Foot Locker, Inc. Accused of Misleading Investors About its Financial Prospects
According to the complaint, Foot Locker, Inc. (NYSE: FL) touted the company’s outstanding track record of meaningful sales and profit growth in its public filings, while continuing to assure investors of the company’s strong vendor relationships and solid financial position. However, Foot Locker’s vendors were transitioning to selling through online retailers, in turn decreasing the utility of Foot Locker’s brick and mortar stores. In addition, Foot Locker faced increased pricing competition and lower demand at its stores due to competition from online retailers. On August 18, 2017, Foot Locker reported that its 2Q17 revenues had declined 4.4% year-over-year and same store sales fell 6%. The company further announced that it would close approximately 130 stores and that it expected weaker sales for the remainder of FY17. Since Foot Locker began releasing poor financial results, the company’s stock fell over 51% to close at $34.38 per share on August 18, 2017.
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