(Bloomberg) — Foot Locker Inc. shares fell the most in 13 years on Friday after the retailer gave a disappointing outlook as Nike Inc., its largest supplier, cuts back on business.
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The chain said no single vendor is expected to represent more than 60% of total purchases this fiscal year, down from 70% in fiscal 2021 and 75% in the previous year. That contributed to Foot Locker projecting profit and comparable sales well below Wall Street expectations for the current year, which runs through next January.
Business with Nike is shrinking as the footwear and apparel maker accelerates a shift to direct-to-consumer sales. Foot Locker said it’s trying to diversify its merchandise and sign new partnerships while also investing in new shopping platforms and opening more stores outside of malls.
“We continue to work to broaden our selection including leaning into brands where we are under-penetrated,” Foot Locker Chief Executive Officer Dick Johnson said on a conference call with analysts. He pointed to momentum across shoe labels including Adidas, Puma and New Balance.
Foot Locker shares fell as much as 31% in New York, the biggest intraday drop since November 2008.
Read more: Foot Locker Sinks as Adjusted EPS, Comparable Sales Views Miss
Evercore ISI analyst Omar Saad downgraded Foot Locker’s stock to the equivalent of a neutral rating after the earnings release. He said in a note to clients that the company’s struggles aren’t being mirrored at other Nike sellers such as Dick’s Sporting Goods Inc., making the retailer “too slippery a slope for us to stick with.”
“We prefer to stay on the sidelines until we get better clarity on the what will be the sustainable level and quality of Nike’s product allocations to Foot Locker,” he wrote.
(Updates with company comment in fourth paragraph, analyst downgrade in sixth.)
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