By Denny Jacob

Foot Locker sees a bumpy road ahead for the rest of the year as it contends with cautious consumers and turnaround efforts at Nike.

The sneaker and athletic-wear retailer on Wednesday guided for full-year sales to range between a decline of 1% to growth of 0.5%. The company said it is navigating changes at Nike as the shoemaker discounts its goods and focuses on innovation to claw back market share taken by its competitors.

"We saw consumers be more cautious and sensitive, which has impacted our business quarter to date," said Chief Executive Mary Dillon, noting that Foot Locker's customers are young and have limited budgets. "They're thinking about the overall cost of living, plus some uncertainty about tariffs."

President Trump this week slapped 25% tariffs on goods from Canada and Mexico, and an additional 10% on imports from China. The increased tariffs for goods from China pose a threat to shoewear retailers such as Foot Locker, with the country being among the largest suppliers of shoes to U.S. companies.

Foot Locker's partnership with Nike is fully reset, say company executives. But while the sneaker company continues to rebalance its portfolio and inventory levels, Foot Locker will continue to be hurt as a result.

China supplies about half of Foot Locker's private-label business, said Chief Financial Officer Mike Baughn on an earnings call, but noted that the business represents a low-single-digit percentage of sales. The company also has some minor exposure linked to fixtures across the three countries primarily targeted for tariffs this week, he said.

For the fourth quarter, Foot Locker said demand increased during the holidays and during new product launches.

"They're more cautious in those in-between periods," Dillon said.

Foot Locker in the fourth quarter swung to a profit of $49 million, or 51 cents a share, compared with a loss of $389 million, or $4.13 a share, in the prior-year period.

Stripping out certain one-time items, earnings of 86 cents a share topped Wall Street's estimates of 72 cents a share.

Revenue declined to $2.25 billion from $2.38 billion. Analysts polled by FactSet had expected $2.32 billion.

Write to Denny Jacob at denny.jacob@wsj.com

(END) Dow Jones Newswires

March 05, 2025 10:44 ET (15:44 GMT)

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