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Foot Locker stock plunges after blaming tax-refund lag for slowdown

Fri., May 19, 2017, 8:27 a.m.

Consumer shopping at House of Hoops during the Foot Locker 34th Street Grand Opening on Tuesday, Aug. 30, 2016 in New York. (Bennett Raglin / AP Images)
Consumer shopping at House of Hoops during the Foot Locker 34th Street Grand Opening on Tuesday, Aug. 30, 2016 in New York. (Bennett Raglin / AP Images)

Foot Locker Inc. suffered its worst stock decline in more than eight years after first-quarter results missed analysts’ estimates, an outcome the retailer blamed in part on slow income-tax refunds.

The shares tumbled as much as 17 percent to $58.13, the biggest intraday plunge since the financial crisis was underway in November 2008. Foot Locker was Friday’s biggest decliner in the Standard & Poor’s 500 Index by a wide margin.

The athletic-shoe chain blamed “unprecedented challenges” last quarter — especially in February, when same-store sales plummeted by a percentage in the low teens. February is typically one of the biggest months of the year for Foot Locker, but a lag in consumers receiving their tax refunds hampered results, the New York-based company said.

Foot Locker joins a long list of retailers blaming the delays. Just this week, Wal-Mart Stores, Advance Auto Parts, L Brands and Ross Stores cited the effect when reporting quarterly sales. It’s hard to tell how much credence investors lend to the tax-return complaint, but broader concerns about retail have made life hard on chains that miss estimates.

Foot Locker reported first-quarter earnings of $1.36 a share, trailing the $1.38 predicted by analysts. Its sales came in at $2 billion in the period, which ended April 29. The average estimate was $2.02 billion.

“The first quarter was one of our most profitable quarters ever, but it did fall short of our original expectations,” Chief Executive Officer Dick Johnson said in a statement. “The slow start we experienced in February, which we believe was largely due to the delay in income-tax refunds, was unfortunately not fully offset by much stronger sales in March and April.”



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