After releasing strong quarterly results Footlocker Inc. announced it will call it a day for its Footaction chain. During a call with analysts that followed their financial release, the company’s leadership shared their thought process.
Asked whether there was a substantial overlap between Foot Locker stores the Footaction ones, Richard A. Johnson, chairman and CEO at the athletic shoes group, explained they followed a similar process than that of last year when they close Runners Point.
“We identified key points in time that if we have to make moves, then we’ll make moves. So I think the math tells us that 85 percent of our Footaction stores are located in proximity of one of our other banners. So there is a fair amount of overlap from a store base, there’s a fair amount of overlap from a consumer base, even though the great work that the Footaction team has been doing of late to try to separate with different product assortments, etc.”
“We’ll be turning our focus on Foot Locker, Champs, Eastbay and Kids Foot Locker,” Johnson said. “We are assessing each Footaction location and determining the best move for each, whether they should turn into Foot Locker stores or close. We are taking advantage of lease expiration too,” further added Johnson.
Footaction stores to be totally gone by 2023
Regarding the timing, Johnson pointed out that “given the timing of the lease expiries, given the timing of the digital effort that we’ve seen, this is the time to make this decision.” He referred to the fact that in the next two years, approximately 40 percent of the Footaction stores will go through a natural lease expiry. In the meantime, about a third of the chain’s stores will be repositioned into either Foot Locker Champs Sports. “As difficult as the decision is to do that, it’s the right thing to make sure that we continue to drive value for our shareholders, and we continue to drive productivity up for all of our banners that are remaining,” reassured the company’s CEO.
As Foot Locker’s management reviewed their entire portfolio, they realized Footaction’s productivity and profitability run below the portfolio’s average.
Image: Footaction store, Mall of America, NYC