Foot Locker Should Benefit from Easy Comparison in Q1
A number of factors should positively benefit Foot Locker’s first quarter results slated to be disclosed on May 28. Most notably, in Q1/20 as the COVID-19 pandemic was spreading around the globe and forcing business closures, Foot Locker same store sales dropped 43 percent as its retail doors were open 50 percent of potential operating days. Currently, slightly more than 10 percent of Foot Locker’s store base is temporarily closed because of COVID restrictions.
Beyond the year-over-year sales comparison, Foot Locker’s first quarter results may be bolstered in the U.S. if federal stimulus checks reach consumers’ bank accounts by March 31 and if a new Nike Drop Ship pilot program shows early promise. The FL-NKE initiative will widen the Swoosh SKU availability to Foot Locker’s online customers.
Of course, a potential headwind to Foot Locker’s fortunes in the current quarter would be difficulties getting new, branded products from U.S. ports and into North American stores.
“The question on the ports and the flow is something that I’m not willing to predict and guess,” FL Chairman and CEO Dick Johnson told analysts Friday morning. “It’s all COVID as the port has slowed down due to COVID precautions. And workflows have slowed down. Once the products get into our portion of the supply chain, I feel really confident that our tea can move through the inventory and get in the right place very quickly.”
Foot Locker will continue to adjust its brick-and-mortar presence in 2021 amid the ongoing rise in online sales, which rose 44 percent in the fourth quarter as DTC rose to 27.4 percent of period revenues versus 18.7 percent in the year-ago quarter. The retailer intends to open approximately 100 stores this year, mostly in Asia; remodel or relocate another 130; and shutter 150 stores. The remainder of the retailer’s annual capital expenditure budget will be spent on digital and supply chain initiatives.