UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM
CURRENT REPORT
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Emerging growth company
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
| Item 2.02. | Results of Operations and Financial Condition. |
On March 20, 2023, Foot Locker, Inc. (the “Company”) issued a press release (the “Press Release”) announcing its financial and operating results for the fourth quarter and full-year of 2022. In addition, as previously announced, on March 20, 2023, the Company will host an Investor Day event to discuss the Company’s long-term strategic priorities, growth initiatives, and financial objectives, as well as the financial and operating results for the fourth quarter and full-year of 2022. The Company has made available to investors an investor presentation on its website at footlocker-inc.com. A copy of the Press Release and investor presentation are furnished as Exhibit 99.1 and Exhibit 99.2, respectively, to this Current Report on Form 8-K, which, in their entirety, are incorporated herein by reference.
The Company is making reference to financial measures not presented in accordance with U.S. generally accepted accounting principles (“GAAP”) in the Press Release, investor presentation, and Investor Day event. A reconciliation of these non-GAAP financial measures to the nearest comparable GAAP financial measures is contained in the attached Press Release and investor presentation. The Company believes these non-GAAP financial measures provide useful information to investors because they allow for a more direct comparison of the Company’s performance for the fourth quarter and full-year of 2022 to the Company’s performance in the comparable prior-year periods. The non-GAAP financial measures are provided in addition to, and not as an alternative to, the Company’s reported results prepared in accordance with GAAP. A reconciliation to GAAP is provided in the Condensed Consolidated Statements of Operations.
The information contained in Item 2.02 of this Current Report on Form 8-K, including Exhibit 99.1 and Exhibit 99.2, shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), or otherwise subject to the liabilities of that section, and shall not be deemed incorporated by reference into any filing under the Securities Act of 1933, as amended, or the Exchange Act, except as expressly set forth by specific reference in such filing.
| Item 9.01. | Financial Statements and Exhibits. |
| (d) | Exhibits. |
| Exhibit No. | Description | |
| 99.1 | Press Release, dated March 20, 2023. | |
| 99.2 | Investor Presentation, dated March 20, 2023. | |
| 104 | Cover Page Interactive Data File (embedded within the Inline XBRL document). |
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
| FOOT LOCKER, INC. | |||
| Date: March 20, 2023 | By: | /s/ Robert Higginbotham | |
| Name: | Robert Higginbotham | ||
| Title: | Senior Vice President and Interim Chief Financial Officer | ||
Exhibit 99.1
N E W S R E L E A S E
| Contact: | Robert Higginbotham Interim Chief Financial Officer Senior Vice President, Investor Relations
and Financial Foot Locker, Inc. robert.higginbotham@footlocker.com (212) 720-4600 |
FOOT LOCKER, INC. REPORTS FOURTH QUARTER 2022 RESULTS;
COMPANY TO OUTLINE NEW LONG-TERM GROWTH STRATEGY AT INVESTOR DAY
| • | Total sales decreased by 0.3%; Comparable-store sales increased 4.2% |
| • | Fourth quarter EPS of $0.20 and Non-GAAP EPS of $0.97 |
| • | Launching new “Lace Up” strategy with updated financial targets |
| • | Reset year in 2023 expected to result in Non-GAAP EPS of $3.35-$3.65 |
| • | Beyond 2023, new strategies to drive low- to mid-twenties adjusted EPS growth |
NEW YORK, NY, March 20, 2023 – Foot Locker, Inc. (NYSE: FL), the New York-based specialty athletic retailer, today reported financial results for its fourth quarter and fiscal year ended January 28, 2023. The Company will host an Investor Day starting at 8:30 a.m. Eastern Time where it will review these results and outline a new long-term growth strategy.
“Our team delivered a great finish to the year with strong fourth quarter results that capitalized on resilient Holiday demand and a compelling assortment and inventory position from our brand partners,” said Mary Dillon, President and Chief Executive Officer. “We are entering 2023 with a focus on resetting the business – simplifying our operations and investing in our core banners and capabilities to position the Company for growth in 2024 and beyond.”
Ms. Dillon continued, “We are proud of Foot Locker’s role in influencing and serving the global sneaker community, and next year, we will celebrate the 50th anniversary of the iconic Foot Locker brand. We are incredibly excited to introduce our “Lace Up” plan with a new set of strategic imperatives and financial objectives that are designed to set us up for success for the next 50 years.”
Fourth Quarter Results
| · | Comparable-store sales grew by 4.2%, driven by increased traffic and improved access to high-quality inventory, resulting in broad-based strength across brands and regions. |
| · | Total sales decreased by 0.3%, to $2,334 million, compared with sales of $2,341 million in the fourth quarter of 2021. Excluding the effect of foreign exchange rate fluctuations, total sales for the fourth quarter increased by 3.6%. |
Please refer to the Sales by Banner table below for detailed sales performance by banner and region
| · | Gross margin declined by 290 basis points compared with the prior-year period, driven mainly by higher markdowns on increased promotional activity across the industry. |
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| · | SG&A decreased by 10 basis points as a percentage of sales compared with the prior year, with savings from the cost optimization program, offset by inflation. |
| · | Net income decreased to $19 million as compared with $103 million in the fourth quarter of fiscal 2021. Non-GAAP net income decreased to $92 million from $148 million in the fourth quarter of fiscal 2021. |
| · | EPS decreased to $0.20 per share, versus $1.02 in the fourth quarter of fiscal 2021. Non-GAAP EPS decreased to $0.97 per share compared with EPS of $1.46 in the fourth quarter of fiscal 2021. |
Balance Sheet
At quarter-end, the Company’s cash and cash equivalents totaled $536 million, while debt on its balance sheet was $452 million. The Company’s total cash position, net of debt, was $84 million, as compared with $347 million last year.
As of January 28, 2023, the Company’s merchandise inventories were $1.6 billion, 29.8% higher than at the end of the fourth quarter last year.
Dividend and Share Repurchases
During the fourth quarter of 2022, the Company paid a quarterly dividend of $0.40 per share. For full-year 2022, the Company repurchased 4.1 million shares for a total of $129 million and paid a total of $150 million in dividends.
The Board of Directors declared a quarterly cash dividend on the Company’s common stock of $0.40 per share, which will be payable on April 28, 2023, to shareholders of record on April 14, 2023.
Store Base Update
During the fourth quarter, the Company opened 21 new stores, remodeled or relocated 45 stores, and closed 101 stores.
As of January 28, 2023, the Company operated 2,714 stores in 29 countries in North America, Europe, Asia, Australia, and New Zealand. In addition, 159 franchised stores were operating in the Middle East and Asia.
Asia Business Model
As part of its efforts to simplify its business model and focus on core banners and regions, the Company announced today that it is transforming its business model in Asia through the following actions:
| · | Closing its stores and ecommerce in Hong Kong and Macau; |
| · | Converting its current owned and operated stores and ecommerce in Singapore and Malaysia to a license model; |
| · | Continuing to operate stores in South Korea; and |
| · | Continuing to pursue growth in the region through license partners. |
MAP Active, Indonesia’s leading lifestyle retailer, who already partners with the Company in Indonesia and the Philippines, will take over the Company's store and ecommerce operations in Singapore and Malaysia, and seek to grow in those markets and new markets in the region over time.
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2023 Financial Outlook
Fiscal year 2023 represents the 53 weeks ending February 3rd, 2024. The Company’s full year 2023 outlook, which includes the 53rd week, is summarized in the table below.
| Sales Change | Down 3.5% to 5.5% including ~1% from the extra week |
| Comparable Sales Change | Down 3.5% to 5.5% |
| Square Footage Change | Down ~4% |
| Licensing Revenue | ~$20 million |
| Gross Margin | 30.8% to 31.0% |
| SG&A Rate | 22.6% to 22.8% |
| D&A | ~$205 million |
| Interest | ~$12 million |
| Tax Rate | 31.5% to 31.7% |
| Non-GAAP EPS | $3.35-$3.65 including $0.15 from the extra week |
| Adj. Capital Expenditures* | ~$305 million |
* Adjusted Capex includes capitalized Technology expense
The Company provides earnings guidance only on a non-GAAP basis and does not provide a reconciliation of the Company’s forward-looking capital expenditures and diluted earnings per share guidance to the most directly comparable GAAP financial measures because of the inherent difficulty in forecasting and quantifying certain amounts that are necessary for such reconciliations.
Investor Day
At today’s Investor Day, senior management will outline the Company’s new “Lace Up” plan, designed to drive the next phase of Foot Locker, Inc.’s growth and create value for all of the Company’s stakeholders, including team members, communities, and investors.
The “Lace Up” plan will be guided by the following set of new strategic imperatives:
| · | Expand Sneaker Culture. Serve more sneaker occasions, provide more choice, and drive greater distinction. |
| · | Power Up the Portfolio. Create more distinction among banners, including re-launching the Foot Locker brand, and transforming the Company’s real estate footprint by opening new formats, shifting off-mall, and closing underperforming stores. |
| · | Deepen Our Relationship with Customers. Reset the Company’s loyalty program and elevate the customer relationship through enhanced analytical capabilities. |
| · | Be Best-in-Class Omni. Improve the customer experience online through the full shopping journey. |
In connection with its new strategic direction, the Company has set the following long-term financial targets for fiscal years 2024 through 2026.
| Financial Metric | Target* |
| Total Sales Growth | 5% to 6% |
| Comparable Sales Growth | 3% to 4% |
| Square Footage Growth | Approximately 5% |
| Adj. EBIT Margin Rate | 8.5% to 9% by 2026 |
| Adj. EPS Growth | Low- to mid-twenties |
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* Growth rates are annual growth rates from 2023 on a 52-week basis
Disclosure Regarding Forward-Looking Statements
This report contains forward-looking statements within the meaning of the federal securities laws. Other than statements of historical facts, all statements which address activities, events, or developments that the Company anticipates will or may occur in the future, including, but not limited to, such things as future capital expenditures, expansion, strategic plans, financial objectives, dividend payments, stock repurchases, growth of the Company’s business and operations, including future cash flows, revenues, and earnings, and other such matters, are forward-looking statements. These forward-looking statements are based on many assumptions and factors which are detailed in the Company’s filings with the U.S. Securities and Exchange Commission.
