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Foot Locker shares slide 13% premarket as soft 2022 guidance offsets earnings beat

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Foot Locker Inc. shares
FL,
+3.86%

slid 13% premarket Friday, after the athletic retailer offered weak guidance for 2022, offsetting a fourth-quarter earnings beat and news of a higher dividend. The company posted net income of $103 million, or $1.02 a share, for the quarter, down from $123 million, or $1.17 a share, in the year-earlier period. Adjusted for special items, the company had EPS of $1.67, well ahead of the $1.44 FactSet consensus. Sales rose to $2.341 billion from $2.189 billion, edging ahead of the $2.321 billion FactSet consensus. The company said it is planning changes to its vendor mix and announced a new restructuring program. “Our journey to diversify our mix of business and expand our reach as a house of brands and banners is ongoing,” Chief Executive Richard Johnson said in a statement. Starting in the fourth quarter of 2022, the company does not expect any single vendor to account for more than 55% of total supplier spend, down from 65% in the fourth quarter of 2021. “This change reflects the accelerated strategic shift to DTC by one of the company’s vendors and Foot Locker, Inc.’s ongoing brand and category diversification efforts,” said the statement. The company will expand further into apparel and broaden its product mix across brands and categories, starting with exclusive access to Reebok’s basketball footwear. It expects to generate savings of about $200 million from a cost saving plan that will start shortly. For 2022, it expects adjusted EPS to range from $4.25 to $4.60, compared with a FactSet consensus of $6.41. It expects 2022 sales to fall 4% to 6% and for same-store sales to fall 8% to 10%, compared with a FactSet consensus for a rise of 0.1%. The company is raising its quarterly dividend by 33% to 40 cents a share and its board has approved an up to $1.2 billion share buyback program. Shares have fallen 21% in the last 12 months, while the S&P 500
SPX,
+1.50%

has gained 12%.



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