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Two beaten retailers that could sink to new lows next week

Talk about getting kicked while you're down.

Shares of Foot Locker and Dick's Sporting Goods have fallen 57 and 50 percent respectively this year, and according to David Seaburg of Cowen, the two sneaker stocks could face bigger hurdles when they report next week. Here's why:

  • "There is absolute risk to these companies cutting guidance," Seaburg said Friday on CNBC's "Trading Nation." Foot Locker fell more than 20 percent following its earnings report in August after the company slashed its guidance to factor in a slow start to the year. Meanwhile, shares of Dick's Sporting Goods plunged nearly 25 percent following its last earnings report after it cut its full-year outlook.
  • The struggling retailers will continue to face cyclical and structural pressure, Seaburg added. "Brands like Nike and Adidas are focused on building out their direct-to-consumer channel, which will continue to put significant pressure on the wholesale channel," he said. At Nike's investor day last month, the company CEO outlined its growth targets, which includes a new direct-to-consumer push and plans to sell its products on Amazon.
  • If Foot Locker and Dick's Sporting Goods were to trade lower, Seaburg expects Nike to feel the heat. "From a sentiment perspective and from disappointing earnings out of these two names I think Nike could probably drift lower as well," he said.

Bottom line: Seaburg says disappointing earnings could send shares of Foot Locker to $28 and Dick's Sporting Goods to $22.

For Foot Locker, analysts are largely expecting an earnings per share of 80 cents, according to FactSet estimates. For Dick's Sporting Goods, analysts on average are expecting earnings per share of 26 cents.

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Brian Sullivan is co-anchor of CNBC's "Power Lunch" (M-F,1PM-3PM ET), one of the network's longest running programs, as well as the host of the daily investing program "Trading Nation." He is also a frequent guest on MSNBC's "Morning Joe" and other NBC properties.

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