Shares of Foot Locker cratered over 30% in premarket trading on Wednesday, and dragged down those of its rivals, after the retailer lowered its annual forecasts as it reels from weaker consumer demand in the face of still-high inflation.

The athletic-wear retailer also missed expectations for quarterly sales, said it would pause its dividend payouts and flagged softer demand in July, which is typically when back-to-school shopping starts.

"We did see a softening in trends in July and are adjusting our 2023 outlook to allow us to best compete for price-sensitive consumers," CEO Mary Dillon said.

The shares of the company's larger rivals Nike, Dick's Sporting Goods and Under Armour fell between 2% and 4% in premarket trade. Shares of European peers Adidas and Puma skidded 4% to 6%.

Foot Locker's warnings kept the pressure on sportswear retailers after they tumbled on Tuesday when Dick's Sporting Goods also cut its full-year profit targets, slammed by hits to its margins from retail theft.

Foot Locker also said its quarter was hit by inventory shrink, or retail theft, and steeper discounts. Its second-quarter gross margins slumped 460 basis points.

It now expects sales to fall 8.0% to 9.0% this year, compared with its previous forecast of a drop of 6.5% to 8.0%.

The company trimmed its annual earnings per share forecast to $1.30-$1.50 from $2.00-$2.25.

(Reporting by Juveria Tabassum; Editing by Savio D'Souza)