(Reuters) – Shares of Foot Locker Inc plunged more than 25% on Friday, touching their lowest level in nearly 1-1/2 years, after the footwear retailer issued dour sales and profit forecasts for 2022 on expectations of selling fewer Nike products.
The retailer said no single supplier is expected to account for more than about 60% of its total purchases for fiscal 2022, down from 70% in the past year.
The move comes as sportswear giant Nike, Foot Locker’s biggest supplier, is ramping up its focus on its direct-to-consumer business.
Foot Locker, whose top suppliers also include Adidas and Puma, sourced about 75% of all its merchandise from Nike in 2020, according to its 2020 regulatory filing.
Nike, which has been battling supply chain issues and production facility closures over the last year, has been increasingly moving toward its direct-to-consumer business, with the channel delivering record Black Friday sales in North America last year.
Analysts have also cheered Nike’s expansion into the channel, saying they expect the company’s mobile apps to grow into a larger part of sales.
Foot Locker said it expects an adjusted profit between $4.25 and $4.60 per share for fiscal 2022, lower than analysts’ estimate of $6.49, according to Refinitiv IBES.
It also forecast an 8%-10% slump in annual comparable sales.
(Reporting by Deborah Sophia in Bengaluru; Editing by Shailesh Kuber)
