Foot Locker Joins Retail Rout, Nvidia Countdown, Peloton Plummets 8/23/23

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Carl Quintanilla (0:31)

Market moving insight and analysis. Join Jim Cramer, David Faber and me, Carl Quintanilla, on the opening bell hour of CNBC's Squawk on the Street.

Good Wednesday morning, welcome to Squawk on the Street. I'm Carl Quintanilla with Jim Cramer, David Faber at Post 9 of the New York Stock Exchange. Future's pretty steady, but we got a bunch of movers, especially in consumer, as Foot Locker and Peloton get crushed on results. Meantime in Europe, PMI's a 33 month low, dollar getting a bounce even with the 10 year back to four and a quarter. Our roadmap begins with a retail reckoning. Foot Locker is the latest to cite consumer softness, slashing their guidance, and Nike notching the longest losing streak since the IPO.

David Faber (1:08)

Shares of Nvidia, well, they've hit record after record of late and are potentially higher ahead of the open. Investors, of course, will be closely watching those quarterly results. They will be delivered after the bell.

And how about some concern about housing? Mortgage demand is dropping to its lowest level in 28 years. Toll Brothers, though, out with earnings and points to a supply-demand imbalance in the market.

Carl Quintanilla (1:33)

Let's begin with Foot Locker, though, extending the retail route we've seen the last couple of days. Quarterly revenue missed, slashing their guidance, suspending the dividend. CEO Mary Dillon says the company saw a softening of trends in July, Jim. And we've mentioned Nike and this losing streak we've seen the last nine days.

Jim Cramer (1:50)

And so, look, Mary's got, she turned around Ulta, took her a couple quarters to get it righted. You could argue she could turn around Foot Locker. I would point out, and I think this is important, they do have 180 mil in cash. They have 600 million credit line and they will have to use it.

I've known her for a long time and she's got great strength of character, which is what's gonna be needed because David, frankly, when you have minus nine, same store, and August continues, and you got a lot of stores you gotta close, and you have a lot of inventory, I mean, a huge amount, almost two billion, you don't have to discount the heck out of it. I believe Mary, and so far, it's been a mistake, but she's got a track record of being able to turn around, it's just, the clock may be ticking here.

David Faber (2:38)

Yeah, as you point out, comp store sales down 9.4%, gross margin down 460 basis points compared with the prior year period. As Jim just said, of course, that probably means you got to get rid of a lot of inventory.

Jim Cramer (2:52)

More than a billion dollars.

David Faber (2:54)

And by the way, we're talking about a market cap now that may actually fall below two billion dollars. I mean, it's a small company. Jim, you said it's been a mistake. You're getting a lot of heat. It always happens to you because you've been positive on the stock.

Jim Cramer (3:08)

I've made a mistake. I mean, that's what happens.

David Faber (3:10)

Do you, what do you do here though? When you're down, when you're looking, obviously, all right, you made a mistake, it happens. We always talk about the fact that, hey, you get some right, you get a lot right, you get the same wrong.

Jim Cramer (3:19)

For me, I got a travel trust. I mean, at the end of the year, if this stock's still there, I'll take the loss.

It's been horrendous. I bought stock when she bought stock. She came home mad money. She traced out a plan. The plan has so far not worked.

I banked on her because she had been successful at her previous place. That's a very good learning lesson for members of the club that just because someone's done very well at a previous place, if the situation is too difficult, and Foot Locker is a very, very difficult situation because now you're dealing with younger people who are stretched. You've got problems with student loans. You've got a demographic of people who just, frankly, don't have the money to have before. The shoes are going up.

So my take is that, I mean, the two takes here, she is very optimistic, but she has gotten it wrong. And I believed in her optimism and I got it wrong. And I think that it's incumbent upon our guests who come on our show to be a little like I do and show humility at the same time. It's not incumbent on our guests to make mistakes. I got this wrong.