Foot Locker (FL - Get Report) shares slumped to a one-year low Friday after posed weaker-than-expected first quarter earnings, and trimmed its full-year profit guidance, as the prospect of tariffs on China-made goods looms over the sports shoe and apparel industry.
Foo Locker said earnings for the three months ending on May 4 came in at $1.52 per share, up 4.8% from the same period last year but well shy of the $1.60 Street consensus forecast. Group revenues, Foot Locker said, rose 2.6% to "2.078 billion and again missed analysts' forecast of a $2.11 billion tally.
Same store sales also disappointed, even as they rose 4.6% from last year, given the market was looking for a 5.2% tally. Foot Locker said it now sees full-year earnings growth in the "high-single digit", compared to a double-digit advance it forecast in February.
"We started the year with great energy, innovative products, and exciting customer events, leading to solid top-line growth in the first quarter with strong performance across our regions, banners, channels, and categories," said CEO Richard Johnson. "Based on the momentum we have underway, we feel confident that the updated strategic imperatives we introduced at our Investor Day in March position us to deliver on our long-term goals."
Foot Locker shares were marked 17.7% lower following the earnings release and changing hands at $43.46 each, the lowest in a least a year and move that wipes out all of stock's year-to-date gains.
Earlier this week, Foot Locker joined a host of U.S. companies in the shoe and sports apparel business in signing a letter sent to President Donald Trump urging him to reconsider placing tariffs on footwear made in China and imported into the United States, calling the levies a "catastrophic" move that will cost U.S. consumers $7 billion a year.
Foot Locker joined Nike (NKE - Get Report) , Under Armour (UA - Get Report) JCPenney (JCP - Get Report) and several other rivals in letter to both the White House and senior members of his economic team, including Commerce Secretary Wilbur Ross, Treasury Secretary Steven Mnuchin and economic adviser Larry Kudlow, that called for shoes to be removed from a list of products that could face a 25% tariff over the coming months.
The group said the levy will add $7 billion in additional costs, which will have to be passed onto consumers, and argued they falling "disproportionately" on working class families, who already bear the brunt of rising duties on consumer products.
"There should be no misunderstanding that U.S. consumers pay for tariffs on products that are imported," the letter read. "As an industry that faces a $3 billion duty bill every year, we can assure you that any increase in the cost of importing shoes has a direct impact on the American footwear consumer."
"It is an unavoidable fact that as prices go up at the border due to transportation costs, labor rate increases, or additional duties, the consumer pays more for the product," the letter continued. "This significant tax increase, in the form of tariffs, would impact every type of shoe and every single segment of our society."