What happened
Shares of Foot Locker (FL 3.27%) plunged 30% on Friday after the athletic apparel and footwear retailer warned of a sales decline in the coming year.
So what
Foot Locker's sales rose 6.9% year over year to $2.3 billion in its fiscal 2021 fourth quarter, which ended on Jan. 29. The company's recent purchases of retailers WSS and atmos contributed to the gains.
"We made significant progress diversifying our brands, categories, and channels in 2021, as well as expanding our customer base across demographics and high-growth geographies," CEO Richard Johnson said in a press release.
Image source: Getty Images.
Foot Locker's net income, however, declined by 16% to $103 million, or $1.02 per share, because of higher costs and restructuring charges.
Now what
More worrisome was Foot Locker's forecast for fiscal 2022. The company said that no single vendor would account for 60% of its sales in the coming year, down from 70% in 2021.
Nike (NKE 0.14%) is Foot Locker's largest supplier. The sports apparel titan is increasingly shifting toward a direct-to-consumer model, led by its popular websites and company-owned stores.
In turn, Foot Locker expects its sales to fall by as much as 6% in 2022. Its brick-and-mortar stores are projected to endure the brunt of that decline, with comparable sales down as much as 10%.
To offset the downturn in Nike-related sales, Foot Locker plans to increase its partnerships with other footwear and sportswear brands, while also expanding its private-label merchandise.
"Our journey to diversify our mix of business and expand our reach as a house of brands and banners is ongoing," Johnson said.
