Foot Locker’s annual investor day this week, presided over by its new President and CEO Mary Dillon for the first time, was a split decision. Two analysts questioned the retailer’s long-term financial targets after guidance for 2023, described as a transition year, came in well below expectations. Conversely, two investment houses, Evercore ISI and Citi, raised their outlooks on Foot Locker yesterday based on some actions already taken that have already begun, including a moving away from mall-based stores; cozying up again with the Swoosh; and focusing on loyalty programs, digital and kids’ products going forward.

Citi analyst Paul Lejuez presented opposing views on Foot Locker on consecutive days. On Monday, he told his clients that the retailer’s sales guidance was likely overly aggressive as he reiterated a neutral rating on FL shares. The next day, he said Foot Locker’s conservative guidance would set the groundwork for the retailer to exceed profit expectations later this year before increasing full-year guidance as he forecast 25 percent upside for FL shares.

Part of Foot Locker’s transformation plan under Dillon, which is forecast to escalate annual sales growth to 5 to 6 percent between FY24 and FY26, will focus on core banners and regions. Other goals for this transitional period include resetting the retailer’s Nike penetration, repositioning its Champs Sports’ business, and driving down costs.

Foot Locker, already a leader in the $80 billion sneaker market, thinks it has some advantages going forward under Dillon’s tutelage, namely a mass casualization trend that has accelerated through more hybrid work models, performance footwear brands such as On and Asics becoming more mainstream and “sneakers as self-expression” among male and female youth.

The retailer says it already has strong relationships with four of the five types of sneaker consumers that it wants to grow further. An estimated 29 percent of the overall sneaker market consists of “sneaker mavens,” a segment that accounts for 41 percent of Foot Locker’s sales. Active athletes, which make up 21 percent of the overall athletic shoe market equal about 19 percent of FL’s revenues. Fashion-forward enthusiasts represent 21 percent of the market and 21 percent of the retailer’s sales. So-called “Quality Seekers” account for 13 percent of Foot Locker purchases but 17 percent of the overall sneaker market, and “Deal Finders” represent 12 percent of all purchases but only 6 percent of those made inside one of Foot Locker’s banners.