These forward-looking statements are based largely on our expectations and judgments and are subject to a number of risks and uncertainties, many of which are unforeseeable and beyond our control. For additional discussion regarding risks and uncertainties that may affect forward-looking statements, see “Risk Factors” disclosed in the Company’s Annual Report on Form 10-K for the year ended January 29, 2022 filed on March 24, 2022. Any changes in such assumptions or factors could produce significantly different results. The Company undertakes no obligation to update the forward-looking statements, whether as a result of new information, future events, or otherwise.
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Consolidated Statements of Operations
(unaudited)
Periods ended January 28, 2023 and January 29, 2022
(In millions, except per share amounts)
| Fourth Quarter | Year-to-Date | |||||||||||
| 2022 | 2021 | 2022 | 2021 | |||||||||
| Sales | $ | 2,334 | $ | 2,341 | $ | 8,747 | $ | 8,958 | ||||
| Licensing revenue (1) | 3 | 3 | 12 | 10 | ||||||||
| Total revenue | 2,337 | 2,344 | 8,759 | 8,968 | ||||||||
| Cost of sales | 1,632 | 1,568 | 5,955 | 5,878 | ||||||||
| Selling, general and administrative expenses | 521 | 525 | 1,903 | 1,851 | ||||||||
| Depreciation and amortization | 51 | 55 | 208 | 197 | ||||||||
| Impairment and other | 74 | 75 | 112 | 172 | ||||||||
| Income from operations | 59 | 121 | 581 | 870 | ||||||||
| Interest expense, net | (2) | (6) | (15) | (14) | ||||||||
| Other income / (expense), net (1) | (9) | 32 | (42) | 384 | ||||||||
| Income from continuing operations before income taxes | 48 | 147 | 524 | 1,240 | ||||||||
| Income tax expense | 26 | 45 | 180 | 348 | ||||||||
| Net income from continuing operations | 22 | 102 | $ | 344 | $ | 892 | ||||||
| Net loss from discontinued operations, net of tax | (3) | — | (3) | |||||||||
| Net income | 19 | 102 | 341 | 892 | ||||||||
| Net loss attributable to noncontrolling interests | — | 1 | 1 | 1 | ||||||||
| Net income attributable to Foot Locker, Inc. | $ | 19 | $ | 103 | $ | 342 | $ | 893 | ||||
| Diluted earnings per share | ||||||||||||
| Earnings per share from continuing operations attributable to Foot Locker, Inc. | $ | 0.24 | $ | 1.02 | $ | 3.62 | $ | 8.61 | ||||
| Net loss per share from discontinued operations, net of tax | (0.04) | — | (0.04) | — | ||||||||
| Net earnings per share attributable to Foot Locker, Inc. | $ | 0.20 | $ | 1.02 | $ | 3.58 | $ | 8.61 | ||||
| Weighted-average shares outstanding, assuming dilution | 94.9 | 100.6 | 95.5 | 103.8 | ||||||||
| (1) | During the fourth quarter of 2022, the Company has changed how it classifies licensing revenue received from partners operating our stores in the Middle East and Asia. These amounts were previously classified as part of other income / (expense), net, accordingly reclassifications have been made to prior period financial statements to conform to the current period presentation. |
Non-GAAP Financial Measures
In addition to reporting the Company’s financial results in accordance with generally accepted accounting principles (“GAAP”), the Company reports certain financial results that differ from what is reported under GAAP. Effective with the first quarter of 2022, the Company excludes all gains or losses associated with the minority investments to arrive at non-GAAP earnings; previously only certain amounts were adjusted. Those amounts not previously excluded from non-GAAP earnings during 2021, represented $17 million ($12 million, after tax or $0.12 per share), $27 million ($20 million after tax or $0.19 per share), and $27 million ($20 million or $0.21 per share) for the second, third, and fourth quarters of 2021, respectively. For the full year, this represented income of $71 million ($52 million after tax or $0.50 per share) and was primarily related to our investment in Retailors, Ltd. Amounts recorded prior to 2021 were not significant. Non-GAAP financial measures that will be presented will exclude (i) minority investments, (ii) impairments and other charges, and (iii) certain tax matters that we believe are nonrecurring or unusual in nature.
Certain financial measures are identified as non-GAAP, such as sales changes excluding foreign currency fluctuations, adjusted income before income taxes, adjusted net income, and adjusted diluted earnings per share. We present certain amounts as excluding the effects of foreign currency fluctuations, which are also considered non-GAAP measures. Where amounts are expressed as excluding the effects of foreign currency fluctuations, such changes are determined by translating all amounts in both years using the prior-year average foreign exchange rates. Presenting amounts on a constant currency basis is useful to investors because it enables them to better understand the changes in our business that are not related to currency movements.
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Non-GAAP Reconciliation
(unaudited)
Periods ended January 28, 2023 and January 29, 2022
(In millions, except per share amounts)
These non-GAAP measures are presented because we believe they assist investors in comparing our performance across reporting periods on a consistent basis by excluding items that we do not believe are indicative of our core business or affect comparability. In addition, these non-GAAP measures are useful in assessing our progress in achieving our long-term financial objectives and are consistent with how executive compensation is determined.
We estimate the tax effect of all non-GAAP adjustments by applying a marginal tax rate to each respective item. The income tax items represent the discrete amount that affected the period. The non-GAAP financial information is provided in addition, and not as an alternative, to our reported results prepared in accordance with GAAP. The various non-GAAP adjustments are summarized in the tables below.
Reconciliation of GAAP to non-GAAP results:
| Fourth Quarter | Year-to-Date | |||||||||||
| 2022 | 2021 (1) | 2022 | 2021 (1) | |||||||||
| Pre-tax income: | ||||||||||||
| Income from continuing operations before income taxes | $ | 48 | $ | 147 | $ | 524 | $ | 1,240 | ||||
| Pre-tax adjustments excluded from GAAP: | ||||||||||||
| Impairment and other (2) | 74 | 75 | 112 | 172 | ||||||||
| Other income / (expense), net (3) | 9 | (30) | 41 | (377) | ||||||||
| Adjusted income from continuing operations before income taxes (non-GAAP) | $ | 131 | $ | 192 | $ | 677 | $ | 1,035 | ||||
| After-tax income: | ||||||||||||
| Net income attributable to Foot Locker, Inc. | $ | 19 | $ | 103 | $ | 342 | $ | 893 | ||||
| After-tax adjustments excluded from GAAP: | ||||||||||||
| Impairment and other, net of income tax benefit of $11, $18, $21, and $42, respectively (2) | 63 | 57 | 91 | 130 | ||||||||
| Other income / (expense), net of income tax benefit/(expense) of $2, $(8), $9, and $(99), respectively (3) | 7 | (22) | 32 | (278) | ||||||||
| Net loss from discontinued operations, net of income tax benefit of $1, $-, $1, and $-, respectively (4) | 3 | — | 3 | — | ||||||||
| Tax reserves charge (5) | — | — | 5 | — | ||||||||
| Tax benefits related to tax law rate changes (6) | — | (1) | — | (1) | ||||||||
| Tax charge related to revaluation of certain intellectual property rights (7) | — | 11 | — | 11 | ||||||||
| Adjusted net income (non-GAAP) | $ | 92 | $ | 148 | $ | 473 | $ | 755 | ||||
| Fourth Quarter | Year-to-Date | |||||||||||
| 2022 | 2021 (1) | 2022 | 2021 (1) | |||||||||
| Earnings per share: | ||||||||||||
| Diluted earnings per share from continuing operations attributable to Foot Locker, Inc. | $ | 0.24 | $ | 1.02 | $ | 3.62 | $ | 8.61 | ||||
| Diluted EPS amounts excluded from GAAP: | ||||||||||||
| Impairment and other (2) | 0.66 | 0.57 | 0.95 | 1.24 | ||||||||
| Other income / (expense), net (3) | 0.07 | (0.23) | 0.33 | (2.68) | ||||||||
| Tax reserves charge (5) | — | — | 0.05 | — | ||||||||
| Tax benefits related to tax law rate changes (6) | — | (0.01) | — | (0.01) | ||||||||
| Tax charge related to revaluation of certain intellectual property rights (7) | — | 0.11 | — | 0.11 | ||||||||
| Adjusted diluted earnings per share (non-GAAP) | $ | 0.97 | $ | 1.46 | $ | 4.95 | $ | 7.27 | ||||
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Non-GAAP Reconciliation
(unaudited)
Periods ended January 28, 2023 and January 29, 2022
(In millions, except per share amounts)
Notes on Non-GAAP Adjustments:
| (1) | Non-GAAP results in the fourth quarter and full year periods of 2021 were affected by the change in presentation of minority investments discussed above, which excluded $27 million of income ($20 million after tax or $0.21 per share) in the fourth quarter and $71 million of income ($52 million after tax or $0.50 per share) year-to-date. |
| (2) | For the fourth quarter of 2022, impairment and other charges included $53 million of impairment of long-lived assets and right-of-use assets and accelerated tenancy charges. These were incurred as a result of the Company’s planned wind down of the Sidestep banner, a review of underperforming stores, and the continued wind down of the remaining Footaction stores. Additionally, the Company recorded $20 million of primarily severance costs related to the Company’s reorganization, $15 million of transformation consulting, $9 million of litigation costs related to an employment matter, and $8 million of Sidestep tradename asset impairment, partially offset by a $31 million benefit from the change in fair value of the atmos contingent consideration liability. For full year 2022, impairment and other charges included $58 million of impairment of long-lived assets and right-of-use assets and accelerated tenancy charges, $42 million of transformation consulting, $22 million of primarily severance costs related to the reorganization, $9 million of litigation costs, and $8 million of Sidestep tradename asset impairment, and $4 million of acquisition integration costs, partially offset by a $31 million benefit from the fair value adjustment of the atmos contingent consideration liability. |
For the fourth quarter and full year periods of 2021, impairment and other charges included $40 million and $92 million, respectively, of impairment of long-lived assets and right-of-use assets and accelerated tenancy charges associated with the decision to exit Footaction stores and underperforming stores, $10 million and $42 million, respectively, of impairment of investments, and acquisition and integration costs of $10 million and $24 million, respectively. Additionally, the fourth quarter and full year periods of 2021 included $11 million and $15 million, respectively, of lease-related termination costs for several locations, $2 million and $4 million of support function reorganization costs, primarily severance, and a $2 million charge related to a tradename impairment recorded in the fourth quarter of 2021. Partially offsetting these losses and charges was $7 million of additional insurance recovery recorded in impairment and other charges that related to the book value of property losses recorded in 2020.
