Foot Locker Plunges Due To Amazon's Rising Market Share

Shares of Foot Locker plunged nearly 30% on Friday afternoon after their quarterly earnings report significantly underwhelmed expectations. Shares of the company now trade at $34.48, which is a significant discount from the nearly $80/share levels that they were trading at earlier this year.

The story of Foot Locker is the story that many retailers and grocers have experienced over the past year or so - Amazon or the threat of Amazon entering a new market has caused a cratering of share prices.

We saw this earlier in the year when Amazon announced that they would be purchasing Whole Foods - other grocers tanked, as Amazon has proven that they have the reach and Amazon Prime membership numbers and sophisticated operational efficiencies to disrupt any industry that they are even considering entering. We also saw this in the meal preparation industry, as shares of Blue Apron have been absolutely decimated since their initial public offering thanks to Amazon's promised entry into the industry.

For Foot Locker, the story is the same - Amazon is taking market share in the footwear industry and this is resulting in weaker earnings reports for their competition.

As of this moment, Amazon has reportedly 9% of US athletic footwear market share, well off of the over 30% market share that Foot Locker currently commands.

This is obviously changing, however - by 2022, Amazon is expected to have nearly 20% market share, at the expense of Foot Locker and everybody else that is competing in the industry (department stores, etc).

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Some analysts believe that the market is over-reacting to the news, as Amazon typically focused on more affordable footwear, while the higher end shoes generally get sold at Foot Locker.

The market, however, believes that there is plenty of reason to worry, thanks to the 800 pound gorilla that is available.

Is it really outlandish to think, the market wonders, that Amazon will start to take over the high-end shoe market as well, especially with their customer-friendly return policies?

Filed under: General Market News