Shares of Footstar Inc. and
Finish Line Inc. fell after the two athletic-shoe retailers cut
profit forecasts because of disappointing back-to-school sales.
Stocks of shoemakers including Reebok International Ltd. and Nike
Inc. dropped.
Footstar and rival Finish Line each said in statements that
sales at their mall-based stores have been less than expected
during the back-to-school season, which for many retailers is the
second most-important behind Christmas.
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“People don’t really buy expensive shoes anymore,” said
Andre Pardue, 16, who was wearing a pair of $80 Nike shoes in
Atlanta. “It’s not that they don’t want to pay a lot. There are a
lot of (lower-priced) shoes that appeal nowadays.”
Athletic-shoe retailers including No. 1 Foot Locker Inc. are
selling fewer higher-priced sneakers as teenagers spend less
because the faltering economy made part-time and summer jobs
harder to find, analysts said. Spending by teens has typically
been less affected by the economy, investors said. Profit margins
also were hurt as stores held more promotions.
“There’s no such thing as truly recession proof” with
teens, said Steve Monticelli, president of Mosaic Investments LLC,
which has $25 million in assets under management, including Foot
Locker shares.
Consumers have reduced their purchases of items such as shoes
and clothing even as homes and autos are selling at record or near-
record levels because of cheap financing.
New homes sold in July at the fastest pace ever as mortgage
rates headed toward three-decade lows, a Commerce Department
report on Monday showed. That same month, autos sold at the best
pace of the year as General Motors Corp. reintroduced zero percent
financing. Retail sales excluding cars and autos failed to rise in
July, a separate government report showed.
Bloomberg News