| (3) | Other income / expense for the fourth quarter of 2022 consisted of a $9 million loss on the sale of our minority investment in Retailors, Ltd., a publicly-listed entity. The full year of 2022 also included $52 million of loss on the changes in fair value of the investment in Retailors, Ltd., partially offset by $1 million of dividend income from this investment, and our share of income related to our other equity method investments of $1 million. Additionally, we had a $19 million gain on the divestiture of the Team Sales business that occurred in the second quarter. |
Other income/ expense for the fourth quarter of 2021 consisted of $27 million of fair value changes and our share of income related to our equity investments. For the full year, one of our minority investments, GOAT, which is measured using the fair value measurement alternative, received additional funding at a higher valuation resulting in a $290 million fair value adjustment in the second quarter. Additionally, our Retailors, Ltd. investment generated a gain of $77 million for the full year, which included an initial discount of $9 million. Other minority investments generated income of $3 million for the full year of 2021.
Other income for the thirteen weeks and fifty-two weeks ended January 29, 2022 also included $3 million and $7 million, respectively related to our insurance recovery from the 2020 social unrest, which is the amount by which the recovery exceeded the book value losses previously recorded.
| (4) | In the fourth quarter of 2022, the Company recorded a charge to discontinued operations of $4 million ($3 million after tax) related to the resolution of a legal matter of a business we formerly operated. |
| (5) | In the second quarter of 2022, the Company recorded a $5 million charge related to the Company’s income tax reserves due to the resolution of a foreign tax settlement. |
| (6) | In the fourth quarter of 2021, the Company recorded a tax benefit of $1 million in connection with a tax law change in the Netherlands. |
| (7) | In the fourth quarter of 2021, the Company recorded tax charges related to the revaluation of certain intellectual property rights, pursuant to a non-U.S. advance pricing agreement of $11 million. |
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Sales by Banner
(unaudited)
Periods ended January 28, 2023 and January 29, 2022
(In millions)
| Fourth Quarter | Full Year | ||||||||||||||||
| 2022 | 2021 | Constant Currencies | Comparable Sales | 2022 | 2021 | Constant Currencies | Comparable Sales | ||||||||||
| Foot Locker | $ | 893 | $ | 799 | 12.6 | % | 13.2 | % | $ | 3,304 | $ | 3,295 | 0.7 | % | 0.9 | % | |
| Champs Sports | 415 | 472 | (11.6) | (10.4) | 1,681 | 1,939 | (13.1) | (13.1) | |||||||||
| Kids Foot Locker | 192 | 181 | 6.1 | 4.1 | 708 | 724 | (2.2) | (5.4) | |||||||||
| WSS | 166 | 139 | 19.4 | 10.6 | (1) | 604 | 195 | 209.7 | n.m. | ||||||||
| Other | 15 | 135 | n.m. | n.m. | 126 | 742 | n.m. | n.m. | |||||||||
| North America | 1,681 | 1,726 | (2.1) | 1.2 | 6,423 | 6,895 | (6.6) | (7.2) | |||||||||
| Foot Locker | 455 | 426 | 15.7 | 12.7 | 1,628 | 1,565 | 16.5 | 14.1 | |||||||||
| Sidestep | 25 | 19 | 50.6 | 40.0 | 94 | 76 | 38.4 | 23.0 | |||||||||
| EMEA | 480 | 445 | 17.1 | 13.8 | 1,722 | 1,641 | 17.5 | 14.5 | |||||||||
| Foot Locker | 122 | 121 | 6.9 | 5.7 | 414 | 373 | 19.5 | 16.0 | |||||||||
| atmos | 51 | 49 | 71.7 | n.m. | 188 | 49 | 351.5 | n.m. | |||||||||
| Asia Pacific | 173 | 170 | 25.7 | 5.7 | 602 | 422 | 58.1 | 16.0 | |||||||||
| Total | $ | 2,334 | $ | 2,341 | 3.6 | % | 4.2 | % | $ | 8,747 | $ | 8,958 | 0.9 | % | (1.9) | % | |
| (1) | WSS’ comp represents the month of January 2023. |
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Consolidated Balance Sheets
(unaudited)
(In millions)
| January 28, | January 29, | |||||
| 2023 | 2022 | |||||
| ASSETS | ||||||
| Current assets: | ||||||
| Cash and cash equivalents | $ | 536 | $ | 804 | ||
| Merchandise inventories | 1,643 | 1,266 | ||||
| Other current assets | 342 | 293 | ||||
| 2,521 | 2,363 | |||||
| Property and equipment, net | 920 | 917 | ||||
| Operating lease right-of-use assets | 2,443 | 2,616 | ||||
| Deferred taxes | 90 | 86 | ||||
| Goodwill | 785 | 797 | ||||
| Other intangible assets, net | 426 | 454 | ||||
| Minority investments | 630 | 781 | ||||
| Other assets | 92 | 121 | ||||
| $ | 7,907 | $ | 8,135 | |||
| LIABILITIES AND SHAREHOLDERS' EQUITY | ||||||
| Current liabilities: | ||||||
| Accounts payable | $ | 492 | $ | 596 | ||
| Accrued and other liabilities | 568 | 561 | ||||
| Current portion of long-term debt and obligations under finance leases | 6 | 6 | ||||
| Current portion of lease obligations | 544 | 572 | ||||
| 1,610 | 1,735 | |||||
| Long-term debt and obligations under finance leases | 446 | 451 | ||||
| Long-term lease obligations | 2,230 | 2,363 | ||||
| Other liabilities | 328 | 343 | ||||
| Total liabilities | 4,614 | 4,892 | ||||
| Total shareholders' equity | 3,293 | 3,243 | ||||
| $ | 7,907 | $ | 8,135 | |||
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Store Count and Square Footage
(unaudited)
Store activity is as follows:
| January 29, | January 28, | Relocations/ | ||||||||
| 2022 | Opened | Closed | 2023 | Remodels | ||||||
| Foot Locker U.S. (1) | 816 | 31 | 100 | 747 | 37 | |||||
| Foot Locker Canada | 95 | 1 | 10 | 86 | 4 | |||||
| Champs Sports | 525 | 3 | 42 | 486 | 6 | |||||
| Kids Foot Locker | 410 | 22 | 22 | 410 | 22 | |||||
| WSS | 98 | 17 | — | 115 | 4 | |||||
| Footaction | 41 | — | 39 | 2 | — | |||||
| North America | 1,985 | 74 | 213 | 1,846 | 73 | |||||
| Foot Locker Europe | 626 | 20 | 18 | 628 | 24 | |||||
| Sidestep | 86 | 1 | 9 | 78 | — | |||||
| EMEA | 712 | 21 | 27 | 706 | 24 | |||||
| Foot Locker Pacific | 94 | 1 | 1 | 94 | 15 | |||||
| Foot Locker Asia | 30 | 3 | — | 33 | — | |||||
| atmos | 37 | 4 | 6 | 35 | 3 | |||||
| Asia Pacific | 161 | 8 | 7 | 162 | 18 | |||||
| Total | 2,858 | 103 | 247 | 2,714 | 115 |
Selling and gross square footage are as follows:
| January 29, 2022 | January 28, 2023 | |||||||
| (in thousands) | Selling | Gross | Selling | Gross | ||||
| Foot Locker U.S. (1) | 2,417 | 4,193 | 2,362 | 4,044 | ||||
| Foot Locker Canada | 253 | 416 | 249 | 412 | ||||
| Champs Sports | 1,905 | 2,985 | 1,792 | 2,809 | ||||
| Kids Foot Locker | 748 | 1,274 | 772 | 1,306 | ||||
| WSS | 958 | 1,217 | 1,138 | 1,435 | ||||
| Footaction | 113 | 190 | 6 | 11 | ||||
| North America | 6,394 | 10,275 | 6,319 | 10,017 | ||||
| Foot Locker Europe | 1,074 | 2,249 | 1,131 | 2,329 | ||||
| Sidestep | 104 | 196 | 97 | 186 | ||||
| EMEA | 1,178 | 2,445 | 1,228 | 2,515 | ||||
| Foot Locker Pacific | 188 | 294 | 213 | 325 | ||||
| Foot Locker Asia | 114 | 199 | 126 | 233 | ||||
| atmos | 36 | 63 | 37 | 63 | ||||
| Asia Pacific | 338 | 556 | 376 | 621 | ||||
| Total | 7,910 | 13,276 | 7,923 | 13,153 | ||||
| (1) | Included in Foot Locker U.S. are 14 and 6 Lady Foot Locker stores as January 29, 2022 and January 28, 2023, respectively. |
- END -
Exhibit 99.2
2023 INVESTOR DAY LACING UP FOR THE FUTURE
O F F I C E R F I N A N C I A L I N T E R I M C H I E F A N D F P & A R E L A T I O N S S V P , I N V E S T O R
Disclosure Regarding Forward - Looking Statements This presentation contains “forward - looking” statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Exchange Act, as amended. The words “believe,” “expect,” “anticipate,” “plan,” "predict," “intend,” "seek," “foresee,” “should,” “would,” “could,” “attempt,” “appears,” “forecast,” “outlook,” “estimate,” “project,” “potential,” “may,” “will,” “likely,” “guidance,” “goal,” “model,” “target,” “budget” and other similar expressions are intended to identify forward - looking statements, which are generally not historical in nature. Statements may be forward looking even in the absence of these particular words. Examples of forward - looking statements include, but are not limited to, statements regarding our financial position, business strategy, and other plans and objectives for our future operations, and generation of free cash flow. These forward - looking statements are based on our current expectations and beliefs concerning future developments and their potential effect on us. The forward - looking statements contained in this presentation are largely based on our expectations for the future, which reflect certain estimates and assumptions made by our management. These estimates and assumptions reflect our best judgment based on currently known market conditions, operating trends, and other factors. Although we believe such estimates and assumptions to be reasonable, they are inherently uncertain and involve a number of risks and uncertainties that are beyond our control. As such, management’s assumptions about future events may prove to be inaccurate. For a more detailed description of the risks and uncertainties involved, see “Risk Factors” in our most recently filed Annual Report on Form 10 - K and subsequent Quarterly Reports on Form 10 - Q. We do not intend to publicly update or revise any forward - looking statements as a result of new information, future events, changes in circumstances, or otherwise. These cautionary statements qualify all forward - looking statements attributable to us, or persons acting on our behalf. Management cautions you that the forward - looking statements contained herein are not guarantees of future performance, and we cannot assure you that such statements will be realized or that the events and circumstances they describe will occur. Factors that could cause actual results to differ materially from those anticipated or implied in the forward - looking statements herein include, but are not limited to a change in the relationship with any of our key suppliers or the unavailability of premium products at competitive prices; a change in negotiated volume discounts, cooperative advertising, and markdown allowances with any of our key suppliers, or the ability to cancel orders and return excess or unneeded merchandise; our ability to fund our planned capital investments; the impact of volatility in the financial markets or other global economic factors; difficulties in appropriately allocating capital and resources among our strategic opportunities; our ability to realize the expected benefits from recent acquisitions; business opportunities and expansion; investments; expenses; dividends; share repurchases; liquidity; cash flow from operations; use of cash and cash requirements; borrowing capacity and use of proceeds; repatriation of cash to the United States; supply chain issues, including delays in merchandise receipts and increasing cost pressure caused by higher oceanic shipping and freight costs; labor shortages; expectations regarding increased wages; inflation; consumer spending levels; the effect of governmental assistance programs; social unrest; the direct and indirect effects of all variants of the coronavirus pandemic (COVID - 19) on our business, including any adverse effects of the U.S. government’s COVID - 19 vaccine mandates; expectations regarding increasing global taxes; the impact of government regulation, including changes in law; the impact of the adverse outcome of any material litigation against us or judicial decisions that affect us or our industry generally; the effects of weather; increa sed competition; the financial impact of accounting regulations and critical accounting policies; credit risk relating to the risk of loss as a result of non - performance by our counterparties; and any other factors listed in the reports we have filed and may file with the SEC that are incorporated by reference herein. All written and oral forward - looking statements attributable to us are expressly qualified in their entirety by this cautionary statement. A forward - looking statement is neither a prediction nor a guarantee of future events or circumstances, and those future events or circumstances may not occur. You should not place undue reliance on forward - looking statements, which speak to our views only as of the date of this presentation. Non - GAAP Measures – Amounts used in this presentation are on a Non - GAAP basis, a reconciliation is included in the Appendix.
Agenda Speaker Section Time (ET) Robert Higginbotham, Interim Chief Financial Officer SVP of Investor Relations and FP&A Welcome / 4Q’22 Highlights 8:30 – 8:35 AM Mary Dillon, Chief Executive Officer Chris Santaella, Chief Merchandising Officer Frank Bracken, Chief Commercial Officer Tony Aversa, SVP Global Store Development Management Presentations 8:35 - 9:45 AM Break 9:45 – 10:00 AM Peter Scaturro, SVP, Strategic Planning & Growth Elliott Rodgers, Chief Operations Officer Robert Higginbotham, Interim Chief Financial Officer SVP of Investor Relations and FP&A Management Presentations 10:00 – 10:30 AM Q&A 10:30 – 11:15 AM Store Tour 11:45 - 12:15 PM
2 0 2 2 R E S U L T S
Well Positioned With High - quality Inventory To Start The Year +29.8% Year - over - year COMP SALES +4.2% Total sales - 0.3% Constant FX +3.6% GAAP EPS $0.20 Non - GAAP EPS* $0.97 NON - NIKE SALES (CORE BANNERS) INCREASED MID - SINGLES Gross margin - 290 bps On Planned Promotions Comps by Region NA EMEA APAC +1.2% +13.8% +5.7% * A reconciliation to GAAP is provided in the Appendix FOURTH QUARTER 2022 HIGHLIGHTS
Footwear Up Mid - Singles Down Low - Singles November Apparel Up Low - Singles Up Low - Doubles December Accessories Up Low Double Digits Down Lo w - Singles Janu a ry Note: data is on comp basis unless otherwise noted. All data is ex - WSS/atmos 4Q GLOBAL COMP DETAIL
Key Drivers • Merchandise Margin Fell 310 Bps On Higher Markdowns And Increased Promotional Activity • Occupancy Leveraged 20 Bps Down 290 bps Vs. Last Year 31.5% 33.1% 33.0% 30.1% Q4 2019 Q4 2020 Q4 2021 Q4 2022 19.4% 21.0% 22 . 4 % 22.3% Q4 2019 Q4 2020 Q4 2021 Q4 2022 Down 10 bps Vs. Last Year Key Drivers • Early Benefits From Cost Optimization • Offset By Ongoing Inflationary Pressures FOURTH QUARTER 2022 MARGIN PERFORMANCE GROSS MARGIN (% of sales) SG&A EXPENSES (%) of sales
P R E S I D E N T A N D C H I E F E X E C U T I V E O F F I C E R
Foot Locker is the leader and originator of sneaker culture WIT H T H E R IG H T F O CU S , INV E ST ME N T A N D CAPABILITIES, WE WILL DRIVE STEADY, LONG - TERM PROFITABLE GROWTH LA CIN G U P F O R TH E FUTU R E Operate In An Exciting, Growing Market New Insights And Opportunities To Grow Strong Assets To Leverage
Differentiated global category leader with strong assets 5 0 Y E A R H E R I T A G E I N S N E A K E R C U L T U R E 90% Foot Locker Brand Awareness & 5X Social Media Following Vs. Closest Competitors U NRIVALE D BR AN D COMMUNITY CONNECTION Job Creator And Career Starter +90% Of Field Team Members Are POC NPS ~90 TRUSTED EXPERTS Striper Teams Who Are True Sneakerheads NPS ~90 EQUITY WITH TEENS The ONLY 3rd party retailer recognized as a FAVORITE FOOTWEAR BRAND Piper Sandler “Taking Stock with Teens” report ST R ON G BR AN D PARTNERSHIPS #1 wholesale account for the leading brands in the industry
MASS CASUALIZATION Hybrid work model is expected to grow from 42% In 2021 to 81% in 2024 PERFORMANCE BECOMING MAINSTREAM Performance footwear brands On, Salomon and Asics increasingly being adopted for non - sporting use SNEAKERS AS SELF - EXPRESSION 25% of teens surveyed this spring identified as Sneakerheads: 21% of all females and 28% of all males We lead in the large and growing $80B* sneaker market (Forbes 2022) (Business of Fashion 2023) (Piper Sandler 2021) #1 #2 #3 * NPD Athletic Footwear Consumer Panel Data 2022 US and EMEA Big 5, Euromonitor Sports Footwear Canada and Australia **Projected growth through 2026 per Euromonitor Sports Footwear Market STRONG TAILWINDS ARE DRIVING MID - SINGLE DIGIT GROWTH ACROSS MULTIPLE NEEDS **
Consumers demand choice to meet all their lifestyle needs S U P P O R T I N G O U R V A L U E P R O P O S I T I O N A S A M U L T I - B R A N D R E T A I L E R 43% 47% 2019 2026 Source: Euromonitor Sports Footwear Market *Based On Analysis Of Identified Customers In North America Excluding WSS And Atmos ** High Frequency Defined As Customers Who Buy Footwear >4x Over 2 Years Of Foot Locker Transactions That Have More Than One Item ~40% Have Multiple Brands* 80% Of Foot Lockers Highest Frequency Shoppers Buy Multiple Brands** SNEAKERS ARE GROWING IN USE, TAKING A GREATER SHARE OF THE FOOTWEAR MARKET SNEAKER PENETRATION OF TOTAL FOOTWEAR MARKET CONSUMERS CRAVE CHOICE
36% 47% 28% 33% 24% 18% 12% 2% M a rket FL Inc Buyers We over index with a young and diverse consumer and cast a wider net W E A R E W E L L P O S I T I O N E D T O S E R V E T H E G R O W I N G D I V E R S I T Y I N T H E U S INCLUSIVE OF ALL GENDERS & AGES WITH A GREATER SHARE OF MALES & YOUTH 50% 50% 59% 41% MARKET FL INC BUYERS 18% 27% 55% 28% 38% 33% Ages 18 - 24 Ages 25 - 34 Ages 35+ Market FL Inc Buyers Men Women BY AGE Source: NPD US Footwear Consumer Panel. Data is ex - WSS “Lower Income” - <$50k || “Middle Income” - $50k to $100k || “ Upper Middle Income” - $100k - $200k || “Upper Income” - $200k+ 14 SERVING ALL INCOMES WITH 80% UNDER $100K Upper Income Middle Income Lower Income Upper Middle I n come HEALTHY MIX ACROSS SPECTRUM; SKEW TOWARDS GROWING SECTIONS OF POPULATION 4% 19% 20% 56% 2% 45% 23% 30% Asian White/ Ca u ca s ian Black/ African American Market H i s p an i c / Latino FL Inc Buyers
Sneaker Consumers have diverse motivations Active At h l e te Quality Seekers 29% 21% 21% 17% 12% Sneaker Sales By Customer Segments Sneak er Maven Active Athl e te Deal F i nd e r Fashio n - Forward Expressionist Qu a lity Seeker Deal Fin ders S neaker Maven Fashio n - Forwa r d Expressionist Source: Foot Locker Teen + Adult Global Footwear Segmentation (Commissioned in Q1 2023). Estimates generated from self - reported retailer purchase behavior, shopper spend, survey incidence rates, and publicly available population statistics. Survey - based market sizing techniques involve respondent biases and researcher assumptions; as a result, data should be interpreted as directional. Markets included: US, CA, UK, FR, IT, ES, IT, and AUS.
