About 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 3,400 specialty stores mostly in US malls, but also in 20-plus countries in North America and Europe, as well as in Australia, and New Zealand. Its 1,830-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. Beyond 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.

Operations

Through its subsidiaries, Foot Locker operates in two reportable segments: Athletic Stores and Direct-to-Customers. The Athletic Stores segment, which generated 88% of Foot Locker's revenue in fiscal 2015 (ended January 31), 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. Some 78 of its shops were franchised in FY2015. The Direct-to-Customers segment (12% of revenue) includes Footlocker.com and other affiliates, including Eastbay and CCS, which sell to customers through websites, mobile devices, and catalogs.

Foot Locker boasts more than half a dozen distribution centers worldwide, as well as third-party agreements to supports its operations in the US, Canada, Germany, Australia, and New Zealand.

Overall, about 79% of the retailer's revenue came from footwear sales in FY2015 (up from 76% in FY2013), while the remainder came from apparel and accessories sales.

Geographic Reach

Foot Locker has stores in 23 countries in North America, Europe, Australia, and New Zealand. The retailer generates around 70% of its sales in the US. Europe is its next largest market, where it operates more than 600 stores and rings up about $2 billion in sales.

Sales and Marketing

Foot Locker is heavily dependent on athletic-shoe-giant NIKE -- which supplied 73% of its merchandise in FY2015 (ended January 31) -- and four other key suppliers (including Adidas), which supplied another 16%.

The retailer spent $104 million on advertising in FY2015, compared to $102 million and $107 million in fiscal years 2014 and 2013.

Financial Performance

Foot Locker's revenues and profits have been growing over the past few years despite its store base staying flat around 3,400 stores. This is because the retailer has managed to grow its same-store sales to $490 per average gross square foot in fiscal 2015 (ended January 31) from $360 in 2010, while shrinking its selling, general, and administrative costs over the same period.

The retailer's revenue jumped 10% to $7.15 billion in fiscal 2015 (ended January 31) thanks to a 6.7% rise in same-store sales, driven by Kids Foot Locker, Foot Locker US, Footaction, and Foot Locker Europe (including added sales from its Runners Point store acquisitions in 2013). Children's footwear continued to perform well across several of its stores. The company's direct-to-consumer revenue grew by 21% during the year as well, partly thanks to the newly added Runners Point e-commerce division.

Higher sales in FY2015 drove Foot Locker's net income up 21% to $520 million. The retailer's operating cash levels spiked 34% to $712 million thanks mostly to higher cash earnings as well as favorable changes in working capital stemming from an increase in accounts payable and other liabilities balances.

Strategy

While Foot Locker has met its near-term goal of improving sales and profitability, the retailer is looking to expand its footwear and apparel store lines to attract a more-diverse, and international customer base. During FY2015, for example, more than one-third of Foot Locker's 86 store openings were Kids Foot Locker stores, while another 20% of openings were Champs Sports or Runners Point stores. At the same time, the retailer closed a net 32 Foot Locker stores (almost all in the US) and a net 44 Lady Foot Locker Stores (closing about one-fifth of the feminine brand's total store base). In 2014, it rolled out its Eastbay Performance Zone at Champs Sports, which offers customers the full range of Eastbay's elite-level products.

With sales maturing in the US, Foot Locker has been closing domestic stores in favor of expanding into other countries (particularly in Europe) to become the leading global retailer of athletic shoes and apparel. In FY2015, the company opened a new distribution in Germany to support growing business in the region, especially after its 2013 acquisition of Recklinghausen-based Runners Point. Meanwhile during FY2015, the company closed a net 29 stores in the US.

Mergers and Acquisitions

In 2013, the footwear retailer acquired Runners Point Warenhandelsges, a specialty athletic store and online retailer headquartered in Recklinghausen, Germany, as it continued its expansion plans into the strongest economy in Europe. The deal, valued at €72 million Euros ($94 million), gave Foot Locker shops in Germany that operated 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.

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EASTBAY, INC.

111 S 1st Ave
Wausau, WI 54401-4625
Phone: 1 (800) 826-2205
Fax: 1 (715) 261-9950
www.eastbay.com

Stats

  • Employer Type: Public
  • Chief Executive Officer, President And Director: Harry Colcord
  • Vice President Human Resources: Carrie Madson
  • Pres: Dowe Tillema

Major Office Locations

  • Wausau, WI

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