In This Article:
Foot Locker (FL) , a nostalgic mall retailer that thrived in the '80s and early 2000s, has managed to stay afloat as its peers have either gone out of business or significantly decreased their retail footprints across the nation.
Foot Locker lives on, but the retailer has recently been struggling to attract customers into its stores. In the company’s fourth-quarter earnings report for 2024, it revealed that its total sales declined by almost 6% year-over-year, while total revenue shrunk by 5.7%.
💰💸 Don't miss the move: Subscribe to TheStreet's free daily newsletter💰💸
Foot Locker’s sales decline during the 2024 holiday season happened during a time when mall visits were down nationwide in December. According to data from Placer.ai, indoor mall visits in December fell 0.6% year-over-year, while visits to outdoor malls declined by 1.8%.
Related: Foot Locker sounds the alarm on a concerning customer behavior
Foot Locker suffers a major loss
During an earnings call on March 5, Foot Locker Chief Commercial Officer Frank Bracken said that while the company saw shoe brands such as Adidas, New Balance, UGG, Crocs, etc., increase in sales, it continued to see challenges in its apparel business. Revenue in that business was “down in the mid-teens.”
In December last year, Bracken first warned investors that Foot Locker’s apparel sales were struggling due to a lack of innovation in silhouettes, colors, and materials.
“As innovation within apparel is lagging compared to our footwear business, we see this manifest in a more promotional environment as consumers clearly are seeking more newness and innovation in the category,” said Bracken during an earnings call on Dec. 4.
In its latest earnings call, Foot Locker also flagged that in February, it continued to see customers pull back on their spending, which is hurting sales.
“We saw consumers be more cautious and sensitive, which has impacted our business quarter-to-date,” said Robert Higginbotham, Foot Locker interim chief financial officer, during the call. “We’re seeing consumers respond and come out to spend during compelling activations, key shopping events, and product launches or newness. They spend when there’s a call to action, but they are more cautious in those in-between periods.”
The retailer's concern about the shift in customer behavior has caused it to predict that in 2025, its total sales will either decline by 1% year-over-year or increase by only 0.5%.
Related: Ross Stores flags a troubling consumer trend that's hurting sales
“What we’re just looking at is consumers with some uncertainty,” said Foot Locker CEO Mary Dillon during the call. “So, our customers are young, by definition, they’re more limited in their discretionary budgets. This is for sure a category that they prioritize in their lives. But we’re watching – as they’re thinking about overall cost of living, plus some uncertainty about tariffs. So, we factored that into our 2025 outlook.”