Foot Locker Inc. suffered its worst stock decline in more than eight years after first-quarter results missed analysts' estimates, an outcome the retailer blamed in part on slow income-tax refunds.
The shares tumbled as much as 17 per cent to $58.13, the biggest intraday plunge since the financial crisis was underway in November 2008. Foot Locker was Friday's biggest decliner in the Standard & Poor's 500 Index by a wide margin.
The athletic-shoe chain blamed "unprecedented challenges" last quarter – especially in February, when same-store sales plummeted by a percentage in the low teens. February is typically one of the biggest months of the year for Foot Locker, but a lag in consumers receiving their tax refunds hampered results, the New York-based company said.
Foot Locker joins a long list of retailers blaming the delays. Just this week, Wal-Mart Stores Inc., Advance Auto Parts Inc., L Brands Inc. and Ross Stores Inc. cited the effect when reporting quarterly sales. It's hard to tell how much credence investors lend to the tax-return complaint, but broader concerns about retail have made life hard on chains that miss estimates.
Foot Locker reported first-quarter earnings of $1.36 a share, trailing the $1.38 predicted by analysts. Its sales came in at $2-billion in the period, which ended April 29. The average estimate was $2.02-billion.
"The first quarter was one of our most profitable quarters ever, but it did fall short of our original expectations," Chief Executive Officer Dick Johnson said in a statement. "The slow start we experienced in February, which we believe was largely due to the delay in income-tax refunds, was unfortunately not fully offset by much stronger sales in March and April."