Shares of Foot Locker Inc plunged 25% premarket on Friday, after the footwear retailer cut its annual sales and profit forecasts reeling under a sharp drop in demand and a hit from heavy discounts aimed at clearing excess inventories.

The company also missed Wall Street estimates for its first-quarter results and named former Kohl's Corp executive Mike Baughn its new finance chief, effective June 12.  

U.S. consumers have sharply cut back discretionary spending, worn thin by persistent inflation. This dented sales at a wide range of companies, including big-box retailer Target Corp and home improvement chain Home Depot.

Foot Locker doubled down on promotions and markdowns to drive demand at its stores, which, coupled with a rise in theft-related inventory "shrink", dealt a 400-basis-point hit to its quarterly gross margin.

Organized retail crime has been a growing problem for retailers, with Target earlier this week also saying it could take a more-than-$500 million hit to profitability this year.

Foot Locker's gloomy report dragged shares of sportswear companies on Friday, with Nike Inc and Under Armour Inc dropping 3% each.

The company adjusted its forecast for full-year comparable sales to a fall of 7.5%-9%. It had expected a drop of 3.5%-5.5% earlier.

It also expects adjusted earnings of between $2.00 to $2.25 per share, much lower than the $3.35-$3.65 range estimated previously.

The company's revenue fell more than 11% to $1.93 billion in the quarter ended April 29, missing analysts' average estimate of $1.99 billion, according to Refinitiv IBES data.

Excluding items, Foot Locker earned 70 cents per share, which was also below estimates of 81 cents per share.

(Reporting by Deborah Sophia in Bengaluru; Editing by Janane Venkatraman)