The US sporting goods retailer Foot Locker Inc. increased its sales significantly in the 2021/22 financial year and more than doubled its profit. For the current year, however, the company expects shrinking revenues. The main reason is the changed sales strategy of the important trading partner Nike, explained Foot Locker on Friday.
In the last fiscal year, which ended on January 29, the retail group achieved sales of 8.96 billion US dollars (7.99 billion euros). It thus exceeded the previous year’s level by 18.7 percent. The company was also able to improve significantly in terms of earnings: Operating profit jumped from 303 to 860 million US dollars, net income attributable to shareholders from 323 to 893 million US dollars (797 million euros).
With its forecasts for the current year, however, management ensured that the company’s share price collapsed by almost 35 percent on Friday: the retailer announced that it expects sales to fall by four to six percent in 2021/22. On a comparable area, sales would therefore probably shrink by eight to ten percent.
The sobering prospects were justified by the fact that the most important trading partner wanted to deliver fewer products in the future. This is the sporting goods giant Nike, which was not named in the announcement. The share of Nike products in Foot Locker’s sales will fall to about 60 percent from 70 percent last year, the company said. The reason for this is the “accelerated strategic move towards direct customer business” at the world’s largest sports brand, explained Foot Locker.
The retailer is looking to offset the reduced volume of Nike items through greater assortment diversification, which has already been initiated through partnerships with labels such as Reebok and Puma. At the same time, the company announced the expansion of its omnichannel offerings and an extensive cost-cutting program. This envisages annual savings of around 200 million US dollars. Foot Locker intends to present details together with the results for the first quarter.