Foot locker CEO Mary Dillon on Monday touted a “renewed” and revitalized relationship with Nikeincluding a focus on what she called “sneaker culture.”
Foot Locker shares fell more than 1%. The sneaker and sportswear retailer also announced its quarterly results on Monday morning.
In the holiday quarter, which ended Jan. 28, Foot Locker reported revenue of just under $2.34 billion, slightly lower than the previous year. Its profit for the period was $19 million, or 20 cents per share, compared with $103 million, or $1.02 per share, a year earlier. Excluding one-time items, earnings per share were 97 cents, down from $1.46.
For the current fiscal year, which will include an additional week, Foot Locker expects sales and comparable sales to be down 3.5% to 5.5%, with adjusted earnings per share of 3. $35 to $3.65.
The retailer plans to close around 400 underperforming mall stores, but said it will open around 300 new-format stores.
Since Dillon took over as CEO of Foot Locker in September, she has spent “a lot of time with Nike revitalizing our partnership” after Nike moved away from wholesale channels to focus on expanding direct sales to consumers. consumers.
“Of course, Nike is our biggest brand partner and the industry leader. From day one, I was welcomed into the industry by John and Heidi and their team,” Dillon said of the CEO. of Nike’s John Donahoe and Heidi O’Neill, its consumer and market president.
Dillon, the former CEO of Ultimatesaid Foot Locker and Nike have “reestablished joint planning, as well as data and information sharing”.
“The fruits of our renewed commitment to each other will begin to show over the holidays this year as we build growing momentum through 2024 and Foot Locker’s 50th anniversary,” Dillon said.
Over the past few years, Nike has worked to grow its direct-to-consumer business and with it, severed partnerships with many wholesale accounts so it can expand its e-commerce channels and open new stores.
However, like other retailers, Nike has been stuck with an inventory glut brought on by pandemic-related supply chain challenges in recent quarters and has relied on these wholesale partners to release this product.
In its fiscal second quarter that ended Nov. 30, Nike’s wholesale revenue rose 19% for the quarter after being effectively flat in previous quarters.
“We starved the wholesale channel for six to eight quarters due to supply constraints and as we had supply constraints we were prioritizing adequate stock levels within NIKE Direct and we so we’re seeing strong demand as we return to our wholesale partners with available supply,” Matthew Friend, Nike’s chief financial officer, told investors during an earnings call in December.
In January, when asked about Nike’s direct-to-consumer plans during an interview with CNBC, Donahoe spoke about the importance of an omnichannel model.
“Our strategic wholesale partners, partners like Dick Sporting Goods or Foot Locker or JD, are very, very important because consumers want to be able to try products, they want to be able to touch and feel,” Donahoe said. “And so we invested in strengthening those strategic relationships.
While Nike was happy to get rid of that extra inventory in its last quarter, Foot Locker is now dealing with its own glut of footwear and apparel that it’s struggling to get off the shelves. At the end of its fiscal fourth quarter, inventory was $1.6 billion, about 30% higher than a year ago, though down slightly from the fiscal third quarter.
As part of its new strategy under Dillon, Foot Locker is reviewing its store footprint with the aim of generating revenue and acquiring new customers. While it plans to close around 400 underperforming malls in North America, it plans to grow its new-format stores from around 120 to more than 400 by 2026.
New formats include Foot Locker community stores, grocery stores and its gambling den concept.
