Foot Locker parent slashes outlook, sending shares plunging... a warning sign of a U.S. consumer collapse?

[Financial News]  

DICK'S Sporting Goods, the parent company of Foot Locker, said on the 25th local time in its quarterly earnings report that it had lowered its full-year sales and profit outlook. Shares plunged as much as 27% intraday.
The weaker outlook for Foot Locker's sales and earnings suggests that U.S. consumers are tightening their spending amid financial strain. Concerns are growing that consumption, a key component that accounts for more than three-quarters of the U.S. economy, may be starting to crack.
According to the Financial Times (FT), Ed Stack, CEO of DICK'S, told analysts during an earnings conference call that "there is too much inventory in the industry." He added that consumers are becoming "more cautious than expected because of the geopolitical environment."
Although it had been expected that consumers would cut back on other spending as gasoline prices surged after the Iran war launched by President Donald Trump on February 28, the decline has far exceeded forecasts. Stack stressed that footwear products, especially sneakers, have been hit hard.
Recent U.S. retail sales and consumer sentiment indicators show that many Americans are struggling with higher living costs driven by President Trump's tariffs and the Iran war. Discretionary spending, one of the first categories consumers cut when budgets are tight, has been particularly hard hit. As prices for essentials such as fuel rise, consumers are reducing spending on these nonessential items. As a result, the S&P 500 discretionary consumer goods index on the NYSE fell 5% last month.
U.S. consumer sentiment is also falling sharply.
The University of Michigan's consumer sentiment index for August, released on the 14th, fell 7.6% from the previous month to 51.0. Older adults and lower-income households were hit especially hard psychologically by the surge in gasoline prices. Crude oil prices have risen about 40% since the outbreak of the Iran war.
Susan Collins, president of the Boston Fed, told FT in a recent interview that poor U.S. consumers are finding it "hard to put food on the table" as war-driven pressure on living costs intensifies.
According to the U.S. Department of Commerce, retail sales in July fell 0.6% from the previous month, marking the sharpest decline in more than a year. The shift of Amazon Prime Day sales to June this year was a major factor, but economists say a slowdown in U.S. consumption is unavoidable.
The slowdown at Walmart Inc., the world's largest brick-and-mortar retailer, also suggests that these concerns are becoming reality.
Walmart's share price plunged last week after its quarterly earnings report showed that U.S. sales growth had slowed to its weakest pace in more than six years.
Meanwhile, DICK'S lowered its full-year net sales forecast to $21.9 billion-$22.2 billion from $22.1 billion-$22.4 billion. It also cut its operating profit outlook to $1.45 billion-$1.55 billion from $1.69 billion-$1.81 billion.


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