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Foot Locker (FL) Shines: Omni-Channel Efforts Boost Growth

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Zacks Equity Research
·4 min read
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As online activities are grabbing the spotlight in the wake of coronavirus pandemic uncertainties, big consumer brands are going all out to boost guests’ shopping experiences via solid digital offering, curbside pickup and expedited delivery services along with other initiatives. Renowned athletic footwear and apparel retailer Foot Locker, Inc. FL is constantly focusing on improving performance through operational and financial initiatives.

The company has been investing in digital platforms, improving supply chain efficiencies and effectively managing inventory. It is also benefiting from strategic deals like the partnership with NIKE NKE. We note that the company’s basketball footwear category is also experiencing strong momentum. Let’s delve deeper.

Robust Strategic Efforts

The New York-based company has been augmenting its e-commerce platform and expanding direct-to-consumer (“DTC”) operations. The company’s digital endeavors comprise improvement of mobile and web platforms, implementation of point-of-sale software worldwide, and expansion of data analytics capabilities. Encouragingly, the company continued to witness strength across its digital business, registering growth of more than 50% year over year during the third quarter of fiscal 2020.

Foot Locker experienced robust digital traffic through the quarter with strong growth in all banners and geographies. Additionally, the DTC channel continued to exhibit strength, registering 52% sales growth, which more than offset almost flat results across its stores. As a rate of total sales, DTC rose to 21.4% in the fiscal third quarter, higher than 15% recorded in the year-ago period. Moving ahead, management is optimistic about the omni-channel strategy, including digital strength.

Meanwhile, Foot Locker’s commitment toward developing Power Store concept to offset mall-related pressure is encouraging. The company plans to spend a major portion of its capital on its fleet of stores, including revamping and remodeling of the same. Further, Foot Locker continues to benefit by continually exploiting opportunities like kids’ and women’s businesses as well as enhancement of its product assortments.

Markedly, the company has rolled out a membership program FLX that inspires customers to remain within the Foot Locker portfolio of banners. In the fiscal third quarter, FLX program exceeded 11 million members in the United States. Also, FLX has been receiving favorable responses in Europe as member enrollment and engagement have been positive. Going ahead, management is encouraged to continue refining FLX globally.


Wrapping Up

Given the strength in Foot Locker’s omni-channel endeavors, we believe the company is well poised to capitalize on the evolving customer shopping trends. Sturdy advancement in the digital realm coupled with a robust brand portfolio and store-revamping efforts will continue yielding favorable results. Impressively, the Zacks Rank #1 (Strong Buy) company’s shares have increased 21.6% in the past month and outperformed the industry’s 8.4% rally. A VGM Score of B further builds optimism on the stock.

More Key Picks in Retail

Boot Barn BOOT has a long-term earnings growth rate of 20% and currently sports a Zacks Rank #1. You can see the complete list of today’s Zacks #1 Rank stocks here.

Tapestry (TPR), also a Zacks Rank #1 stock, has a long-term earnings-growth rate of 11.7%.

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