As Foot Locker‘s turnaround plan takes hold, the company is rolling out more changes aimed at improving the business.
The sneaker retailer on Wednesday announced that it would move its global headquarters to St. Petersburg, Fla. in 2025 while maintaining a smaller presence in its current New York City office. Foot Locker also announced the upcoming opening of its Global Technology Services (GTS) Hub in Dallas, which will serve as the heart of the retailer’s tech capabilities and innovations.
Details about the moves and impact on company positions were not immediately disclosed.
“St. Petersburg has always been a center of gravity for the company,” Foot Locker president and chief executive officer Mary Dillon told FN in an interview. “Champs is headquartered there. We have a large center of gravity with executives already there across many of our commercial functions. And so for us, it’s an opportunity to bring together more of our team in one place, to drive more collaboration across the business. But we’re also going to keep a presence in New York to keep us connected to sneaker culture and basketball culture.”
On the international front, Foot Locker said it would shut down stores and e-commerce operations in South Korea, Denmark, Norway and Sweden while expanding operation in Greece, South East Europe and Romania via a licensing partner, Fourlis Group.
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“We’re always looking at how we can simplify and optimize the business as we move forward and to really bring greater focus to our core banners, our core markets and improve our profitability,” Dillon said.
For the second quarter, Foot Locker reported revenue growth of 1.9 percent to $1.896 billion, in line with the $1.89 billion expected by analysts surveyed by Yahoo Finance. Net loss was $12 million in the second quarter, compared with a net loss of $5 million in Q2 the prior year. Non-GAAP loss per share was 5 cents, which was ahead of analysts’ expectations of a loss of 7 cents.
Notably, comparable sales saw positive growth for the first time in six quarters and was up by 2.6 percent. This was led by 5.2 percent bump in global Foot Locker and Kids Foot Locker comparable sales.
“We’re pleased with our strong performance in the second quarter and really believe it indicates that the Lace Up plan is working,” Dillon said, referring to Foot Locker’s strategic plan announced in 2023 to diversify its brand portfolio mix, relaunch the Foot Locker brand with new store formats focused on an off-mall presence, maximize its loyalty program and invest in technology to enhance the customer journey.
Just last week, Foot Locker reopened its Manhattan Herald Square store on 34th Street after updating its interior design and layout in line with Foot Locker’s broader retail enhancement plan. In Q2, Foot Locker remodeled or relocated 14 stores, refreshed 67 stores, closed 31 stores and opened five new stores.
Foot Locker also saw positive results from the launch of its new and improved loyalty program, FLX Rewards, in the U.S. in Q2. While the launch contributed to a non-recurring $11 million charge, Dillon said metrics for enrollment pace and engagement with first time redeemers was positive and that members had higher average order values compared to non loyalty members. Penetration for the loyalty program was highest in July, which was the retailer’s strongest sales month in the quarter thanks a strong start to the back-to-school season.
Also in the second quarter, the percentage of non-Nike brand sales held steady at 40 percent, in line with the company’s goal to have more than 40 percent of its brand mix be outside Nike by 2026. Dillon highlighted standout brands like Adidas and New Balance.
“As we think about expanding sneaker culture, we’re finding that there’s a lot of sneaker occasions and we can feed into those for different people at different times,” Dillon said. “And as we look at the pipeline of innovation coming with the brands, I’m excited about that as well.”
Foot Locker reaffirmed its outlook for fiscal year 2024 and expects sales to be between down 1 percent and up 1 percent. Comparable sales are expected to be up between 1 and 3 percent and Non-GAAP EPS is expected in the range of $1.50 to $1.70. Foot Locker downgraded its outlook for gross margin, which is now expected to be between 29.5 percent and 29.7 percent, due to promotional pressure in the international business and the WSS banner.