41% 21% 19% 13% 6% Our portfolio serves across those motivations W I T H A S T R O N G R E L A T I O N S H I P W I T H T H E S N E A K E R M A V E N 29% 21% 21% 17% 12% Sneakers Sales By Customer Segment Foot Locker Sales* By Customer Segment Sneak er Maven Active Athlete Fashio n - Forward Expressionist Qu a lity Seeker Deal F i nder Sneak er Maven Active Athlete Fashio n - Forward Expressionist Qu a lity Seeker Deal F i nd e r *represents only footwear sales Source: Foot Locker Teen + Adult Global Footwear Segmentation (Commissioned in Q1 2023). Estimates generated from self - reported retailer purchase behavior, shopper spend, survey incidence rates, and publicly available population statistics. Survey - based market sizing techniques involve respondent biases and researcher assumptions; as a result, data should be interpreted as directional. Markets included: US, CA, UK, FR, IT, ES, IT, and AUS.
We will use our “sneaker authority” and portfolio of banners to drive growth Sn e aker Maven Active Athlete Deal F i nders Quality S e e k e r s F a shio n - F o rwa r d Expressionist E X PA N D W ALLE T SHAR E B R O AD EN I N G C ON SU ME R REA C H 13% 9% 8% 7% 4% Size of market Foot Locker Inc. Share* *represents footwear sales only Source: Foot Locker Teen + Adult Global Footwear Segmentation (Commissioned in Q1 2023). Estimates generated from self - reported retailer purchase behavior, shopper spend, survey incidence rates, and publicly available population statistics. Survey - based market sizing techniques involve respondent biases and researcher assumptions; as a result, data should be interpreted as directional. Markets included: US, CA, UK, FR, IT, ES, IT, and AUS.
SNEAKER GROWTH MAP E a c h Bann e r W il l P l a y A D i st i n c t Ro l e SNEAKERS - LED SNEAKERS & APPAREL S H O P P I N G O C C A S I O N SNEAKER MAVEN FASHIO N - FORWARD ACTIVE ATHLETE QUALITY SEEKER DEAL FINDER VALUE REPLACE EXPLORE ATHLETIC
Foot Locker Unlocks The “Inner Sneakerhead” In All Of Us – Sparking Discovery And Igniting The Power Of Sneaker Culture. Serve the active athlete Celebrate the Hispanic community Recruit the next generation Bring the best of sneaker culture to all Share Japanese street and sneaker culture FOOT LOCKER VISION
Our “Lace Up” plan EXPAN D S NEAKE R CULTURE PO WE R U P O U R PORTFOLIO DEEPEN OUR RELAT I ON S HI P WI T H CUSTOMERS BE BEST - IN - CLASS OMNI CREATE VALUE FOR ALL STAKEHOLDERS ( CUSTOMERS, COMMUNITY, TEAM MEMBERS, & INVESTORS )
A sharper focus on ‘all things sneakers’ Invest into new capabilities and technology Move from product - led to consumer - led Build the culture of the future How we will do it
Our path to get there T R A N S F O R M T O G R O W 2022 2023 2024 2025 2026 SIMPLIFY • Close underperforming banners and stores • Strategically license Asia I N VE S T I N C O R E • Loyalty program • Global brand platform • Our technology DRIVE SUSTAINABLE GROWTH • Focus on core banners • Scale new concepts • Drive digital and loyalty • Nike penetration • Champs Sports repositioning • Fleet optimization • Absorb exit costs • Drive cost savings RESET
Our talented leadership team 26 FRANK BRACKEN EVP Chief Commercial Officer 2010 ELLIOTT RODGERS EVP Chief Operations Officer 2022 SHEILAGH CLARKE EVP General Counsel 1988 ROSALIND REEVES EVP Chief HR Officer 2020 NATALIE ELLIS VP APAC Lockers 2011 GUY HARKLESS SVP Champs Sports NA 2015 JILL FELDMAN SVP Lockers NA 2021 ROBERT HIGGINBOTHAM Interim Chief Financial Officer SVP, Investor Relations, FP&A 2022 TONY AVERSA SVP Store Development 1995 TODD GREENER SVP Supply Chain 2018 GIOVANNA CIPRIANO SVP Chief Accounting Officer 1996 KIM WALDMANN ADRIAN M. BUTLER PATRICK WALSH PETER SCATURRO CHRIS SANTAELLA TOMAS PETERSSON BRYON MILBURN SVP SVP SVP SVP SVP SVP President Chief Customer Officer Chief Technology Officer Atmos Strategic Planning & Growth Chief Merchandising Officer EMEA Lockers Lockers & Champs NA 2023 (starting March 27) 2023 2016 2008 1991 2017 1989 MARY DILLION President Chief Executive Officer 2022 OLIVIA MATA VP Corporate Communications 2023
Our targets and long - term aspirations EXPAND SNEAKER CULTURE POWER UP THE PORTFOLIO DEEPEN OUR RELATIONSHIP WITH CUSTOMERS BE BEST IN CLASS OMNI SIMPLIFY / INVEST / GROW W E W IL L LONG - TERM ~$8 . 5 B of revenue >$1 0 B of revenue <7% EBIT margin <10% ROIC >10% EBIT margin Low to Mid - Teens ROIC CREATE VALUE FOR ALL STAKEHOLDERS FR O M
C H I E F M E R C H A N D I S I N G O F F I C E R
S T R A T E G I C I M P E R A T I V E # 1
Fashion Forward Expression i st Sneaker Maven Active Athlete Quality Seekers Deal Find e rs Sneaker culture has evolved to be more inclusive
We will leverage our key equities while increasing our array of brands to expand sneaker culture SERVE M O R E S NEA K E R OCCASIONS PROVIDE MORE S NEA K E R C H OI C E DR I V E GR EA T E R SNEAKER DISTINCTION Broaden the consumer occasions that drive sneaker buying Strengthen brand relations to provide more choice to consumers Drive distinction through exclusive concepts and basketball leadership
5% Foot Locker Athletic Footwear Market Compelling Visual Technology And Comfort Are Attracting Older And More Affluent Consumers Into The Category, As Well As More Women. 28% 11% 25% Foot Locker Athletic Footwear Market Female Consumers Are Increasingly Participating In Sneaker Culture, Driving The Adoption And Appeal Of More Casual Sneakers And Seasonal Styles. 27% 66% Foot Locker Athletic Footwear Market Consumers Want To Participate In Sneaker Culture And Desire Authentic Athletic Brands At Accessible Price Points. Our sneaker growth map illustrates 3 sneaker occasions that provide outsize opportunity P R O V I D I N G O P P O R T U N I T Y T O A C Q U I R E N E W C O N S U M E R S W H I L E T A K I N G G R E A T E R W A L L E T S H A R E O F E X I S T I N G PERFORMANCE CASUAL & SEASONAL UNDER $ 100 Source: NPD US Consumer Panel % Of Sales
We have revitalized our Nike relationship B O T H C O M P A N I E S A R E C O M M I T T E D T O A S H A R E D V I S I O N O F F U T U R E G R O W T H FOOT LOCKER’S PARTNERSHIP IS COMPLEMENTARY TO NIKE’S DTC STRATEGY INTEGRATED MARKETPLACE CONSUMER DISTINCTION EXPANDED DR O P S HI P L O Y A LT Y & DATA MARKET P L A NNIN G SNEAKER CU LT U R E KIDS BASKETBALL CULTURE & HOH RETURN TO GROWTH IN 2024 55 - 60 % OF REVENUE IN 2026 San Francisco Los Angeles Vancouver Portland Update picture above
Delivering unrivaled product and experiences for our consumers Re - launch House Of Hoops Joint Kids Leadership Position Tuned Air 25 - year Anniversary Celebrate Foot Locker 50 Create Path To Join Our Loyalty Programs
OPPORTUNITY TO DOUBLE OUR NON - NIKE SALES 8% 16% Foot Locker Market Share Of Non - Nike Brands We Carry (Wholesale Market) Foot Locker Market Share (Wholesale Market) We will continue to diversify our brand mix to offer more sneaker choice and meet more occasions DELIVERED THROUGH: • Long Range Plans driving sustainable, scalable revenue • Comprehensive go - to - market strategies across product, marketing, in - store and digital • Co - created product franchises with elevated storytelling >2 X Company Average 2022 - 2026 Grow Non - Nike Brands >40 % Of Sales By 2026 Source: NPD POS Data
GROWING OUR EXCLUSIVE BUSINESS 15% 25% 2026 Current % OF SALES We will drive distinction and scarcity to make Foot Locker Inc the ‘must shop’ destination MODEL EXCLUSIVITY Exclusive Access To Key Franchises And Athlete Partnerships EXCLUSIVE C O N CE PT S Elevated Execution Of Inline Product Rooted In Consumer Insights And Storytelling ALL THINGS B A SK E TB A L L The Best Multi - branded Portfolio Of Basketball On And Off Court Silhouettes OUR DISTINCTION IN THE MARKETPLACE WILL DELIVER: Customer Loyalty, Stronger Vendor Relationships And Margin Improvement
