Executive Briefings

Maybe Foot Locker Should Be Afraid of Amazon Selling Nike

Foot Locker CEO Richard Johnson seems to be living in a bit of denial.

The executive told analysts on a conference call on Friday to discuss the sports retailer's abysmal second quarter results that he wasn't concerned about companies like Adidas and Nike selling on Amazon.com, saying that quality in-store experience remained a crucial protection against the massive online retailer.

At the same time, Foot Locker shares, already down sharply this year, tumbled 25 percent in heavy trading as the retailer reported that comparable sales fell 6 percent in the second quarter — a stunning result given the 1.7-percent increase expected by Wall Street, according to Consensus Metrix. It was Foot Locker’s first decline in that key metric since 2009, according to Citi Research. And Foot Locker expects similar pain for the rest of the year.

Particularly worrisome for sports retailers and vendors is that Foot Locker's results showed weakness in the high-end sneaker category, which was high-flying until recently.

The results should not have been entirely surprising: NPD Group has said that its data showed that sales at athletic and sporting goods retailers were down by a low-double digit percentage in the quarter. Indeed, Hibbett Sporting also reported poor results on Friday, while Dick's Sporting Goods underwhelmed investors with a tiny sales increase earlier last week.

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The executive told analysts on a conference call on Friday to discuss the sports retailer's abysmal second quarter results that he wasn't concerned about companies like Adidas and Nike selling on Amazon.com, saying that quality in-store experience remained a crucial protection against the massive online retailer.

At the same time, Foot Locker shares, already down sharply this year, tumbled 25 percent in heavy trading as the retailer reported that comparable sales fell 6 percent in the second quarter — a stunning result given the 1.7-percent increase expected by Wall Street, according to Consensus Metrix. It was Foot Locker’s first decline in that key metric since 2009, according to Citi Research. And Foot Locker expects similar pain for the rest of the year.

Particularly worrisome for sports retailers and vendors is that Foot Locker's results showed weakness in the high-end sneaker category, which was high-flying until recently.

The results should not have been entirely surprising: NPD Group has said that its data showed that sales at athletic and sporting goods retailers were down by a low-double digit percentage in the quarter. Indeed, Hibbett Sporting also reported poor results on Friday, while Dick's Sporting Goods underwhelmed investors with a tiny sales increase earlier last week.

Read Full Article