Foot Locker Will Close 400+ Mall Stores, Open New "Concept Stores" In Their Place
The company also touted its renewed partnership with Nike.
Foot Locker is looking to re-energize its business by closing up to 420 underperforming mall stores and opening up to 300 “concept stores” by 2026. Part of the company’s new “Lace Up” business plan, the news was announced by Foot Inc. CEO Mary Dillon in an investor day event today, March 17, 2023.
Per a report from Business Insider, Foot Locker’s “concept stores” will be free-standing stores that fall into one of three categories: “community” stores “power stores” and “house of play” stores. The “community” concept will be 15,000-square-foot stores that are designed to be placed in areas with a “strong affinity for sneakers,” (ie New York City, Chicago or Los Angeles). The “power store” is a 10,000-square-foot model that Foot Locker says will offer an “elevated experience” to a “broad set of consumers.” One of these “power stores” is already open in Dallas, and Dylan noted that it’s “attracting an older and higher-income shopper.” Lastly, the “house of play” is a 7,500-square-foot-store that will be geared towards kids’ products, a potential evolution of Kids Foot Locker. Currently, Foot Locker operates roughly 1,300 stores in the US, and by 2026, the company expects 50% of its revenue to come from stores outside of malls — currently, outside-of-mall revenue is 35% of Foot Locker’s business.
The store plan wasn’t the only noteworthy piece of news from the investor day event. Dylan touched on a “renewed commitment” with Nike, stating “I have spent a great deal of time with Nike, revitalizing our partnership, developing a shared vision of the future marketplace [and] aligning on growth plans in key strategic areas like basketball, kids, and sneaker culture. The fruits of our renewed commitment to one another will begin to show up in holiday this year.” This follows a February 2022 announcement that Foot Locker would be carrying less Nike product as the Swoosh pivoted towards smaller boutiques and its own in-brand channels, an announcement that caused Foot Locker stock to drop 35%.
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Since then, Foot Locker has improved its relationship with other brands like Reebok and adidas, filling the retro basketball and lifestyle void left by Nike’s departure by becoming the exclusive big box retailer for Reebok’s retro basketball releases like the Question and the lead partner for adidas Basketball. Now, they appear to be following the same model as they re-expand their partnership with Nike. Dillon also mentioned that Foot Locker is again sharing data and insights with Nike, which could indicate that they’ll be the brand’s next “connected inventory” partner, a Swoosh initiative that aims to provide more targeted selections to consumers.
Don’t expect to see Dunks, rare Jordan Brand releases or any Tier 0 drops at Foot Locker though: much like they are with Reebok and adidas, Foot Locker will serve as a launching pad for Nike Basketball shoes and initiatives. Key styles of which they’ll have increased stock are retroed and new models from LeBron James and Kevin Durant’s signature lines, as well as Air Force 1s. Meanwhile, the House of Hoops brand will spotlight signature shoes from younger stars on the Swoosh roster like Ja Morant and Jayson Tatum.
“Nike will continue to be the largest brand partner, and we’ve revitalized our Nike relationship, and both companies are committed to growth,” said Foot Locker CMO Chris Santaella. “The partnership is focused on creating a strategy that is complementary to the Nike direct-to-consumer strategy.” A final takeaway from the presentation is that Foot Locker wants to double its sales of smaller brands it carries — like HOKA, Salomon, Crocs and On — by 2026.
Despite all these initiatives, Wall Street is decidedly bearish on the company: Foot Locker’s shares were down more than 5% for the day even though the stock market as a whole was in the green.
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