As it approaches its 50th anniversary in 2024, Foot Locker has outlined a new transformation strategy “designed to set us up for success for the next 50 years,” said the company’s President and CEO Mary Dillon at an investor presentation on March 20, 2023.
The company posted a slight dip in sales in Q4 2022, which ended Jan. 28, 2023, with sales down 0.3% to $2.33 billion from the $2.34 billion generated in Q4 2021. Comparable store sales in the quarter grew by 4.2% YoY.
Now Foot Locker is “entering 2023 with a focus on resetting the business,” said Dillon. The plan to do that — dubbed “Lace Up” — will include simplifying operations and investing in “core banners and capabilities.” In particular, the company is looking to double down on the growing sneaker culture to help “unlock the inner sneakerhead in all of us.”
Citing the growing popularity of sneakers among consumers of all ages and lifestyles, the company is looking to push its advantage in the category by enhancing its focus on “all things sneakers,” investing in new technologies and streamlining its business. That streamlining will include the closure of approximately 400 underperforming mall stores by 2026, which will be replaced with approximately 300 new format stores, including the Community, Power and House of Play concepts, according to CNBC. Other plans include a reset of the retailer’s loyalty program and the development of an enhanced omnichannel experience.
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Included in the planned closures are 125 underperforming Champs Sports locations that will be shuttered this year, according to CNN. The company already closed 101 stores in Q4 2022 and also remodeled or relocated 45 others while opening 21 new locations. As of the end of January 2023, the company operated 2,714 stores across 29 countries in addition to 159 franchise stores in the Middle East and Asia.
Foot Locker’s largest brand partner, Nike, will be central to the retailer’s renewed focus on “sneaker culture.” The brand will continue to lead Foot Locker’s portfolio, making up 55% to 60% of its product mix, and the partnership will be “revitalized” with a product concept to celebrate Foot Locker’s 50th anniversary in 2024, according to CNN.
Foot Locker also announced plans to simplify its business model in Asia by closing all its stores and ecommerce operations in Hong Kong and Macau and converting its currently owned-and-operated stores and ecommerce in Singapore and Malaysia to a license model with partner MAP Active, which already manages the brand in Indonesia and the Philippines. Foot Locker will continue to operate its stores in South Korea and plans to pursue additional growth in Asia through other license partners.
While the strategy now has a formal name, transformation initiatives have been ongoing at Foot Locker over the past year, including a reconfiguration of the company’s C-suite, a new ecommerce partnership with Fanatics, the winding down of the Sidestep banner in Europe and the halting of a planned expansion into Japan.
