Saddled with some excess inventory following a Q3 where its apparel/accessory sales were down high-single digits, Foot Locker will offer discounts on apparel this holiday season as it prepares for a category shift away from big logo garb to clothing with cleaner aesthetics.
“While the overall apparel business remains healthy, the (Q3) results were affected by a fashion shift away from select branded sportswear programs that in prior quarters had helped drive strong results in the category,” President and CEO Dick Johnson told analysts on Friday. “On top of that, we felt the impact from our strategic move away from the private label business and tough comparisons in the licensed (apparel) category.”
Johnson cited current work being done by Foot Locker team members to generate more “connectivity” between footwear and apparel offerings. “I think it’s progress…And I think the team is definitely moving that way and we’re getting to be a little bit better at apparel.”
Footwear comps were up high-single digits in Q3, bolstered by double-digit growth in kids and high-single expansion in men’s where men’s basketball rose double-digits and running raced to mid-single digit growth. The retailer’s worse banner performer was Eastbay, where a current style shift away from windwear and nylon negatively impacted results. Champs Sports, Foot Locker U.S. and Kids Foot Locker each produced high-single digit comp sales growth in the period ended Nov. 2.
In other developments, Foot Locker is developing and introducing enhanced women’s merchandise departments with curated assortments in 25 U.S. doors this holiday across Foot Locker, Champs and Footaction locations with plans to expand the concept to additional locations in 2020. Also, FL has made a minority investment in NTWRK, an early-stage company that combines brands and cultural icons on live videos and offers customers a connection to shop exclusive products as they watch.
Meanwhile, Foot Locker sees the potential of approximately 100 community-based “Power Stores” open for business over the next five years, similar to those already operational in New York’s Washington Heights neighborhood, Detroit and Philadelphia. The retailer’s FLX loyalty membership program, already available in Lady Foot Locker doors, will go wider in the U.S. shortly following a tech improvement where a single sign-on allows customers access to all Foot Locker apps and websites.