Foot Locker Inc. and CEO Mary Dillon today rolled out a multi-pronged strategy to help it increase market share and grow sales to $9.5 billion by 2026.
Dubbed its “Lace Up” plan, the new strategy will aim to grow Foot Locker Inc.’s business to more than $9.5 billion in annual revenue by 2026 by diversifying its brand portfolio, relaunching the Foot Locker brand with new store formats focused on an off-mall presence, maximizing its loyalty program and investing in technology to enhance the customer journey.
For fiscal years 2024 through 2026, Foot Locker expects total sales growth of between 5% and 6%, comparable sales growth of between 3% and 4% and adjusted EPS growth in the low- to mid-20s.
The retailer also outlined its guidance for the full fiscal year of 2023, and expects sales to be down between 3.5% and 5.5%. Comparable sales are also expected to be down between 3.5% and 5.5%. Non-GAAP EPS is expected to be in the range of $3.35 and $3.65.
“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,” said Dillon in a statement.
Here’s a closer look at the four key pillars of the new strategy:
Foot Locker wants to tap into different classes of sneaker consumers — from sneaker mavens to deal seekers — to grow its market share. To do this, Foot Locker plans to capitalize on key sneaker moments and anniversaries while offering consumers a broad selection of brands and styles. Exclusive launches and collaborations will also fuel demand.
Part of this pillar involves reigniting a strong brand partnership with Nike, which will remain Foot Locker’s largest brand by sales. As the standout brand in the retailer’s portfolio, Nike will make up between 55% and 60% of Foot Locker’s total sales mix by 2026, Foot Locker chief merchandising officer Chris Santaella said. (Nike made up 70% of sales in 2021 and 75% of sales in 2020.)
In addition to a renewed focus on basketball product, Foot Locker and Nike will align on product for Kids Foot Locker and partner on celebrating key sneaker moments, such as the 25th anniversary of the Tuned Air franchise this year and Foot Locker’s 50th anniversary in 2024.
Foot Locker also plans to lean into other brands such as Adidas, Puma, New Balance, Crocs, Hoka, On and Under Armour.
The second pillar focuses on optimizing Foot Locker’s fleet and unique store banners. This involves closing a number of underperforming stores, opening new formats in off-mall locations and positioning the Foot Locker brand as a community builder. Overall, Foot Locker plans to close about 400 locations to focus on higher performing doors.
At Kids Foot Locker, the goal is to “develop the next generation of sneaker enthusiasts” by leveraging the chain’s unique high-heat assortment of kids merchandise, said Santaella.
At Champs, Foot Locker will focus on serving an active and wellness-focused consumer. WSS will continue to serve the Hispanic market and capture more demand in that growing demographic. In Japan, the company’s Atmos banner will serve as a ground for innovation while being rooted in Japanese culture.
The Asia business is also getting an overhaul: Foot Locker said it would close all stores and e-commerce operations in Hong Kong and Macau and convert business to to a license model in Singapore and Malaysia. In Indonesia, leading lifestyle retailer MAP Active will take over Foot Locker operations in Singapore and Malaysia and grow the company’s presence in new markets as well.
Foot Locker wants to connect to consumers through a variety of channels, including in stores, digitally, on social media and via events. A key part of this relationship will come from a renewed focus on the FLX loyalty program, which Foot Locker said will win over more members via its integration into the sales journey.
In the long-term, Foot Locker is aiming to have loyalty sales account for 70% of total sales, up from 25% currently. The company also plans to integrate paths to join FLX and Nike’s loyalty program as well, further cementing the relationship between the two entities.
Along with its in-store experience revamp, Foot Locker also sees an opportunity to grow the percentage of its digital sales. By 2026, Foot Locker aims to have digital sales penetration be about 25% of sales, or about $2.5 billion.
At the same time, the company wants to blend both digital and physical channels into one seamless omnichannel experience. To do this, Foot Locker plans to relaunch its app in 2024 and also plans to optimize certain omnichannel capabilities, such as being able to see a store’s inventory availability in real-time and offering a variety of fulfillment options for online orders.