Shares of Foot Locker (FL 0.23%) plunged 29.4% on Wednesday after the company announced a large loss based on generally accepted accounting principles (GAAP) for the crucial holiday quarter and followed with weak forward guidance.

Foot Locker's latest quarter was actually better-than-expected

For its fiscal fourth quarter 2023 ended Feb. 3, 2024, Foot Locker's total sales grew 2% year over year -- though comparable sales fell 0.7% after accounting for an extra week in the fiscal year -- to $2.334 billion. That translated to a quarterly net loss of $389 million, or $4.13 per share. Adjusted for nonrecurring items -- namely a $478 million noncash charge related to minority investments and $75 million related to a partial settlement of pension plan obligations -- Foot Locker's (non-GAAP) net income was $36 million, or $0.38 per share, down from $0.97 per share in the same year-ago period.

Still, Foot Locker CEO Mary Dillon noted the company's fourth-quarter results were above its expectations. And analysts, on average, were modeling lower adjusted net income of $0.32 per share on revenue of $2.28 billion.

Dillon added that the company saw "meaningfully accelerated sales trends relative to the third quarter," as well as improvements across multiple key performance indicators. Foot Locker also reinvested in markdowns in order to end the year with leaner inventory levels than previously expected.

Foot Locker delays a key margin milestone

Looking ahead to the new 2024 fiscal year, Foot Locker issued guidance to be flat from fiscal 2023, plus or minus 1% -- which was technically above expectations for a 0.5% decline -- including comparable-sales growth of 1% to 3%. However, Foot Locker also called for full-year adjusted earnings of between $1.50 and $1.70 per share, below consensus estimates for around $1.85 per share.

Worse yet -- and noting Foot Locker previously told investors at its March 2023 Investor Day it was targeting EBIT margin in the range of 8.5% to 9% by 2026 -- the company now expects a two-year delay in achieving that margin milestone.

"2024 will serve as a cash rebuilding year, and we, therefore, are not resuming a dividend at this time," elaborated Foot Locker CFO Mike Baughn. "We are confident, however, that our strategy will unlock longer-term shareholder value, including a return to quarterly dividends and share repurchases over time."

In a market that hates being told to hurry up and wait, it should come as no surprise to see Foot Locker stock plunging in response today.