The legal action, initiated by the firm Levi & Korsinsky, LLP, alleges that the company misled shareholders regarding the health of its Foot Locker acquisition. While management repeatedly signaled to analysts throughout early 2026 that inventory cleanup was complete, the company later revealed that stagnant legacy footwear continued to pressure sales and margins. This reversal prompted a sharp market reaction on August 25, 2026, when shares plummeted $55.02 to close at $124.31.

Financial analysts, including those from Baird and Barclays, expressed significant concern over the sudden shift in guidance. The company’s proforma comparable sales outlook for Foot Locker was slashed to a range of negative 2.0% to 0.0%, a stark contrast to earlier growth forecasts. Shareholders who incurred losses during the identified class period have until November 3, 2026, to apply for lead plaintiff status in the ongoing litigation.