The company attributed the decline to macroeconomic challenges, including lower income tax refunds in the US. A changing vendor mix and the repositioning of Champs Sports also contributed to a 9.1 per cent decrease in comparable-store sales.

Gross margin in Q1 FY23 suffered a 400 basis-point drop compared to the prior-year period. This was primarily due to higher markdowns, which were compared to the historically low levels seen in the previous year, the company said in a press release.

In Q1 FY23, selling, general, and administrative expenses as a percentage of sales increased by 110 basis points from the prior year.

Furthermore, net income for Q1 FY23 was $36 million, a significant decrease from $133 million in the same quarter the previous year. On a non-GAAP basis, net income fell to $66 million from $155 million in Q1 FY22.

Earnings per share (EPS) dropped to $0.38 in Q1 FY23 from $1.37 in Q1 FY22. Non-GAAP EPS also declined to $0.70 per share from $1.60 in the prior-year period.

Foot Locker's merchandise inventories as of April 29, 2023, totalled $1,758 million, a notable increase of 25 per cent compared to the end of the first quarter last year.

"Coming off the recent launch of our Lace Up Strategy at our investor day in March, we are making early progress in building a strong foundation to return to sustainable growth beyond this year," said Mary Dillon, president and chief executive officer.  "However, our sales have since softened meaningfully given the tough macroeconomic backdrop, causing us to reduce our guidance for the year as we take more aggressive markdowns to both drive demand and manage inventory."

Fibre2Fashion News Desk (DP)