Foot Locker Reports 4.5% Revenue Decline and $363 Million Net Loss in Q1 Fiscal 2025

Foot Locker, Inc. reported a significant decline in financial performance for the first quarter of fiscal 2025, ending May 3, 2025. The company recorded total revenue of $1.794 billion, a decrease of 4.5% from $1.879 billion in the same period last year. The decline was primarily driven by a drop in store sales, which fell to $1.455 billion from $1.554 billion, reflecting a 6.4% decrease. In contrast, direct-to-customer sales increased by 4.1% to $333 million, indicating a shift in consumer purchasing behavior towards online channels. The company reported a net loss of $363 million, compared to a net income of $8 million in the prior year, resulting in a basic loss per share of $3.81.

The financial results were impacted by several significant factors, including impairment charges totaling $276 million, which included $140 million related to the WSS tradename and $110 million for goodwill. These impairments were attributed to a decline in the company's stock price and broader macroeconomic challenges affecting consumer spending. Additionally, Foot Locker's operating income turned negative, with a loss from operations of $271 million compared to an income of $18 million in the previous year. The company's gross margin rate also decreased to 28.4%, down from 28.8%, reflecting increased promotional activity to clear inventory.

In terms of strategic developments, Foot Locker announced a merger agreement with DICK'S Sporting Goods, Inc. on May 15, 2025. This transaction, which is subject to shareholder and regulatory approvals, is expected to close in the second half of 2025. The merger aims to enhance Foot Locker's market position and operational capabilities. The company also reported a reduction in its store count, operating 2,363 stores as of May 3, 2025, down from 2,410 stores at the beginning of the fiscal year, as part of its strategy to close underperforming locations.

Operationally, Foot Locker's customer engagement metrics showed mixed results. While total sales decreased, the direct-to-customer channel experienced a 5.4% increase in comparable sales, indicating a successful adaptation to changing consumer preferences. The company also transitioned its operations in Greece and Romania to a licensing partner, which is part of its broader strategy to streamline international operations. The total number of licensed stores increased to 236, up from 224 in the previous quarter.

Looking ahead, Foot Locker's management expressed cautious optimism regarding future performance, emphasizing the importance of adapting to market conditions and consumer trends. The company plans to invest approximately $300 million in capital expenditures for fiscal 2025, focusing on store remodels, technology enhancements, and supply chain improvements. However, management acknowledged the ongoing challenges posed by macroeconomic factors and consumer spending patterns, which could impact the company's recovery trajectory.