Dive Brief:
- Foot Locker capped off the year with sales up 2% and comps down 0.7% in the fourth quarter, noticeably better than the company’s guidance. The retailer swung to a net loss, though, recording a loss of $389 million in the quarter, according to a company press release.
- For the year, sales fell 6.8% to $8.2 billion and the retailer swung from a $341 million net income to a $330 million net loss. The outlook for 2024 is more positive, with plans for sales to be down 1% to up 1%, and comps projected to be positive 1% to 3%.
- As Foot Locker continues its turnaround, the retailer is launching its first store of the future next month and has three more planned for later this year, CEO Mary Dillon said on a call with analysts. The retailer is revamping two-thirds of its global Foot Locker and Kids Foot Locker fleets over the next few years.
Dive Insight:
At Foot Locker, much of the turnaround hinges on changes to its store fleet. In addition to shuttering 400 mall-based stores by 2026, shutting down its Atmos stores in North America and winding down its Sidestep banner, Foot Locker is also investing in new store concepts.
The store of the future model will be immersive, informed by customer data and feature “powerful brand storytelling,” according to Dillon. Learnings from the format will help inform future store openings as well. But Dillon also said the retailer is focused on its “stores of the now,” acknowledging that its current fleet needs attention. Foot Locker piloted nearly 100 revamps to its fleet in the back half of 2023 with better merchandising, fixtures and branding, and it will now carry out a wider revamp in the years to come.
The retailer is temporarily putting less money into new stores for its WSS banner, which Foot Locker acquired alongside Atmos in 2021, after a challenging 2023 for the banner and its customers. And 40 more Champs stores will close this year, including 15 in the first half.
“The fiscal that has just closed was always billed as a year of resetting the business. As such, the poor results — which included a 6.8% decline in total sales — is partly excusable. However, it is important for Foot Locker to show its plans are delivering in the year ahead,” GlobalData Managing Director Neil Saunders said in emailed comments, noting that the next year will also be hard given the competitive sneaker market. “To attain — and hopefully beat — these numbers, Foot Locker will need to pull out all the stops and ensure it is on the right side of sneaker trends to build on its status as a destination for sneaker enthusiasts.”
Foot Locker has also been investing in its digital business, with digital penetration reaching about 20% and a new Foot Locker mobile app expected to drop later this year. Promising customer acquisition trends also mean the retailer is increasing its marketing and brand-building budget in 2024, including with a new campaign focused on fashion-forward female shoppers.
“The green shoots we’re seeing encourage us that this is the right path for us,” Dillon said of the retailer’s strategy.
