Acknowledging its customers “are moving faster than ever before,” Foot Locker set its five-year financial objectives and solidified its plan to elevate the customer experience at its first Investor Day in four years last week.
The retailer’s strategic imperatives through 2023 include building a customer-driven supply chain utilizing next-generation technology and investing in long-term growth and driving productivity across the organization, CEO Dick Johnson told attendees during the two-and-half-hour session that featured presentations by nine senior executives.
Among the highlighted FL initiatives was “Greenhouse,” an innovation and incubation operation the company will utilize to “fuel the future of our industry and brands,” he said. Executives say the idea behind the platform, which will include the launch of a shopping app later this year, is to empower, create and invest in the next great ideas through collaborations, new concepts and a “think tank” focused on future-forward ideas.
Five-year financial targets for Foot Locker include mid-single digit CAGR annual sales growth, sales per square foot in the $525 to $575 range, an inventory turn rate of 3 to 4 times; high-single digit net income margin and a mid-teen Return on Invested Capital (ROIC).
The drive toward financial objectives will occur as Foot Locker investments embrace a focused omnichannel approach that will steadily adjust its brick-and-mortar network, make new technology investments and also provide customers with a new FLX membership program that may be used across the portfolio of banners.
Foot Locker’s network of high-profile Power Stores, now 10 strong worldwide including Detroit and Philadelphia, will grow by at least 20 this year and more than 50 in 2020. Overall, FL will average 20 to 40 net new stores annually through 2023 as underproductive locations are shuttered. There are plans to close 85 stores, the majority in North America, in 2019. A five-year shift will see FL’s overall square footage increase low-single digits over the next five years as the percentage of doors in malls declines from approximately 80 percent in 2018 to about 70 percent in 2023.
“The competition for mind and wallet is fierce,” Johnson said. “There is a constant quest to create shareable moments. As our customer discovers new brands and trends faster than ever, the time we have to seed and sell product is shorter.”