Dive Brief:
- Foot Locker CEO Dick Johnson said the retailer has made “significant progress” in diversifying its assortment, improving omnichannel and other key initiatives. In the first quarter, the retailer signed deals with Reebok and Adidas to increase its offering of those brands.
- Johnson said on Friday that the company has reached an agreement with Deckers Brands to sell Hoka footwear starting this summer and will continue to make new partnerships to diversify its offerings. The company’s private labels also are continuing to gain steam, Johnson said.
- Net sales in the first quarter were up 1% to $2.18 billion, while comp sales decreased nearly 2%, per a company press release. Non-Nike comps increased “in the high teens,” according to Chief Financial Officer Andrew Page. Net income also fell, by 34.7%, to $132 million.
Dive Insight:
Much of Foot Locker’s focus remains on building out a more robust assortment after the company announced in February it would sell less Nike product. Johnson noted to analysts that Foot Locker is underpenetrated in “virtually all of our brands outside of our top three,” and therefore has a lot of room to grow.
“Nike does a tremendous job … they create great product. They create great stories and our consumer has followed that and we’ve followed that with our consumer,” Johnson said. “As we add more brands to the portfolio, I do believe that we’ll be stronger and I believe that the overall sneaker marketplace will certainly be stronger.”
Foot Locker has already expanded its relationships with other brands and so far, the strategy has “worked exceptionally well,” according to GlobalData Managing Director Neil Saunders.
“Our fear is that the efforts Foot Locker has made cannot and will not override choppiness in the demand environment over the year ahead,” Saunders said in emailed comments. “A lot of sneaker buying is discretionary and, over the past 18 months, quite a bit of demand has been fueled by consumers being flush with cash thanks to stimulus payments.”
Saunders also noted the impact of day-trading, crypto investments and NFTs, which have given some young consumers “a nice stream of income” for sneaker purchases. “Our view is that these favorable dynamics are now petering out,” Saunders said.
Foot Locker in Q1 also opened its first “Homefield” concept store, which is performing well so far, Chief Operating Officer Frank Bracken said on the call. The company’s new Atmos and WSS banners, acquired last year, are also doing well. CFO Page said they contributed $49 million and $138 million, respectively.
