The headline numbers, $0.39 worth of earnings this year versus $0.94 last year, with comparable store sales down 6%, were bad enough.
But the commentary was downright catastrophic: sales down across all genders, "sales of some recent top styles fell well short of expectations" and a stunning decline in the once sacred Nike (NKE) -Jordan line and the recent love, the Steve Smiths from Adidas (ADDYY) .
Richard Johnson, who is a darned good executive, said: "We are obviously disappointed in the results for the quarter and our team is working quickly to adjust to a changed retail landscape in which we see our consumers move faster than ever from one source of inspiration or influence to another."
The problem is the company simply can't do it fast enough. Or, as Johnson said at the beginning of the call: "The disruption taking place today in our industry and in retail in general is the most significant I have seen in my quarter of a century in the athletic business. The fact is that we are seeing mobile technology drive shifts in consumer behavior and spending patterns at a faster pace than our industry has been able to keep up with."
The reaction to the decline seems anything but anticipatory. Foot Locker (FT) has closed more than 1000 stores since 2010. It is closing even more stores than the 100 it laid out at the beginning of the year. It's staying premium, which it says hasn't been encroached on by Amazon (AMZN) , although the under $100 shoes have.
But this is the line that sent chills through me: "double-digit declines in basketball" shoes.
What's really going on? First, the long-running love with the Jordans suddenly ended. "Today's kid really needs" sneakers connected to a story, and even though the relationship with Jordan is still part of the marketplace, it's not enough. The double-digit decline speaks to it all, and it is a total shocker. Second, the consumer quickly moved on from Stan Smiths. Wow, here today, gone tomorrow. That $12 million Under Armour (UA) paid Steph Curry for his endorsement? Not even a mention.
But perhaps just as important is a comment Johnson threw away in the call: "This consumer has access to an awful lot of information about the product." In other words, it's harder and harder to charge a premium price given how much the consumer, using a mobile phone, knows. We keep hearing this issues throughout the reporting period. I think price discovery is as important as the role of Amazon making it so that the consumer is so wise to all price increases.
The company still has almost $1.2 billion in buyback money, which is significant on a $4.5 billion basis. However, this now reminds me of Bed Bath and Beyond (BBBY) , which had 243 million shares five years ago and a market capitalization of $14 billion, versus $3.9 billion today with 142 million shares. You might as well have burned the money. (Bruce Kamich has had a look at the technicals and you can read his story here for more on how that happened).
Yep, despite the huge decline in the stock, it represents little value. It's just no longer the opportunity on weakness it once was. Not now, at least not yet, until the company can get some traction with something, anything. Right now, there's really nothing I see that can turn this chain back to the juggernaut it was just a few years ago.