diff --git a/.changeset/fix-setup-branch-naming.md b/.changeset/fix-setup-branch-naming.md
new file mode 100644
index 0000000..0772c6e
--- /dev/null
+++ b/.changeset/fix-setup-branch-naming.md
@@ -0,0 +1,5 @@
+---
+"@fnebenfuehr/worktree-cli": patch
+---
+
+Fix setup and clone commands: use correct branch-to-directory naming (slashes to dashes) and properly stop spinner on setup error
diff --git a/src/commands/clone.ts b/src/commands/clone.ts
index 6c2ff1a..415ab38 100644
--- a/src/commands/clone.ts
+++ b/src/commands/clone.ts
@@ -4,7 +4,7 @@ import { writeConfig } from '@/lib/config';
 import { FileSystemError, GitError, ValidationError, WorktreeError } from '@/utils/errors';
 import { move } from '@/utils/fs';
 import { gitGetCurrentBranch } from '@/utils/git';
-import { extractRepoName } from '@/utils/naming';
+import { branchToDirName, extractRepoName } from '@/utils/naming';
 import { intro, isInteractive, outro, promptGitUrl, spinner } from '@/utils/prompts';
 import { tryCatch } from '@/utils/try-catch';
 import { isValidGitUrl, VALIDATION_ERRORS } from '@/utils/validation';
@@ -65,7 +65,7 @@ export async function cloneCommand(gitUrl?: string): Promise<number> {
 			);
 		}
 
-		const targetDir = `${repoName}/${defaultBranch}`;
+		const targetDir = `${repoName}/${branchToDirName(defaultBranch)}`;
 		await move(tempClone, targetDir);
 		await writeConfig(targetDir, { defaultBranch });
 
diff --git a/src/commands/setup.ts b/src/commands/setup.ts
index 564e8bb..b5c481d 100644
--- a/src/commands/setup.ts
+++ b/src/commands/setup.ts
@@ -1,15 +1,18 @@
 import * as worktree from '@/lib/worktree';
 import { gitGetCurrentBranch } from '@/utils/git';
-import { cancel, intro, isInteractive, outro, promptConfirm, spinner } from '@/utils/prompts';
+import { branchToDirName } from '@/utils/naming';
+import { cancel, intro, isInteractive, log, outro, promptConfirm, spinner } from '@/utils/prompts';
+import { tryCatch } from '@/utils/try-catch';
 
 export async function setupCommand(): Promise<number> {
 	const currentBranch = await gitGetCurrentBranch();
+	const targetDirName = branchToDirName(currentBranch);
 
 	if (isInteractive()) {
 		intro('Setup Worktree Structure');
 
 		const confirmed = await promptConfirm(
-			`Convert repository to worktree structure? Current branch '${currentBranch}' will be moved to ./${currentBranch}/`,
+			`Convert repository to worktree structure? Current branch '${currentBranch}' will be moved to ./${targetDirName}/`,
 			true
 		);
 
@@ -22,7 +25,13 @@ export async function setupCommand(): Promise<number> {
 	const s = spinner();
 	s.start('Converting repository structure');
 
-	const result = await worktree.setup();
+	const { error, data: result } = await tryCatch(worktree.setup());
+
+	if (error) {
+		s.stop('Setup failed');
+		log.error(error.message);
+		return 1;
+	}
 
 	s.stop('Repository converted successfully');
 	outro(`cd ${result.worktreePath}\nworktree create feature/<branch-name>`);
diff --git a/src/lib/worktree.ts b/src/lib/worktree.ts
index 9cadb87..42c0841 100644
--- a/src/lib/worktree.ts
+++ b/src/lib/worktree.ts
@@ -376,7 +376,7 @@ export async function setup(targetDir?: string): Promise<SetupResult> {
 	}
 
 	const tempDir = `.tmp-worktree-setup-${process.pid}`;
-	const targetDirName = targetDir || currentBranch;
+	const targetDirName = targetDir || branchToDirName(currentBranch);
 
 	const itemsToRollback: string[] = [];
 	let interrupted = false;