Foot Locker, Inc. (NYSE:FL) is a leading global retailer of athletically inspired shoes and apparel. Headquartered in New York City, the company operates approximately 3,160 athletic retail stores in 27 countries, as well as websites and mobile apps, under the brand names Foot Locker, Champs Sports, Eastbay, Kids Foot Locker, Footaction, Lady Foot Locker, Runners Point, and Sidestep.
With its various marketing channels and experiences across North America, Europe, Asia, Australia, and New Zealand, the Company's purpose is to inspire and empower youth culture around the world, by fueling a shared passion for self-expression and creating unrivaled experiences at the heart of the sport and sneaker communities.
2018 Financial Highlights
Our momentum in 2018 was fueled by the improving breadth and depth of top trending footwear and apparel assortments as well as by the steps we are taking to share the excitement and energy of sneaker culture with our consumers. With this focus in mind, we achieved some notable highlights, including:
• Total sales of $7.94 billion increased 3.3 percent, including a comparable sales gain of 2.7 percent.
• Gross margin rate improved to 31.8 percent of sales.
• Inventory turnover rate finally exceeded our long-term goal of 3 times – an accomplishment which reflects our focus on driving productivity.
• Non-GAAP net income rose to $547 million, up 7.3% over last year’s $510 million.
• Adjusted earnings per share increased 18 percent to $4.71, due to the increase in net income and the meaningful returns to shareholders through our share repurchase program.
New Strategic Framework
As we analyzed the ways our customers’ expectations have changed, the multitude of influences that reach them on their mobile devices, and their continued passion for self-expression, it became clear that we needed to evolve in order to remain relevant and connected to our customers. To address this need, we broadened our purpose from simply being a retailer of sneakers and apparel, to truly inspiring and empowering youth culture. We intend to achieve this by fueling a shared passion for self-expression and creating unrivaled experiences at the heart of the sport and sneaker communities. To drive this vision, we created a new Customer Connected strategic framework, with five essential touchpoints (our “Five Cs”):
• Collections: Deliver the most compelling and unique assortments
• Content: Engage consumers with powerful stories across multiple channels
• Community: Focus on building trust and authentic relationships at a hyper-local level
• Connectivity: Empower the consumer with new pathways to participate, connect, and share
• Convenience: Reimagine the retail and merchandising experience through speed, data, and analytics
By executing against this framework, we believe we will have the focus and tools to achieve our four key strategic imperatives:
1) Elevate the customer experience
2) Invest for long-term growth
3) Drive productivity
4) Leverage the power of our people
We are constantly looking at new ways to elevate our customer experience and bring the excitement and energy of sneaker and youth culture to the people. With this goal and our strategic imperatives in mind, we also announced several strategic investments, including minority stakes in:
• Carbon38 – the world’s destination for women’s luxury activewear. We expect this investment to provide us with industry insights in order to elevate the women’s business across Foot Locker, Inc.’s portfolio of brands.
• GOAT Group – One of the premier managed marketplaces for customers to buy and sell authentic sneakers. The power of Foot Locker’s global footprint and GOAT Group’s digital capabilities will enable us to provide an unmatched experience and elevate customer engagement across the entire sneaker industry.
• PENSOLE Footwear Design Academy – together, Foot Locker, Inc., our vendor partners, and PENSOLE, will collaborate on new educational programs and the design and manufacturing of exclusive products for the Foot Locker, Inc. brands.
• Rockets of Awesome – a children’s apparel company simplifying the way parents shop by delivering high-quality, on-trend, handpicked items directly to customers. Kids Foot Locker will create exclusive Rockets of Awesome shop-in shop destinations and be the largest retailer of their products in the U.S., in-store and online.
• Super Heroic – a lifestyle brand that designs, manufactures, and markets innovative children’s footwear, clothing, and accessories. Kids Foot Locker will be the first brick-and mortar retailer of Super Heroic products in the U.S. – less