Foot Locker (FL) enjoys favorable demand and online sales
With the easing of restrictions related to the pandemic, socialization and indulgence in the outdoors is back. As a result, consumer interest in purchasing clothing products has returned to normal. Such trends benefit the famous shoe and clothing company, Foot Locker, Inc. FL. Strong demand in various categories contributed to the performance of the company in the second quarter of fiscal 2021. Robust digital operations, efforts to elevate brands and supply chain capabilities have supported the company .
Demand conditions appear favorable
Foot Locker’s second quarter revenue strengthened across stores and digital channels, supported by a strong product pipeline and healthy customer demand. It recorded strong performances in women’s and children’s footwear companies, as well as strong demand for clothing and accessories offers. The company’s footwear business grew by less than single digits, while the clothing and accessories business grew by double digits. The company expects the product categories to continue to perform well.
Other retailers of apparel products such as Skechers USA, Inc. SKX and Guess ?, Inc. GES also benefited from favorable demand conditions. Industry experts believe the upcoming holiday season will likely encourage consumers to buy more. This will likely benefit retailers like Foot Locker. The company continues to expect a more rational promotional environment, which should continue to support margins.
The in-line wing looks solid
Foot Locker’s online business is doing well and generating income. It invests significantly to strengthen its digital presence. The company is in the process of strengthening its omnichannel capabilities by adding new features. In this context, the company has activated a Shop My Store functionality on its website. It added Apple Pay and Google Pay to digital payment options to provide greater flexibility and convenience for customers. Apart from that, the company is improving online shopping and in-store pick-up capabilities, as well as its mobile app experience. In the second quarter of fiscal 2021, the company’s digital sales penetration rate was 20.1%, well above 2019 levels and this trend is expected to continue.
Other cautious growth strategies
Foot Locker is focused on strengthening operational and supply chain efficiency. Prudent inventory management strategies and efforts to stimulate seasonal products help the business respond effectively to customer demand. During the second quarter, it benefited from the growth of brands such as Crocs, UGG and Birkenstock as well as an expanded Balkan offering in Vans and Converse. He also revealed his intention to launch his own brands, like Locker and Cozy. Along with the growth of the footwear business, the company’s apparel and accessories business also grew well.
Strategic partnerships and acquisitions also help the company increase its offerings in all categories. Foot Locker recently completed the acquisition of U.S. footwear and clothing retailer Eurostar, Inc. (WSS) for $ 750 million. The company has entered into a deal to acquire Text Trading Company, KK (atmos) for $ 360 million. WSS and atmos transactions are likely to improve business results in fiscal 2021.
The company is on track with the conversion of its Footaction stores to other existing banner concepts. The company is also progressing well with the expansion of the FLX membership program. By the end of the second quarter, FLX program members exceeded 25 million worldwide. Apart from that, the company is making progress in its technology upgrades. It strengthens the point of sale system and has launched a pilot dropshipping program with NIKE, Inc. NKE to activate additional inventory on its website.
In conclusion, Foot Locker’s strategic initiatives keep it well positioned for growth in the periods to come. For fiscal 2021, management is optimistic about the increase in sales of comp.
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