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Athletic shoe and apparel retailer Foot Locker reported a 71% drop in net income Wednesday on markdowns at U.S. stores and lower same-store sales. Q1 net income fell to $17 million ($0.11/share) from $59 million ($0.38) a year ago. Same-store sales dropped 5.1%. Q1 net sales were down 3.6% to $1.32 billion from $1.365 billion in the year-ago quarter. Analysts were expecting EPS of $0.11 on revenue of $1.32 billion. The company has provided EPS guidance of $0.15-0.20 for Q2 and $1.15-1.25 for the full year. CEO Matthew Serra: "Because of the disappointing sales at our U.S. stores, we increased our promotional posture to help clear older goods and reduce inventory levels...As a result, our gross margin in our U.S. store businesses fell significantly short of our plan." The company's shares traded down 1.9% to $21.82 in AH trading.

Sources: Press release, MarketWatch, MoneyCentral
Commentary: Jim Cramer's Wall Street Confidential Picks, May 21Is A Finish Line Inc. Turnaround Approaching?
Stocks/ETFs to watch: Foot Locker, Inc. (FL). Competitors: Finish Line Inc. (FINL), Wal-Mart Stores Inc. (WMT). ETFs: Retail HOLDRS ETF (RTH), SPDR S&P Retail (XRT), PowerShares Dynamic Retail (PMR)

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Source: Foot Locker Posts Sharp Drop in Q1 Net Income