Retail Apocalypse Hits Foot Locker, Again
Foot Locker, among 23 companies experiencing a “retail apocalypse”, announced on Friday that it would be closing an additional 110 under-productive stores in 2018; after closing 147 locations in 2017. Mall-centric retailers are struggling as consumer traffic has declined in favor of an e-commerce sales experience. FL is said to be working to reduce its exposure to “deteriorating malls”, instead focusing on opening up 40 “select, high-profile” stores (company opened 94 in ’17).
Howie Long-Short: Foot Locker posted disappointing Q4 ’17 financials (same store sales declined 3.7%), reporting a net loss of $49 million. Sluggish sneaker/apparel sales were blamed for the steeper than expected decline. The Q4 results combined with projections anticipating ’18 sales to be “flat to up low single digits”, sent shares tumbling 12.69% (to $40.04) at Friday’s close. It wasn’t all bad news though, Q4 2017 sales did increase 5% YOY (to $2.2 billion) and the company foresees an H2 ’18 recovery on the horizon. It’s worth noting that FL invested $15 million into Carbon 38, a luxury women’s active apparel company, during Q4 ’17.
Fan Marino: While declining athletic footwear (not a single performance sneaker placed in the Top 10 for ’17 footwear sales) and apparel sales are hurting FL’s business, athleisure as a trend remains popular; continuing to outpace dress and casual. That’s good news for me (I’m a big joggers and t-shirt guy), but better news for Sweat Tailor; a privately-held company that has managed to combine the comfort of sweatpants with the fit/style of jeans/dress pants. You need to check out their 5 pocket pants; they’re a game-changer. Oh, and if you use the code “JWS-ST” you’ll get 25% off. This is NOT a paid advertisement. I’m just looking to introduce a great product.
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