Foot Locker announced on Friday that it will be winding down many of its Footaction stores "to position its store fleet for the future" and "to focus growth on its iconic banners," according to a company press release.
One-third of the Footaction locations will be converted into Foot Locker's other banners over the course of the year, while "the majority" of the remaining Footaction stores will be shut down as leases expire over the next two years. Chairman and Chief Executive Officer Dick Johnson said on a call with analysts that lease expirations will allow it to exit around 40% of its Footaction stores.
Foot Locker also reported earnings on Friday, posting net sales growth of 83% in Q1. Compared to 2019, net sales increased 3.6%. The company also swung back to a profit, recording net income of $202 million, compared to a net loss of $110 million a year ago.
Foot Locker is updating its store fleet, driven in part by the shift to digital inspired by the pandemic.
Foot Locker said in a press release that Footaction's closures will "enable it to better serve its consumers in a post-COVID marketplace." Johnson referenced the shift to digital specifically in the company's decision to close the stores, as well as convenient timing of some of the lease expirations for the banner.
"The map shows that 85% of our Footaction stores are located in proximity to one of our other banners," Johnson said, noting as well that the banner has a "fair amount of overlap" with its other banners in terms of customer and offering.
Footaction, which Foot Locker acquired in 2004, lags its other banners in terms of both productivity and profitability, according to Johnson. In 2020, the company tested changing some Footaction stores into Foot Lockers and those locations became more productive as a result of the shift, Johnson said, which helped inform the decision to convert many of those stores.
"Difficult as the decision is to do that, it's the right thing," Johnson said.
Champs Sports and Foot Locker specifically will replace some Footaction stores, Johnson said on the call. Foot Locker is also using the Champs Sports banner to boost its Eastbay banner offline, testing Eastbay stores that exist within Champs Sports locations.
Store improvements have been top of mind for Foot Locker for some time, with the retailer in 2020 committing to opening more of its power stores and remodeling locations. In Q1, Foot Locker opened 12 stores, remodeled or relocated 15, and closed 58, ending the period with 2,952.