Foot Locker is making big cuts to its real estate portfolio amid declining profits.
The retailer will shutter 400 underperforming mall locations by 2026, CEO Mary Dillon said on an earnings call earlier this week. Another 125 Champs Sports stores — a Foot Locker subsidiary — are also slated to close during that same time frame.
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The move follows a 0.3% drop in sales in the fourth quarter, according to Retail Dive.
Executives hope the reduction will streamline Foot Locker’s business model and remove competition among stores, Chief Commercial Officer Frank Bracken said on the call. The company anticipates sales and comps to decline by 3.5% to 5.5% through 2023, heightening the need to simplify.
“Simply stated, we had too much overlap between our banners, and some of our smaller banners were adding complexity to our operating model and also diluting our profitability,” Bracken said on the call. “In North America, we have closed the Lady Foot Locker banner, the Footaction banner, and most recently the Eastbay.com banner.”
The move comes on the heels of a significant staff reduction that is expected to save the company $18M, though the company stopped short of disclosing the number of layoffs, according to a previous Retail Dive report.
Foot Locker is among a wave of mall-heavy retailers that have reformatted or shuttered following a pandemic-induced shift in consumer habits. Stores like Macy's, Kohl's and Nordstrom reported declines in consumer spending in recent earnings calls, with executives noting they had to rely on discounts to sell inventory at big mall locations.
Executives with Foot Locker said they intend to broaden their customer base by adding new brands, such as Hoka and On, per Retail Dive. The company also plans to open a new futuristic store concept in New York City next year.
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