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 3,350 specialty stores in 20-plus countries in North America and Europe, as well as Australia and New Zealand. Its 1,900-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. In addition to 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.
Foot Locker appears to be picking up speed in the sales and profit race, after stumbling during the recession. In fiscal 2012 (ends January), Foot Locker saw its sales increase by about 11% and net income grow nearly 65% vs. the prior year. (The previous annual comparison saw sales increase 4%, while net income jumped by more than 250%.) Still, the $5.6 billion in sales Foot Locker rang up in fiscal 2012 was below its pre-recession peak of $5.7 billion. Sales have increased despite a reduction in store count. The chain has trimmed the number of stores across its US chains, while expanding its international retail presence. Foot Locker's direct-to-consumer business posted a double-digit sale gains in 2012, on the heels of a gain of more than 6% in 2011.
While Foot Locker has met its near-term goal of improving sales and profitability -- as outlined in a strategic plan unveiled in 2010 -- longer term the company is looking to expand its footwear and apparel offerings to attract a more-diverse customer base and grow the business internationally. (Foot Locker is heavily dependent on athletic-shoe-giant NIKE, which supplies more than 60% of its merchandise.) Hicks wants Foot Locker to become the leading global retailer of athletic shoes and apparel. Already about 30% of Foot Locker's revenue is earned outside the US and that share is growing. Foot Locker is expanding in Europe, while continuing to reduce its US store count due to declining footwear sales here. Going forward, the retailer plans to open 80 new stores in fiscal 2013, many outside the US. Its recent strong financial performance has led Foot Locker to update the sales and profit objectives set forth in its 2010 strategic plan. The revised plan aims to grow overall sales to $7.5 billion (up from the previous goal of $6 billion), increase sales per square foot of selling space to $500 from $400, and increase its net income margin to 7% from 5%, all by 2015.
Mergers & Acquisitions
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. CSS also operates more than 20 retail shops, an increase of about 10 locations since it was acquired in 2008. – less