Tuesday, August 30, 2016

Foot Locker Doing Great While Nearly Everyone Else Struggles

It seems like they have the secret sauce they need to beat Amazon at the retail game.
In the past year, CitySports and Sports Authority both filed for bankruptcy and began the process to liquidate all their stores. Vestis Retail Group, which owned the chains EMS, Bob’s Stores and Sport Chalet, filed for bankruptcy. Quiksilver filed for bankruptcy; Aeropostale is bankrupt; Finish Line will close 150 stores.

Foot Locker has bucked the trend. This month it beat expectations with its Q2 earnings of 94 cents per share and revenue of $1.78 billion, both figures up from the year before. The company forecasts a profit in 2017 while many of its longtime competitors are gasping for air. The stock (FL) is up 15% in the last two years, and 235% in the last five.
They seem to be listening to their demographics quite well.
It’s all because the chain keeps “listening to the kid,” says Jacobs. “The kid is different today than they were in the past… it’s more of a storytelling game.” The new flagship store isn’t as obvious an example of that—it only has one modest area for children’s footwear, because there is a Kids Foot Locker just one block away—but the average Foot Locker brick-and-mortar visitor is between ages 14 and 25.
I guess they just don't want to buy shoes online and like the idea of waiting in lines for exclusive sneakers. 
I have bought sneakers from Foot Locker for a while and never really thought about buying them from anywhere else. The problem is that I rarely wear non-work sneakers so my Nikes last a very long time. 

One thing is interesting is as more players like Sports Authority are swept off the board companies like Foot Locker and Dick's Sporting Goods become more and more valuable. People like athletic wear and sneaker culture is a billion dollar business and there are just fewer places to buy them. Also millennials as a group seem much more health conscious then other age cohorts. Foot Locker seems to be aiming right at them in their strategy going forward.     

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