Foot Locker reports slump in profits and reforms business in Asia

US retailer Foot Locker Inc. suffered a significant drop in profits in fiscal 2022/23, but still managed to beat market expectations. In addition to the current results, the group also announced extensive reform plans for its activities in Asia at an investor day on Monday.

In the past fiscal year, which ended on January 28, the group’s sales amounted to 8.76 billion US dollars (8.17 billion euros). It fell by 2.3 percent compared to the previous year. Cost increases ensured that operating profit fell by 33.2 percent to 581 million US dollars.

Net income attributable to shareholders of USD 342 million (EUR 319 million) was less than half the level of USD 893 million in 2021/22 (-61.7 percent). In the final quarter, however, the result developed better than had been expected in advance.

The group presented cautious forecasts for the current 2023/24 financial year. The management therefore expects a drop in sales of 3.5 to 5.5 percent. Adjusted for diluted earnings per share is expected to be in the range of $3.35 to $3.65. Last year it had reached a high of 4.95 US dollars.

The company also announced fundamental changes in Asia. Accordingly, the branches and the online shop in Hong Kong and Macau will be closed. In Malaysia and Singapore, the retail activities, which were previously managed independently, are to be switched to a license model. The group intends to continue to operate the stores in South Korea itself.

The aim of the measures, which are part of a comprehensive reform program, is to “simplify the business model and to focus on core brands and markets in the future,” said Foot Locker. In Asia, further growth will therefore primarily be sought through cooperation with license partners.