After phasing out Runners Point in Germany, the Foot Locker group is now planning to phase out its mall-based Footaction chain in the U.S. About two-thirds of its 230-odd stores will be closed over the next couple of years as leases expire, while the others will be converted to the Foot Locker banner or other banners within the group.
The company announced the strategic move in releasing very strong results for its first quarter, ended May 1. Total revenues jumped by 83.1 percent to $2,153 million, with increases of 79.4 percent in local currencies and 80.3 percent on a comparable store basis. Analysts had expected a much lower turnover of $1.86 billion. Even when compared with the pre-pandemic first quarter of 2019, Foot Locker’s sales in the latest quarter scored higher by 3.6 percent in dollars and by 2.4 percent on a constant-currency basis.
E-commerce was up by 47 percent from a year ago, but as stores were reopened in the U.S. and elsewhere, it made up 25 percent of the total turnover, down from 31 percent. In Europe, where the group’s stores were open for only 39 percent of the operating days, e-commerce remained strong and sales went up by more than 35 percent on a same-store basis. However, the German-based Sidestep chain, which experienced the highest number of closures, suffered a decline of more than 15 percent on a comparable store basis.
Besides the lifting of retail lockdowns in many parts of the world, the management credited the “freshness” of the company’s inventory for the better-than-expected performance. Recording increases in all regions, the group’s sales of footwear were up by more than 70 percent overall, led by North America and Asia-Pacific. Stimulated by the casualization trend, apparel and accessories jumped at a triple-digit rate.
A big reduction in promotional activity was partly offset by lower average selling prices due to the shift in the product mix toward apparel and accessories, but it was sufficient to boost gross margins. The company recorded a net profit of $202 million for the quarter, which compared with a loss of $110 million in the year-ago period and was 4 percent higher than in the first quarter of 2019.
Meanwhile, Foot Locker is making a big push with its FLX rewards program, which now has more than 20 million members around the world. It’s aiming to boost its analytic capabilities with the roll-out of new e-commerce sites opened in the last quarter in the U.K., the Netherlands, Germany and France.
During the quarter, the company opened 12 new stores, remodeled or relocated 15, and closed 58, ending with 2,952 stores in 27 countries, plus 131 franchises in the Middle East. The number of Foot Locker stores in Europe declined to 613 from 624 on Jan. 30, while Sidestep moved up from 76 to 78 units.
For the full financial year, the group is budgeting 160 new openings and 240 closures, the beginning of Footaction’s phase-out included. There are also plans for 120 remodelings or relocations.
