Foot Locker Inc. fell the most intraday in nine months after reporting sales that missed Wall Street’s expectations as a supply-chain crunch pressures the sneaker retailer ahead of the holiday shopping season.

• Comparable-store sales, a key retail metric, rose 2.2% last quarter, the company said Friday. Analysts had been expecting a gain of 2.9%, according to the average of estimates compiled by Bloomberg.
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Key Insights

• Like many retailers, Foot Locker has faced challenges from transportation logjams in Asia. “We expect global supply-chain constraints to persist throughout the fourth quarter,” Foot Locker Chief Financial Officer Andrew Page said in a statement. However, the retailer believes it is “positioned for the holiday season.”
• The company said demand was robust last quarter, pointing to strong results for the back-to-school shopping season.
• In another positive sign, gross margin improved last quarter to 34.7% from 30.9% a year earlier. The company credited more full-price selling, a trend seen across the retail sector.
• That boost to profitability helped generate adjusted earnings of $1.93 a share. Analysts expected $1.38 on average.

Market Reaction

• The shares fell as much as 9.9% Friday, the most intraday since Feb. 26. The stock had gained 42% this year through Thursday’s close.

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• See Foot Locker estimates.

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