Foot Locker's Dividend Is in Trouble
Footwear retailer Foot Locker (NYSE: FL) is having all sorts of trouble coping with the current economic environment. Sales plunged 11.4% year over year in the first quarter, with comparable store sales down 9.1%. Adjusted profits crashed by more than 50%, free cash flow fell deep into negative territory, and inventories rose dramatically.
The company declared its standard quarterly dividend of $0.40 per share, but investors shouldn't expect that payout to stick. Dwindling cash reserves and plunging profits will make it difficult for the company to continue returning cash to shareholders.
Foot Locker was already expecting 2023 to be a rough year, but its performance in the first quarter prompted it to slash its guidance. Previously, Foot Locker expected a comparable sales decline between 3.5% and 5.5%. Now, it sees a decline of between 7.5% and 9%.
Source Fool.com
