Foot Locker Plummets on Third-Quarter Report

PORTLAND, Ore. -- Shares of Foot Locker (FL Quote) plunged in trading Friday after the athletic goods retailer announced disappointing third-quarter results and slashed its outlook.

Shares of Foot Locker fell $3.30, more than 43%, to $4.33 by midmorning trading Friday.

Specialty mall-based retailers such as Foot Locker have seen traffic and sales slumping in their stores for more than a year. And the global economic meltdown that has consumers limiting their discretionary spending has exacerbated the situation.

Foot Locker said it earned $24 million, or 16 cents a share, in the quarter, compared with a loss of $33 million, or 22 cents a share, in the same period last year. But after stripping out the one-time charges from both quarters, the company's profit fell 18.2% to $27 million, or 18 cents a share.

The company also lowered its outlook for the year, anticipating it will earn 50 to 63 cents per share in fiscal 2008, excluding impairment charges. This is down from the company's previous guidance that it would earn between 70 to 85 cents and well below analysts' estimates of 82 cents per share.

Sterne Agee analyst Sam Poser wrote in a note that while the quarterly results were disappointing, the company has positioned itself well for future growth.

"We think this puts the company in an excellent position for 2009, as it will have the leanest inventory levels in over five years," he wrote. "Foot Locker is in position to be more nimble than they have in years."

He said inventories have not been this low since its 2003, a year before Foot Locker acquired Foot Action.