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Foot Locker Facing a Brand(s) New World Ahead

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With Nike allocations and sell-ins to Foot Locker on the decline, especially for the all-important holiday period in Q4, the retail behemoth believes it can thrive in an adjusted merchandise environment flush with expanded product assortments from brands not adorned with Swoosh and Brand Jordan logos. There are new partnerships with Adidas and Reebok on tap, new assortments from the likes of Deckers-owned Hoka and On, and increased product allocations from New Balance among others.

“Our first quarter results continue to demonstrate our growing ability to expand our customer bases and delight them with a broader and richer product offering as we diversify our business across brands," Foot Locker Chairman and CEO Richard Johnson told analysts last week. “With our overall (Q1) comps down 1.9 percent, the majority of our top 20 vendors posted sales gains in the quarter from some of our biggest brands like Adidas and Puma and even more outsized growth from brands like New Balance, Crocs and … all of which were up over 50 percent.”

A recently struck enhanced partnership with Adidas establishes Foot Locker as the lead partner for basketball shoes from the Three Stripes and will expand the brand’s key franchises across women’s, kids, and apparel worldwide, targeting $2+ billion in annual retail sales from the effort by 2025. Nike basketball products will continue to be sold. Meanwhile, the Hoka brand will launch in Foot Locker doors this summer, part of the retailer’s renewed focus on the running category. 

Foot Locker’s current outlook for FY22 calls for a 4 to 6 percent overall revenue decline with comp sales forecast to drop 8 to 10 percent with Q2 and Q4 being the most difficult comparable periods. The retailer intends to lower its store count by 3 percent this year but reduce its total square footage by only 2 percent. 

“Our consumers want choice. And historically, we have not displayed the amount of choice that they’ve been looking for,” commented Johnson in response to a question. “We still have a number of customers that love Nike product, and they’re going to continue to love Nike product.”

During Q1, Foot Locker’s net profit slipped 34 percent to $133 million from $202 million on a 1 percent overall sales increase to $2,175 million that was aided by the addition of the WSS and Atmos businesses. North American same store sales were down 11.8 percent year-over-year as the prior period benefited from federal stimulus checks. 

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