Foot Locker Stock Just Took a Big Hit

Friday was a rough day for Foot Locker, as the global sneaker chain saw its shares drop 26 percent after posting lackluster results in its Q2 2017 earnings report. Foot Locker's sales in the quarter were down 4.3 percent on a currency-neutral basis, and adjusted earnings per share fell way below expectations.

"It goes without saying that our second quarter performance clearly fell short of our expectations," CEO Dick Johnson said on the company's earnings call with shareholders. "We are obviously not satisfied with these results, and we're dedicated all our energy to ensure that we get our performance back on the right track."

Over the course of the call Johnson, along with Foot Locker EVP and CFO Lauren Peters, explained the reasons behind the shortcomings and what they hope to do to correct them. Their responses provide insight into how some of the most powerful people in the world of sneakers see the industry at the moment.

Scroll down for five key takeaways from Foot Locker's Q2 2017 earnings call.

"Sales of some recent top styles fell short of our expectations. In North America, for example, the sell-throughs of certain Jordan models slowed considerably compared to historical rates. In Europe, we planned certain Adi original styles—such as Superstars and Stan Smiths—down substantially, but they declined even more than expected." — Johnson

"We were affected by the limited availability of innovative new products in the market. The old, multi-season 'seed, ignite, and rollout' of key footwear platforms just doesn't work as effectively anymore. In addition, the absence of sufficient depth and breadth of exciting new styles in the premium athletic channel also seems to have drawn some customers to marked-down product." — Johnson

"We do not believe our vendors selling directly on Amazon is an imminent threat. There is no indication that any of our vendors intend to sell premium athletic product—the $100-plus sneakers that we offer—directly via that sort of distribution channel. For lower price, largely undifferentiated product, sure, Amazon and other online sales channels are increasing their share of the sneaker market. However, we believe our vendors agree with us that consistently selling their premium aspirational product requires great storytelling, great relevance to the influences in our customers lives, as well as engaging digital and in-store experiences." — Johnson

"We’ll be closing more stores this year than the 100 we mentioned at the beginning of the year. However, due to the disciplined investment process we followed in recent years, and the related increase in productivity he have achieved, we don’t believe we have a store productivity problem in our core banners or store fleet overall that is significantly too large." — Johnson

"We currently expect to close at least 135 stores, up from the 100 we previously guided to. We still expect to open about 90 new stores, which is unchanged from our previous guidance." — Peters

"Even though we saw some slowdown in some key models, we saw some great successes with things like the 6 Rings, the Son of Mars, the Spiz'ike, the Dub Zero—all very very positive. It’s the right story, the right product, the right connectivity with the customer that makes all the difference." — Johnson