The stock in Foot Locker, Inc. (NYSE: FL) plunged nearly 12% to $25.88 per share by midday Friday after reporting losses that were much wider than expected in the first fiscal quarter.
The New York-based athletic footwear retailer said in a statement today in the quarter ended May 2 that its revenues were $1.18 billion on a loss of 67 cents per share. Analysts’ were forecasting the company to report revenues of $1.31 billion on a loss per share of 23 cents.
It has also taken measures to preserve cash and increase its liquidity. That includes borrowing $330 million from Foot Locker $400 million credit facility, limiting capital expenditures to essential projects, and cutting capital expenditure forecast by 50% to $138 million, as well as other moves.
The operator of 3,113 stores in 27 countries is currently reopening in a “phased approach”. It now has 1,400 open stores open for business.
“We have taken full advantage of the investments we have made in technology in recent years in order to stay connected with our customers and serve them online, worked aggressively to protect our financial position and flexibility, and taken actions to ensure we are well positioned to drive our business forward," Richard Johnson, the chairman, and chief executive officer of Foot Locker, said in a statement today.
He added, "Today, thanks to the unwavering efforts of our team, 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."
Shares of Foot Locker are down 34% year-to-date. As of May 2, Foot Locker reported cash and cash equivalents of $1.012 million. The company also had $451 million of debt, which includes the $330 million it borrowed from its credit facility.
The good news for the company is major sports leagues are setting their sights on resuming seasons in July. Nothing is confirmed yet, but the return of sports would increase the demand for Foot Locker. While uncertainties remain, keep an eye on Foot Locker as it is looking to reopen its stores.