Foot Locker announced on Friday that it will close most of its 231 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, such as Foot Locker and Champs Sports. Meanwhile "the majority" of the remaining Footaction stores will be shut down as leases expire over the next two years. In the release, Foot Locker said the strategic decision will enable it to "better serve its consumers in a post-COVID marketplace." Foot Locker also reported earnings on Friday, posting net sales growth of 83 percent in this year's first quarter. Compared to 2019, net sales increased 3.6 percent The company also posted a profit of $202 million, compared to a net loss of $110 million a year ago.
Total Retail's Take: This strategic decision by Foot Locker is a good one. According to a conference call with analysts on Friday, as reported by SBG Media, Dick Johnson, Foot Locker’s CEO, said the profitability and productivity of Footaction was below the company’s portfolio average. In fact, he said that in 2020 the company tested converting some Footaction locations to Foot Locker stores, specifically in Los Angeles and New York, and found those spaces became more productive. The test results were part of the reason for the strategic decision. Johnson also said Foot Locker periodically undergoes a banner review process that in the past has led to the closing of Runners Point in Europe in 2020 and a recent move to more closely align Champs Sports and Eastbay in the U.S. Finally, Johnson noted that 85 percent of Footaction stores are located in the proximity of one of its other banners, and that there’s “a fair amount of overlap from a consumer base” despite efforts over the years to differentiate banners with different product assortments and experiences.