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About Foot Locker Retail, Inc.

Foot Locker is a leading retailer of athletic footwear with chains in the US and more than 25 other countries. It has about 2,200 Foot Locker, Kids Foot Locker, and Lady Foot Locker stores in the US as well as in Canada, Europe, and the Asia-Pacific region. The company's other chains -- totaling more than 1,000 stores -- include Champs Sports, Footaction, and SIX:02 (mostly located in the US) and Runners Point and Sidestep (mostly located in Europe). The primarily mall-based stores offer footwear, apparel, and accessories from leading global brands such as NIKE and adidas as well as emerging brands. Foot Locker also sells via ecommerce sites, mobile devices, and catalogs. The US market accounts for some 70% of total revenue.

Operations

Foot Locker's stores account for about 85% of total sales. The company has more than 1,700 Foot Locker stores, nearly 90% of which are in the US and Europe. It also operates some 425 Kids Foot Locker and about 60 Lady Foot Locker locations as well as the Champs Sports (some 535), Footaction (250), Runners Point (110), Sidestep (80), and SIX:02 (30) chains.

The remaining sales come through direct-to-customer channels such as ecommerce sites, mobile apps, and catalogs. It includes direct marketing business Eastbay.

Overall, more than 80% of the retailer's revenue comes from footwear sales. Foot Locker is highly dependent on NIKE, which supplies two-thirds of all its merchandise.

Geographic Reach

New York-based Foot Locker has stores across the US, as well as in Canada and some two dozen countries in Europe and the Asia-Pacific region. It is heavily reliant on the mature US market, however, which accounts for about 70% of total sales.

The company's five distribution centers are located in the US, Germany, and the Netherlands.

 

 

Sales and Marketing

Foot Locker sells primarily through its stores, but generates about 15% of revenue through ecommerce sites, mobile apps, and catalogs. Its websites are aligned with the brand names of its store banners (footlocker.com, ladyfootlocker.com, six02.com, kidsfootlocker.com, champssports.com, footaction.com, footlocker.ca, footlocker.eu, runnerspoint.com, and sidestep-shoes.com).

Eastbay is its direct marketing business, which offers footwear, apparel, equipment, and licensed merchandise to high school and other athletes in the US.

The company generally spends aboiut $180 million on advertising.

Financial Performance

Foot Locker's revenue has been growing over the past few years (up 11% since 2014) despite its store base shrinking. Net income has been a little more sporadic. It fell significantly in 2017, but rebounded in 2018.

In 2018 the company reported revenue of $7.9 billion, up 2% from the prior year. Comparable store sales increased nearly 3%, led by growth in the direct-to-customer channels as a result of an enhanced ecommerce customer experience and improved product assortments. 

Net income that year nearly doubled to $541 million on the jump in revenue and lower income tax expenses as a result of the Tax Act of 2017. Results were also impacted by a significant decline in pension litigation charges in connection with a 1996 conversion of the company's retirement plan. Foot Locker paid $18 million in charges in 2018 compared to $191 million in 2017.

Cash at the end of 2018 was $981 million, a decrease of $50 million from the prior year. Cash from operations contributed $781 million to the coffers, while investing activities used $274 million, mainly for capital expenditures. Financing activities used another $527 million for dividends to stockholders and the purchase of treasury shares. 

Strategy

As is the case across the entire retail industry, Foot Locker is embracing technology and innovation as keys to strengthening customer relationships. In 2018 the company invested in updating its digital platforms, relaunching its mobile apps, and rolling out new point-of-sale software. In addition, it began testing Radio Frequency Identification (RFID) technology. The retailer announced it would significantly increase its capital spending in 2019 to continue developing its digital and logistics capabilities and expand its newest store concept, the Power Store. With plans for more than a dozen locations in 2019, the Power Store offers full-family shopping while immersing local communities in sneaker culture; the stores feature custom art, city-centric products, and community-oriented events.

Foot Locker also took minority stakes in several business in 2018 as part of its goal to elevate the customer experience. Investments include two children's footwear and apparel firms (Rockets of Awesome and Super Heroic), a marketplace for primarily rare and ultra-exclusive sneakers and other shoes (GOAT Group), and a school for shoe designers (Pensole Footwear Design Academy). In addition, it took a stake in women's luxury active apparel company Carbon38, which fits with the retailer's strategic mission of growing its women's business.

The company has been shuttering stores as it focuses more broadly on its omnichannel strategy, which markets to customers online and via mobile apps as well as through physical locations. It closed about 135 stores in 2018 and has plans for another 165 closures in 2019. 

Company Background

Woolworth, established in 1879 as a five-and-dime store, introduced athletic shoe chain Foot Locker in 1974. It later developed Lady Foot Locker (1982) and Kids Foot Locker (1987).

Foot Locker Retail, Inc.

330 WEST 34TH ST
New York, NY 10001-2406
Phone: 1 (800) 991-6815

Stats

Employer Type: Privately Owned
Senior Vice President: Jeffrey Berk
Director Information: Vikki Heath
Director, Isand T Financial Planning: Dan Whinnie
Employees (This Location): 750
Employees (All Locations): 30,000

Major Office Locations

New York, NY