Companies

Foot Locker unveils long-term growth strategy

Mar 22, 2023 United States

After announcing its full year and fourth quarter results, in which both sales and earnings declined over fiscal 2021, the US-based retailer introduced its long-term growth plan ‘Lace Up’

In the fourth quarter of fiscal 2022, the company's comparable-store sales increased by 4.2%, as compared to the same period of the prior year, “driven by increased traffic and improved access to high-quality inventory, resulting in broad-based strength across brands and regions”.

But due to the effect of foreign exchange rate fluctuations, Foot Locker's total sales were down by 0.3%, reaching 2.33 billion US dollars, on a comparable basis to sales of 2.34 billion US dollars in a similar quarter of fiscal 2021.

In the three months to the 28^thof January, the retailer's gross margin declined by 290 basis points, year-over-year, mostly due to “higher markdowns on increased promotional activity across the industry”.

Foot Locker's fourth quarter net income declined to 19 million US dollars, or 0.20 US dollars per diluted share, from 103 million US dollars, or 1.02 US dollars per diluted share, in the same quarter of fiscal 2021.

Full Year 2022

The US-based retailer reported all-year-round sales of 8.74 billion US dollars, on a comparable basis to sales of 8.95 billion US dollars recorded over fiscal 2021.

In the twelve months to the 28^th of January, Foot Locker's net income was 342 million US dollars, or 3.62 US dollars per diluted share, as compared to a net income of 893 million US dollars, or 8.61 US dollars reported in the previous fiscal year.

Store Base Update

At the end of fiscal 2022, the company operated 2 714 stores in 29 countries in North America, Europe, Asia, Australia, and New Zealand. Additionally, 159 franchised stores were operating in the Middle East and Asia.

The company also announced that as part of its efforts to simplify the business model in Asia will be closing its stores and e-commerce in Hong Kong and Macau, converting its currently owned and operated stores and e-commerce in Singapore and Malaysia to a licence model, while continuing to operate stores in South Korea. Growth in the region is to be pursued through licence partners.

Outlook

For fiscal 2023, Foot Locker is expecting sales to decline between 3.5% to 5.5% over 2022 and non-GAAP earnings per share between 3.35 US dollars and 3.65 US dollars. “We are entering 2023 with a focus on resetting the business – simplifying our operations and investing in our core banners and capabilities to position the Company for growth in 2024 and beyond”, commented Mary Dillon, President and Chief Executive Officer of Foot Locker.

To that end, the company has announced the “Lace up” Plan, centred around the expansion of the sneaker culture, promoting more differentiation among banners, including re-launching the Foot Locker brand, deepening relationships with customers and the improvement of the omnichannel experience. The goal is to reach from fiscal 2024 through fiscal 2026 total sales growth of 5% to 6%, comparable sales growth between 3% to 4% and adjusted earnings per share growth in the low-to mid-twenties.

Image Credits: sneakernews.com

United States Companies Foot Locker, Inc. Footwear Quarter Results Results Sneakers Strategy Year Results