The drop sent shares to new multiyear lows, with the stock down more than 50% year to date.
The October slump wasn't sparked by news from the company, although its latest quarterly update, in late August, gave investors plenty of reasons to be pessimistic. In that report, the retailer posted a surprise 6% drop in comparable-store sales that it blamed on falling customer traffic and a paucity of fresh, innovative footwear on the market.
The industry news hasn't brightened since then. In late September, Nike (NYSE:NKE), which supplies the majority of Foot Locker's inventory, posted declining results in its U.S. segment even as price cuts sent gross profit margin lower.
Neither Nike nor Foot Locker expects the market to return to growth over the upcoming holiday shopping season, so shareholders should brace for another quarter of sales declines and weaker profits. Foot Locker's long-term rebound will depend mainly on Nike's success at improving its product portfolio, so that customers are again motivated to visit Foot Locker's stores in person and pay premium prices for its athletic shoes.