Our aspirations F R O M T O B Y 202 6 Limited sneaker occasions >30% Of Business In Performance, Casual And Under $100 Nike ~70% of sales Nike ~55 - 60% Of Sales Non - Nike Brands ~30% of sales Non - Nike Brands >40% Of Sales Exclusives 15% of sales Exclusives >25% Of Sales INCREASE OUR EXCLUSIVE MIX DIVERSIFY BRAND MIX NON - NIKE UP >2X AVERAGE REVITALIZE OUR PARTNERSHIP WITH NIKE GROWTH BEYOND 2023 SERVE MORE OCCASIONS GROWING AT >10%
C H I E F C O M M E R C I A L O F F I C E R
S T R A T E G I C I M P E R A T I V E # 2 C R E A T I N G D I S T I N C T L A N E S
Foot Locker Inc. plays an integral role in demand creation and serving consumers choice D E M A N D A C C E L E R A T O R C U R A T O R | C H O I C E *North America Only. Does not include WSS or atmos CONSUMERS 23M Active Customers* >1.0B Visitors In 2022 BRANDS Strong relationship with the top brands in the industry C O N S U M E R I N S I G H T S
We have reshaped our portfolio to deliver a more efficient operating model and sharper consumer propositions F R O M TO
Each banner new plays a distinct role at the intersection of targeted consumer segments and critical sneaker occasions SNEAKERS - LED SNEAKERS & APPAREL T R I P MISSIO N SNEAKER MAVEN FASHIO N - FORWARD ACTIVE ATHLETE QUALITY SEEKER DEAL FINDER VALUE REPLACE EXPLORE ATHLETIC
B R IN G TH E B E S T O F SNEAKER CULTURE T O M O R E C O NSU M E R S
Foot Locker is the global leader in sneaker culture *Source: Langston study; social media analytics **Piper Sandler Taking Stock with Teens Report Fall 2022 FOOT LOCKER HAS UNRIVALED BRAND HEALTH #1 Ranked Globally For Brand Health* + 90 % Foot Locker Brand Awareness The ONLY 3rd Party Retailer Recognized As A FAVORITE F OOTW EA R BRAND ** STRIPERS DIFFERENTIATE FOOT LOCKER FROM THE COMPETITION NPS ~90 Stripers Known As Friendly, Knowledgeable, And Trusted Advisors FOOT LOCKER IS THE LEADER IN CONSUMER ENGAGEMENT >5 X vs. the closest competitors >12M
W E W IL L L E A D SN E AKE R C U L TU R E FO R TH E NE X T 50 YEARS AMBITION $5.3 B >$6.0 B global revenues by 2026 (+MSD% CAGR) Reignite our global brand platform Strategically broaden assortment Unleash the power of our store fleet Double down on Striper service
BUILDING COMMUNITIES, NOT JUST STORES MAKING CONNECTIONS, NOT JUST SALES PROUDLY REFLECTING OUR DIVERSITY CELEBRATING ALL KINDS OF SNEAKER LOVE FOOT LOCKER IS THE HEARTBEAT OF SNEAKER CULTURE Welcoming In The World To Experience The Power Of Sneakers
Broadening our sneaker assortment to be the #1 destination for 'all things sneakers' LEADING MULTI - BRANDED POSITION IN BASKETBALL ACQUIRING NEW CONSUMERS THROUGH RUNNING SERVING MORE OCCASIONS THROUGH CASUAL & SEASONAL
Sneaker Primacy Digitally Connected Retail Experiences Men | Women | Kids Spaces Merchandising & Back Of House Productivity Unleashing the power of our store experience
Evolving the role of the Striper to establish more meaningful connections with consumers BRAND AMBASSADORS & CONTENT CREATORS SOLUTION ORIENTED & TECH ENABLED UNRIVALED SNEAKER PASSION & KNOWLEDGE CHARITABLE MEMBERS OF THE COMMUNITY
Recruit The Next Generation Of Sneakerheads Through Kid - First Experience
47% 31% 30% 27% 16% 15% 14% Mark e t sh ar e ne ar l y 2 x the next retailer Closest 3P Retailer Kids Foot Locker + Foot Locker D elive r i n g a premiu m sneaker experience 23% 63% Rest of M a rket Kids Foot Locker M i x O f P r o d u c t A b o v e $ 7 5 K F L ra n k s # 1 p l a c e t o sh o p f o r kids shoes & apparel K i d s F o o t w e a r M a r k e t S h a r e Source: NPD Consumer Panel P12M Source: Langston Kids Footwear Segmentation Study ~2x Kids Foot Locker the only kids focused sneaker retailer with a full premium assortment
Adding distinct strategic value to the portfolio Kids Foot Locker Foot Locker L T V B y Ac quis i t i o n Ba nne r 75% 51% 49% Kids Foot Locker Foot Locker LTV Distribution Between Ac quis i t i o n Ba nne r A n d Ot he r Ba nner s Customers Acquired Through KFL Are ~20% More Valuable Than Other Banners 25% Same Banner % LTV All Others % LTV 50% Of Value Coming From Other Banners
Brand awareness b el o w F oo t Lo c k e r Opportunity to i ncre a s e s tor e f oot pr i n t Kids Foot Locker still has room to grow 74% 90% Kids Foot Locker Foot Locker 22% of consumers cited physical availability as top barrier of purchase* *Survey conducted to understand barriers of purchase preventing someone from buying from brand 2X KFL Sales Total Potential *Calculated by a consumer look - alike predictive model Hi g h r e mai n i n g p o t en t ia l * in top 15 markets
Deliver An Unrivaled Product A s sort m ent Deepen Digital Connections With Kids And Their Parents Grow Store Footprint And Accelerate House Of Play Ambition Revenues By 2026 (+HSD to LDD% CAGR) $700 M > $1 B Path To ONE BILLION ER : Top 2 photos are authentic – bottom photo seems “staged”
Serve the active athlete
Building upon Champs Sports strong reach to serve a broader consumer and further differentiate from Foot Locker Strong Presence In Health & High Brand Awareness Wellness Markets* An Engaged Consumer Base Langston Brand Health Study Jan 2022 90% 66% 45% 25% C h amps Sports *Calculated by per capital population who ‘typically spend &+ exercising per week’ + ‘who control their diet for physical fitness’ 31 26 15 14 New York Los Ange l es Dallas Houston Miami 11 Store Count Market Health Index 1. 2 2. 3 1. 1 1. 2 2. 3 2.3M on Instagram 1.3M on TikTok 570K on Twitter Multi - Branded Sporting Goods Retailers
Champs Sports is being repositioned to serve the Active Athlete Resetting the brand to serve a broader consumer who is grounded in sport & fitness • Sport/Fitness Drives Connectivity To Peer Group • Inspired By What’s In The Game And Worn On The Field • Seeks Accessibility And Authentic, Elevated Experiences • Recognizes That The Lifestyle Has Roots In Performance • Motivated By Key Moments In Sport And Athletes • Appreciates The Simplicity Of One Stop Shopping Performance THE EVERYDAY ATHLETE Lifestyle THE ATHLETIC EXPRESSIONIST
Rationalizing The Fleet Ambition SUSTAINABLE ~$1B Revenues By 2026 ~125 Store Closures In 2023 FOCUS ON CONSUMERS IN KEY MARKETS FLEET RATION A LIZATION RE - PRIORITIZING KEY MARKETS DOUBLING DOWN ON HEAD - TO - TOE
CELEBRATE THE HISPANIC COMMUNITY THROUGH SNEAKERS AND SELF - EXPRESSION
Deep rooted community connection WSS IS THE #1 HISPANIC - FOCUSED RETAILER IN ATHLETIC FOOTWEAR Strong customer loyalty Wide Breadth of product OFF - MALL 100% of stores Underserved Hispanic neighborhoods 300+ community events per year Fully bilingual retail experience >85% sales from loyalty >3.8M loyalty members 20% higher spend per visit FULL FAMILY OFFERING >50% women’s & kids DIVERSE PRODUCT MIX <50% Nike ALL FOOTWEAR PRICE POINTS $20 - $200 12K SQ FT store size to support breadth
SIGNIFICANT OPPORTUNITY TO CAPTURE THE SHIFTING DEMOGRAPHIC TRENDS WITHIN THE US Source: Statista 62.3 68.5 74.8 81.2 2020 2025 2030 2040 GROWING HISPANIC POPULATION Expected to growth faster than the overall US population (in millions) 30% 25% BY 2040 Population will be largest ethnic group in U.S. (up from 18% in 2018) 85% VS 80% Spend more disposable income on shopping versus all other ethnic groups 80% Prefer to shop in stores versus pure eCommerce $2.3 TRILLION U.S. Hispanic GDP in 2017, up from $1.7 trillion in 2010 $3.3 BILLION Amount Hispanic women spend per year on footwear 40%+ “Over - index” on footwear spending versus non - Hispanic groups >300 Store potential HISPANIC CONSUMER POWER
STRONG UNIT ECONOMICS SUPPORT SCALING CONCEPT Year 1 Year 2 Year 3 New Store Sales Maturity Curve** +13% +8% $625 Inventory $1, 3 50 Construction $200 Pre - opening $2, 1 75 Gross Investment $500 Allowances/Credits Net Investment $1,675 Year 1 Year 3 Sales* $4,500 $4,900 EBITDA margin 12% 15% ROI >40% Payback <3 yrs Notes: * New store economics reflect $4.5M in first year sales, which reflects the average of stores opened in 2021 and 2022. ** “New Store Sales Volumes” graph reflects the average of all stores opened in California and Texas between 2015 and 2019.
