EASTBAY, INC.

Foot Locker leads the pack in the race to capture the biggest share of the global athletic footwear market. The company is a leading retailer of athletic shoes and apparel, with more than 3,320 specialty stores in 20-plus countries in North America and Europe, as well as Australia and New Zealand. Its 1,900-store namesake Foot Locker chain is the #1 seller of name-brand (NIKE) athletic footwear in the US. The company also operates stores under the Lady Foot Locker, Kids Foot Locker, Footaction, Champs Sports, and CCS banners. In addition to its bricks-and-mortar business, Foot Locker markets sports gear through its direct-to-customer unit, which consists of catalog retailer Eastbay and Footlocker.com.

Geographic Reach

Foot Locker has stores in 23 countries in North America, Europe, Australia, and New Zealand.The US is the chain's largest market, followed by Europe, where it operates more than 600 stores and rings up more than $1 billion in sales.

Operations

Through its subsidiaries, Foot Locker operates in two reportable segments: Athletic Stores and Direct-to-Customers. The Athletic Stores segment, which generates 90% of Foot Locker's revenue, is one of the world's largest athletic footwear and apparel retailers with banners Foot Locker, Lady Foot Locker, Kids Foot Locker, Champs Sports, Footaction, and CCS. Accounting for the remaining 10% of revenue, the Direct-to-Customers segment includes Footlocker.com and other affiliates, including Eastbay and CCS, which sell to customers through websites, mobile devices, and catalogs.

To supports its business, the company operates four distribution centers. It uses third-party suppliers to support its operations in the US, Canada, Australia, and New Zealand.

Financial Performance

Following one of its best years during a difficult five-year period, net sales for Foot Locker increased 10% in fiscal 2013 (ends January) as compared to 2012 due to a 9% increase in same-store sales driven by higher footwear sales. Footwear sales represented 76% of total sales. Apparel and accessories sales also rose, representing 24% of total sales.  Athletic Stores sales increased 9% and accounted for 90% of the company’s total net sales. Net income increase 43% during the same reporting period. The company points to a boost in net sales, partially offset by the increase in SG&A expenses, for the net income gains. SG&A expenses increased mainly due to higher variable expenses to support sales, such as store wages and banking expenses. Foot Locker spent $8 million more than in 2012 on marketing and advertising to support its strategic objective of differentiating its formats.

Strategy

While Foot Locker has met its near-term goal of improving sales and profitability -- as outlined in a strategic plan unveiled in 2010 -- longer term the company is looking to expand its footwear and apparel offerings to attract a more-diverse customer base and grow the business internationally. (Foot Locker is heavily dependent on athletic-shoe-giant NIKE, which supplies more than 60% of its merchandise.) Hicks wants Foot Locker to become the leading global retailer of athletic shoes and apparel. Already about 30% of Foot Locker's revenue is earned outside the US and that share is growing. Foot Locker is expanding in Europe, while continuing to reduce its US store count due to declining footwear sales here. Going forward, the retailer plans to open more stores outside the US. Its strong financial performance in fiscal 2012 led Foot Locker to update the sales and profit objectives set forth in its 2010 strategic plan. The revised plan aims to grow overall sales to $7.5 billion (up from the previous goal of $6 billion), increase sales per square foot of selling space to $500 from $400, and increase its net income margin to 7% from 5%, all by 2015.

Mergers and Acquisitions

Foot Locker is looking to get a leg up in Germany as it chases after the strongest economy in Europe. To this end, the footwear retailer acquired Runners Point Warenhandelsges, a specialty athletic store and online retailer headquartered in Recklinghausen, Germany in July 2013. The deal, valued at 72 million Euros ($94 million), gives Foot Locker shops in Germany that operate under the Runners Point and Sidestep banners, as well as stores in the Netherlands, Austria, and Switzerland.

The purchase of CCS, a direct marketer of skateboard and snowboard equipment, apparel, and footwear that targets teenage boys, helped boost the company's online presence. CSS also operates more than 20 retail shops, an increase of about 10 locations since it was acquired in 2008.

Sales and Marketing

Advertising expenses for fiscal 2013 reached $107 million; its ad spending in 2011 was lower at $99 million.

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EASTBAY, INC.


111 S 1st Ave
Wausau, WI 54401-4625
Phone: 1 (800) 826-2205
Fax: 1 (715) 2619950
www.footlocker-inc.com

STATS


  • Employer Type: Unknown
  • Chief Executive Officer: Richard Johnson
  • Chair: Cody Ryn
  • President: Matthew Serra

Major Office Locations

  • Wausau, WI
  • Wausau, WI

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