Foot Locker: store closings despite record growth

American shoe chain Foot Locker has seen its turnover rise 2 % to a record of almost 7 billion euros in 2018, which is more than analysts had expected. The biggest turnover growth was in existing stores, but still the chain has decided to close 165 stores this year.

 

Turnover and profits above expectations

In its latest quarter, turnover even increased by 2.8 % to 2.27 billion dollars (2 billion euros), while analysts had only predicted 2.18 billion dollars (1.9 billion euros). Comparable growth in stores that have been open for more than a year even was at 9.7 %, more than double what was expected.

 

Over the whole year, turnover increased by 2 % to 7.93 billion dollars: the highest turnover the company has ever generated. On a comparable basis, turnover increased by 2.7 % in 2018. Adjusted earnings went up 37 %, reaching 1.56 dollars per share, again far above analysts' expectations.

 

Investing in children's fashion

Still, the chain has announced to close 165 stores in 2019, but said it would invest millions in the modernisation of the remaining stores. Meanwhile, Foot Locker has been heavily investing in a diversified product range: for example, the company has invested 12.5 million dollars (11 million euros) in children's fashion brand Rockets of Awesome and a whopping 100 million dollars (88 million euros) in a sales platform for sneakers called Goat Group.

 

The company predicts a double-digit growth in 2019: "The fundamentals of our core business remain strong and led to meaningful improvement in our financial results, not only during the fourth quarter but throughout 2018", CEO Richard Johnson stated. "Looking at 2019, we believe that by maintaining our focus on bringing differentiated experiences to youth culture, we can continue to elevate our financial performance by generating a mid-single digit comparable sales gain and another double-digit percentage increase in earnings per share."

 

Foot Locker also announced that Vijay Talwar to be its new CEO for the EMEA region. Previously, Talwar served as director of the digital department. The chain owns 3221 stores in 27 countries and has 112 franchised ones in the Middle East. In Germany, the enterprise also has ten more franchised stores operating under the label Runners Point.