STRATEGICALLY DEVELOPED AMBITION $600M ~ $1.3B revenues By 2026 (>20%+ CAGR) Current markets Roadmap to 300 stores 2022 Store Base 2023 Store Base 2026 Store Base Long - Term Opportunity 11 5 >300 Future expansion opportunity ~ 25 >40 per year ROADMAP FOR GROWTH ~ 140 HISPANIC POPULATION
SHARE JAPANESE STREET AN D S NEAKE R C UL T UR E W I T H THE WORLD
A S A R E S PECTE D A N D A U T H E N T I C B R A N D I N A SI A , ATMOS ADDS DISTINCT VALUE TO THE FOOT LOCKER PORTFOLIO EM BE D D E D I N A C UL T U R A L H U B O F SN E A KE R C U L T U R E Japan ranks #3 in sneaker spend per capita DIG I TALL Y FORWARD HIGHLY P R OF I TABL E 50% online penetration >15% 2022 profit rate
W IL L S ER V E A S T H E INNOVATION LAB FOR FOOT LOCKER INC. AMBITION ~$190 M >$250 M global business by 2026 (+HSD - LDD% CAGR) STORE EXPERIENCE Rooted In Japanese Culture, Each Store Has An Individualized Design Testing All Aspects Of VM DIGITAL ENGAGEMENT NFT Launch In The Metaverse PRODUCT CONCEPTS & COLLABS “Enter The Jungle” – Atmos’ Bold Animal Prints Exclusives With Air Jordan Designs PRIVATE LABEL atmos 2022 Holiday Collection Enlisting Fast And Furious Star Sung Kang
2022 2026 $5.3 B >$6 . 0 B $700M ~ $1B $1. 7 B ~ $1B $600M ~$1.3B $190 M > $25 0 M $8.5 B > $ 9. 5 B PATH TO >$ 9 . 5 B REVENUES (go - forward)
S V P , G L O B A L S T O R E D E V E L O P M E N T
S T R A T E G I C I M P E R A T I V E # 2 T R A N S F O R M I N G T H E R E A L E S T A T E P O R T F O L I O
We are transforming our real estate portfolio Scaling new concepts with bigger footprints to accelerate growth & broaden our reach Strengthening our store portfolio off - mall and rationalizing underperforming mall stores Optimizing our International portfolio, focusing on key markets and licensed models
COMMUNITY AVG SQ. FOOTAGE: 15K Community focused concept located in the heart of communities with strong affinity for sneakers POWER STORE AVG SQ. FOOTAGE: 10K Delivers an elevated experience in centers, high streets and malls with a broad set of consumers Investing into new store concepts with expanded footprints to deliver growth Going from ~120 to >400 new concepts in 2026 HOUSE OF PLAY AVG SQ. FOOTAGE: 7.5K Play - focused store with elevated product presentations and storytelling
Closing >400 locations to focus on higher performing doors MALL STORE COUNT * • Managing Portfolio Risk With Strategic Closures Of Small And Low Productivity Doors • Closing >200 C/D Doors And >200 Lower - performing A/B Doors • Lowering Our Term Of Remaining C/D Doors To 1.5 Years • Shifting Resources And Product To Off - mall And Key A/B Locations Represents ~10% of Company 2022 Sales 80 0 B P S Lower Profit 80 B P S Of Margin Lift * North America only. Standard format stores >450 <250 ~850 ~630 Cur r ent 2 0 26 C / D A/B - 50% - 25%
Our A/B malls have comped positive since 2019 2 0 1 9 V S . 2 0 2 2 M Y D E A T H E X A G G E R A T E D ” TRAFFIC 6% Pre - shopping/Research Resulting In Less Traffic… “ T H E R E P O R T S O F SALES 8% …And Higher Sales CONVERSION 8% …But Higher Intent Driving Higher Conversion… H A V E B E E N G R E A T L Y North America only – A/B Malls
We are optimizing our international footprint S T R E NG TH E N IN G O U R P O SI T I O N IN WESTERN EUROPE STRATEGICALLY TRANSITIONING SOUTHEAST ASIA TO A LICENSE MODEL Current Countries ‘23 Expansion BENELUX FRANCE ITALY SPAIN UNITED KINGDOM GERMANY
Our real estate t r a n s for m a ti o n C U RR E N T B Y 202 6 2,700 Stores ~2,400 Stores Optimizing Our Store Count (Down Over 10%) 13.2M sq. ft. 14.5M sq. ft. Growing Our Square Footage (Up ~10%) * Square Footage in North America ~120 Locations In New Formats (8% Of Square Footage) >400 Locations In New Formats (>20% Of Square Footage) Open >300 Stores In New Concepts ~35% Off - Mall* >50% Off - Mall* Shift To Higher Performing Off - mall Locations
C H I E F C O M M E R C I A L O F F I C E R
Deepen Our Re l at i on s h i p with Customers S T R A T E G I C I M P E R A T I V E # 3
Our different consumer segments engage in different ways O P P O R T U N I T Y E X I S T S I N H O W W E U S E O U R C H A N N E L S T O D R I V E G R E A T E R , M O R E E F F I C I E N T A C Q U I S I T I O N A N D R E T E N T I O N Sn e aker Maven Active Athlete Deal F i nders Quality S e e k e r s F a shio n - F o rwa r d Expressionist IN - STORE EVE N T S DIG I TA L AP P S OCIA L
1.8X FLX serves as a key unlock to reward that engagement and drive more W E H A V E T H E O P P O R T U N I T Y T O D R I V E G R E A T E R R E L E V A N C Y I N O U R F L X P R O G R A M FLX is continuing to grow and drive improved spend… …but we are still well under penetrated LOYALTY MEMBERS AVERAGE YEARLY SPEND 2021 2022 Non - FLX FLX Members *As of Dec 2022 in US and Europe; Active is defined as members who have validated, purchased, redeemed and/or engaged with the program ACTIVE LOYALTY MEMBERS VS. PEERS LOYALTY SALES TO TOTAL VS. PEERS 70 - 80% FLX Multi - Br a n d e d Peers FLX Multi - Br a n d e d Peers 25% +50% 1.8X 3X ~3X
Resetting FLX to drive relevancy with a broader range of consumers and accelerate our data efforts CURRENT STATE TARGET STATE Program Value Primarily Attracting Core Sneakerheads Seeking Hype Product Lack Of Deep Integration Across Customer Journey And Experience Rewards And Redemption Center Have Limited Appeal To The Broader Audience Broaden Program Appeal Through Points Redeemable For Purchases (Points For Payment) Exclusive Product And Service Access For Members - only Offerings Differentiated By Status Tier Unique Rewards And Point - multiplier Opportunities On Special Occasions To Drive Incremental Trips Simplicity And Transparency In Design To Improve Member Experience Deep Integration Throughout Omni Customer Journey With Store Teams As Advocates And Ambassadors
Investing into our technology and data talent to better know and serve our consumer segments OMNI CHANNEL PERSO N ALIZAT I ON AT SCALE CUSTOMER ANALYTICS & ADVANCED AI/ML CAPABILITIES DRIVE N B Y D ATA , POWERED BY M O DER N M A R T EC H LOYALTY MEMBERS, CONSUMER DATA PLATFORM
Delivering more personalized communication, driving deeper engagement with the brand E NG A G E AC Q U I R E RE T A I N G R O W
Our roadmap ENHANCE FOUNDATION 2023 2024 2025 SCALE CAPABILITIES MAXIMIZE OPPORTUNITY • Develop ‘Points For Payment’ Capabilities For FLX 2.0 And Pilot In Canada • Expanded Consumer Research Connected With 1 st Party Data • Improved Customer Data Capture, Hygiene, And Enrichment • Reimagine Data & Marketing Tech Stack Leveraging New And Existing Components • Launch FLX 2.0 Rewards In All Channels In US • Maturing Analytic Capabilities And AI/ML Models • Pilot Advanced Personalization Use Cases Leveraging Test And Learn Op Model • Complete Roll - out Of Core Customer Data & Marketing Tech Stack • Expand FLX 2.0 Globally • Personalized Omni - channel Content And Experiences • Test And Learn Frameworks Fully Operationalized • Advanced Measurement And AI/ML Capabilities Driving Decisioning
Our aspirations FR O M TO % LOYALTY SALES >70% 50% 25% C u rr e n t 2026E Long Term
BR E A K 1 5 M I N U T E S
S V P , S T R A T E G I C P L A N N I N G & G R O W T H
• S T R A T E G I C I M P E R A T I V E # 4 B e s t - In - C l as s Omni
There is opportunity to increase our digital mix E - C O M M E R C E % O F S A L E S FOOT LOCKER VS. RETAIL PEERS AND MARKET 14% 10% 17% 21% 22% 30% 35% 35% 0% 20% 30% 40% Hi b bett Foot Locker Dic k s Genesco JD Sports M a cy's Athletic F ootwear Market
Our channels work together to drive growth 80% of digital sales are within 10 miles or less of a store 1 . 7 X more digital spend per person within 10 miles of a store 95% of consumers incorporate the digital channel into their purchase journey 45% of digital orders are aided by stores* *North America only. Includes BOSS, BOPIS, S2S
Omni channel customers spend more but are under penetrated Online only In - store only Omni - channel ANNUAL SPEND PER CUSTOMER > 3X higher Note: Foot Locker US, Kids Foot Locker, Champs Sports US. Excludes Resellers and Employees Source: Foot Locker, Company filings OMNI % OF CUSTOMERS 7% 18% Foot Locker Mu l ti - bran d ed peer
