Shares for Foot Locker Inc. are retreating in Friday premarket trading after the specialty athletic retailer posted larger-than-anticipated first-quarter losses as the coronavirus pandemic kept its stores shuttered.
The New York-based company logged a net loss of $98 million, or 93 cents per share, compared with last year’s net income of $172 million, or $1.52 per share. Revenues for the three months ended May 2 declined 43.4% to $1.17 billion, and comps decreased 42.8%.
Analysts had anticipated earnings per share of 49 cents and $1.58 billion in sales. At 9:00 a.m. ET, Foot Locker’s stock was down more than 9% to $26.70.
“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,” chairman and CEO Richard Johnson said in a statement. “We are in the early stages on our road to recovery. Our phased reopening of stores is underway, and our plan is to build, be back and be better than before.”
More than 1,400 Foot Locker stores are now back in business. Over the last three months, the company opened five new outposts, remodeled or relocated nine units and permanently shuttered 21 locations. At the end of the quarter, it had 3,113 stores in 27 countries spanning North America, Europe, Asia, Australia and New Zealand.
In a bid to preserve cash and improve its liquidity position, Foot Locker has taken actions that include borrowing $330 million under its $400 million revolving credit facility, trimming capital expenditures to only essential projects and minimizing nonessential spending. (It has cut back on marketing, limited rent payments and reduced merchandise purchases.)
What’s more, its CEO and senior executives have agreed to reduce their salaries and defer their incentive compensation. The board of directors has also temporarily suspended its cash dividend beginning with the second-quarter payment.
As of May 2, Foot Locker’s cash and equivalents totaled $1.01 billion, while the debt on its balance sheet was $451 million.
“We believe the operational and financial actions we have taken will enable us to create a safe environment in our stores and protect the health of our business to ensure that we emerge even stronger,” added EVP and CFO Lauren Peters.