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Foot Locker is touting a “less is more” approach to rebuild its business.
In addition to moving its global headquarters to St. Petersburg, Fla. from New York City in 2025, Foot Locker said this week it would shut down its stores and e-commerce operations in South Korea, Denmark, Norway and Sweden. The contraction comes on the heels of the retailer’s decision last year to close 400 underperforming locations, including about 125 underperforming Champs units. Foot Locker has also wound down its Lady Foot Locker, Footaction, Eastbay and Atmos banners in North America and its Runners Point and Sidestep banners in Europe.
In its most recent second quarter, Foot Locker remodeled or relocated 14 stores, refreshed 67 locations, closed 31 units and opened five new stores.
“An overarching principle of our Lace Up plan is to simplify and optimize our business to ensure that we can invest behind and focus our energy on our core banners and markets in order to drive sustainable growth,” chief executive officer Mary Dillon said in a call with analysts, explaining the latest decision to close its business in some regions.
Meanwhile, “bigger is better” seems to be the approach for UK competitor JD Sports, which opened 85 new stores in the first half of the year and recently completed its acquisition of American retailer Hibbett, which added 1,179 stores to the retailer’s portfolio. JD Sports chief executive officer Régis Schultz said in a call with analysts last week that the retailer’s strategy hinges on making major investments in the U.S. to help it scale globally.
“Our strategy is very clear,” Schultz told analysts in a call last week. “We believe that there is a strong community market in the U.S. This is a major investment that we are making in the U.S., [aimed at] developing JD as a global brand.”
Willams Trading analyst Sam Poser pointed out these opposing trajectories in a note to investors this week, explaining why Foot Locker should be wary of JD’s growth and potential to grab market share.
“[Foot Locker] cutting its way to prosperity will not work, especially while its primary global competitor, JD Sports continues to invest, expand, and take share,” Willams Trading analyst wrote in a recent note to investors. “The outer edges of JD and Foot Locker stores service a more serious sneaker-head consumer. Through DTLR, Shoe Palace, and now Hibbett, JD has increased its focus on a consumer it was already serving, rather than trying to reach new customers it rarely served before.”