Foot Locker results show the sneaker industry — and Nike — still have more pain ahead

Core Viewpoint - Foot Locker anticipates continued deep discounts in the sneaker industry as Nike, its largest brand partner, works through inventory challenges, impacting Foot Locker's sales and profit expectations for fiscal 2025 [1][6]. Financial Performance - Foot Locker reported a net income of $49 million, or 51 cents per share, for the fiscal fourth quarter, a significant improvement from a loss of$389 million, or $4.13 per share, a year earlier [3]. - Sales for the quarter decreased to$2.25 billion, down nearly 6% from $2.38 billion a year prior, influenced by an extra week of sales in the previous year [4]. - Adjusted earnings per share for the current fiscal year are expected to be between$1.35 and $1.65, falling short of Wall Street's estimate of$1.77 [5]. Sales Expectations - Foot Locker anticipates comparable sales growth of 1% to 2.5%, with the high end exceeding analysts' expectations of 1.9% [5]. - The company expects promotional pressures to continue affecting margins, particularly in the first half of 2025 [6]. Brand Partnership Challenges - Foot Locker's performance is closely tied to Nike, which represents about 60% of its sales. Nike's current strategy involves deep discounting to clear out old inventory, which negatively impacts Foot Locker's business [6][7]. - There is a disparity in pricing strategies, as Nike offers discounts on its website while Foot Locker maintains full prices for certain models, potentially driving customers to purchase directly from Nike [8][9].