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Sector Snap: Athletic Shoe Retailers

11.05.2007 16:30 Shopping - Source: Forbes

Athletic shoe makers and retailers declined on Friday, after Foot Locker Inc. cut its first-quarter outlook due to weak sales at established stores and markdowns at stores nationwide.

After the market closed Thursday, the company slashed its profit forecast to well below analyst expectations.

On Friday, shares dropped $1.66, or 7.1 percent, to $21.61 during morning trading, having fallen to a new 52-week low of $20.82 earlier in the session.

Buckingham Research Group analyst John Zolidis lowered his earnings estimates on Foot Locker (nyse: FL - news - people ) and said he expected the stock to take a "significant dive" on Friday, but maintained his "Accumulate" rating, calling the company an "undisputed leader in its space."

"In addition, investors in Foot Locker win if fashion shifts back towards performance and technical product, in the event that a leveraged buyout is resuscitated, or if the company can make an accretive acquisition," he said in a note to clients.

However, Foot Locker's warnings sent shock waves throughout the sector.

Shares of rival athletic footwear retailer Finish Line Inc. (nasdaq: FINL - news - people ) tumbled 88 cents, or 6.4 percent, to $12.88 during morning trading. The stock has traded between $9.55 and $15.18 during the past 52 weeks.

"We believe Finish Line's first-quarter results might reflect weaker-than-expected trends, mirroring its main mall competitor, Foot Locker," said CIBC World Markets Corp. analyst Shekar Sujata in a client note late Thursday. "We see no signs of a turnaround in mall-based athletic footwear store sales trends."

Some footwear makers were hurt by the announcement as well. Nike Inc. (nyse: NKE - news - people ) shares slipped 26 cents to $53.05.

In the sporting goods retail sector, Dick's Sporting Goods (nyse: DKS - news - people ) seemed to be the only one affected.

Dick's Sporting Goods shares dropped 91 cents, or nearly 2 percent, to $52.91, while Big 5 Sporting Goods Corp. (nasdaq: BGFV - news - people ) shares rose 6 cents to $24.76. And Cabela's Inc. (nyse: CAB - news - people ) shares rose 54 cents, or 2.4 percent, to $22.69.

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Sector Snap: Athletic Shoe Retailers

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