FOOT Locker pushed back a plan to expand its sales to US$9.5 billion by two years after a sluggish 2023.
The projection, unveiled a year ago, is expected to be achieved by 2028, the company said. The strategy involves diversifying brand offerings, opening new store formats and bolstering loyalty programmes. The retailer posted about US$8.2 billion in annual sales in the fiscal year ended Feb 3, down nearly 7 per cent from the prior period.
The retailer predicted adjusted earnings of US$1.50 to US$1.70 a share for this fiscal year, falling short of analysts’ expectations. The shares fell as much as 24 per cent on Wednesday (Mar 6).
“We’re still committed,” chief executive officer Mary Dillon said in an interview. “We believe that continuing to invest in these strategies are what is required to help us to make sure that we’ll be a modern, vibrant retailer.”
Comparable store sales – a key retail metric – were down 0.7 per cent for the quarter, the company said in a statement, a much smaller drop than analysts anticipated. Management expects to return to positive comparable store sales, forecasting a 1 to 3 per cent rise in 2024.
But the retailer had to use more discounts to achieve that sales performance last quarter, and that hurt profit margins, Paul Lejuez, an analyst for Citigroup, wrote in a research note.
New York-based Foot Locker’s performance last year heightened concerns that shoppers were reining in discretionary spending as costs of living soared, with the company leaning on heavy discounts to clear excess merchandise throughout 2023. Inventories fell 8.2 per cent last quarter.
“Our consumers, they’ve been exposed to prolonged inflation, food costs, rents – those kinds of things reduce savings,” said Dillon. “But we do see that they are coming out for the right products at the right time.”
Expanding Foot Locker’s reach in sneaker culture is a top priority and the retailer has been broadening its offerings to be less dependent on Nike shoes, said Dillon. Last quarter, Foot Locker reached its goal of having 40 per cent of its business in brands other than Nike, she said. BLOOMBERG