PRE - PURCHASE Drive discovery and engagement through a more personalized and dynamic pre - purchase experience PURCHASE Deliver a seamless purchase experience that drives connectivity between channels POST - PURCHASE Enhance the post purchase experience through frictionless fulfillment process We will accelerate our omni offense with key enhancements across the customer journey
Drive discovery and engagement through a more dynamic and personalized experience A more predictive search algorithm coupled with seamless navigation Robust product storytelling with improved images, reviews and ratings Dynamic product and content recommendations powered by AI SEARCH & NAVIGATION C O NTEN T PERSONALIZATION Mobile Foot Locker Desktop Peers (Median) OUR OPPORTUNITY TO IMPROVE DISCOVERY TIME PER VISIT, MINUTES 1.4X 1.2X
Deliver a seamless purchase experience that drives connectivity between channels Provide a near - real time view of inventory by 2024 Scale handhelds to 100% of stores in 2023 to drive inventory visibility across the network App relaunch in 2024 with a focus on ‘energy, commerce and connectivity’ NEAR - REAL TIME INVENTORY IN - STORE C O NNE CTIVIT Y APP RELA UNC H PEER ONLINE CONVERSION Foot Locker Peers ~3.5X
Enhance the post purchase experience through frictionless fulfillment Accelerate our global BOPIS rollout Scaled seamless return capabilities Easy to use messaging and self - service support FLEXIBLE FULFILLMENT OPTIONS SEAMLES S RETURNS ORDER TRANSPARENCY & COMMUNICATIONS NET PROMOTER SCORE Dig i t al Sto r es ~1.5X
Our aspirations and digital target 17% 25% C u rr e n t 2026E of sales D IGIT A L P E N E T RA TI O N (% OF SALES)
C H I E F O P E R A T I O N S O F F I C E R
• T EC H N O L OG Y ENABLERS SUPPLY CHAIN A N D
2023 will deliver a significant improvement in our fulfillment capabilities • Single - channel Retail And Ecommerce DCs • 2 Centralized DCs That Service Entire US 2020 2023 • Omnichannel Retail And Ecommerce DCs • 3 Regional DCs That Service Local Territory <40% 2 - Day or less to customers/stores >95% 2 - Day or less to customers/stores 2 Business Days Or Less
We will continue to leverage our supply chain to drive growth END - TO - END P R O DUC T F LO W S U PP L Y C HA I N TECH DI ST RIBUT I O N NETWORK OMNI CONVENIENCE 2023 2024 2025 Expand Transportation Partnerships And Offerings Europe DC Network Investments US DC Network Upgrades Establish Dynamic Customer Promise Capability Improve And Expand Fulfillment Options Develop Differentiated Service Offerings Drive Store Replenishment Speed And Quantity Optimize Omnichannel Inventory Across Fulfillment Channels Robotics/Automation Enablement Platform Resiliency And Scalability Real - time Operational Data For Decision - making Omni Order/Inventory Management
An investment in our technology underpins our omni acceleration 0.0% 0.7% 1.3% 2.0% 2.6% 2013 2014 2015 2016 2 017 2018 2019 2020 2021 2022 BENCHMARK TECHNOLOGY SPEND AS % OF SALES We have historically underinvested in technology UNDERINVESTMENT 2.5% 2022 2026 % of Sales Tech Expense up by ~$80M > 3% Tech Capex* up by >50% $240 $150 Past 4 years Next 4 years * Includes capitalized IT expense
We will create a more agile and modern platform CURRENT STATE OF TECH TARGET STATE Complex Tech Architecture Strained By Legacy Platforms And Heavy Customization Traditional Tech Operating Model With Longer Lead Times And Higher Cost To Deliver Capabilities Deficit In Digital Customer - facing Capabilities Compared To “Best - in - class” Experiences Modern, Lightweight, Modular Cloud - first Solution Architecture, Future - proofed For Growth A Product - platform Operating Model With Agile Ways Of Working And Aligned To The Digital Strategy Improved Digital, Data And Analytics Capabilities To Power Decision Making And Highly Personalized Customer Journeys Strong Technology Core With Resilient Operations And Reduced Technical Debt – Increased Buy Vs. Build Approach Custom - built Technical Solutions That Don't Leverage Market Leading Capabilities Need icon
A multi year plan to elevate our foundation and accelerate our digital capabilities I N V E S T M E N T H I G H L I G H T S Phased Implementation Of Product And Platform Teams Deploy Modern Merchandise, Finance, And HR ERP Foundation Launch Initial Product Teams Aligned To CX Focus Areas ERP Design, Discovery And Launch 2023 2024 2025 Enhance Search, Checkout, And Traffic Management Pilot FLX 2.0 Deploy New Store Handheld Technology Deploy Integrated And Personalized CX Capabilities Launch And Scale FLX 2.0 Pilot And Launch New Mobile App T R A N S F O R M T H E C U S T O M E R E X P E R I E N C E R E - I M A G I N E O U R T E C H O P E R A T I N G M O D E L S T R E N G T H E N T H E F O U N D A T I O N Improve Omni - inventory Visibility Expand Omni - fulfillment Options
O F F I C E R F I N A N C I A L I N T E R I M C H I E F A N D F P & A R E L A T I O N S S V P , I N V E S T O R
• • Community • Team Members • Investors STAKEHOLDERS C R E A T E V A L U E F O R A L L
Investing In black - owned brands, creators, venture capital firms and suppliers across functions ECONOMIC DEVELOPMENT COMMUNITY EMPOWERMENT C O MMU NI T Y GIVING Create value for our community Providing grants and scholarships to under - invested communities, opportunities and individuals Recurring donations and employee volunteering To charitable organizations $200M $16M $21M Economic Commitm e nt Product Purchases To Black Managed VC $2 . 2 M $0 . 4 M 30 In Grants Awarded Scholarships Bridge Interns 25 11K youth programs funded new pairs of sneakers donated
Create value for our team members EMPOWERING OUR PEOPLE T RA NSF O R M I N G HO W W E WORK • Holistic And Integrated Ambition Across Growth, Cost Efficiency, Technology Infrastructure And Organizational Health • Deep Organizational Engagement Across All Areas And Functions • Create New Ways Of Working And Build New Capabilities For Sustainable Impact 550+ members engaged in the transformation effort 3,500+ hours of training In transformation capability building 30 bridge i n ter n s ~ 3,500 promotions in the field >90% promotions that were POC • Providing Mobility Through Multiple Avenues • Committed To Promoting People From Within • Offering Flexibility To Move From Store To Corporate • Dedicated To Creating A Culture Of Diversity
…with over 10% EBIT margin > 10% 7.9% 2022 Long - term Create value for our investors L O N G - T E R M F I N A N C I A L V I S I O N $10B+ and growing revenue… >$10B 2022 Long - term < $9B >15%
Our path to get there T R A N S F O R M T O G R O W 2022 2023 2024 2025 2026 SIMPLIFY • Close underperforming banners and stores • Strategically license Asia I N VE S T I N C O R E • Loyalty program • Global brand platform • Our technology DRIVE SUSTAINABLE GROWTH • Focus on core banners • Scale new concepts • Drive digital and loyalty • Nike penetration • Champs Sports repositioning • Fleet optimization • Absorb exit costs • Drive cost savings RESET
Simplifying our international operations in Europe SIMPLIFY BENEFITS FINANCIAL IMPACT • Sharpen Focus On Foot Locker Brand In Region • Simplifies Our Overall Operations • Reduced Losses/Margin Accretive ~ $1 0 0 M Top - line Reduction ~$10M Eliminated From Annual Loss >10BPS Company EBIT Margin ~ $2 5 M In Exit Costs Winding Down Sidestep Banner In Europe ~70 Stores Closing ~10 Stores Converting To Foot Locker Process Expected To Be Completed By ~Mid - year 2023
Simplifying our international operations in Asia SIMPLIFY 2022 2026E STRENGTHENING ASIA BUSINESS MODEL ~30 Owned Stores - $3 0 M Losses OLD EXPANSION • Capital - intensive • Upfront Losses • Lack Of Scale In Region CLOSE Macau Hong Kong CONVERT/ GROW LICENSE Si n gapore Malaysia OWN AND OPERATE South Korea ~130 /~ 1 5 Licensed/Owned Stores >$15M Licensing Revenue NEW EXPANSION • Asset - light • Leverage Partners' Scale And Expertise • Deve l opment Commitment WITH A PROVEN, TRUSTED PARTNER >3,400 Retail Locations >150 Brands Leading Retailer And Distributor In Region Across Sports, Fashion, Food And Beverage And Lifestyle Products
2.5% 2022 2026 % of Sales Accelerating investments to drive growth Annual Adj. Capex to increase by >$50M* Technology Expense up by ~$80M > 3% 2022 2023 2024 - 2026 Stores/Other Suppy Chain * Adjusted Capex includes capitalized Technology expense Sy s te m s $285 ~ $305 ~$335 I N V E S T I N C O R E
Cost savings as fuel for investment F U E L I N G O U R G R O W T H B Y C H A N G I N G T H E W A Y W E W O R K NEW TARGET $350M ORIGINAL TARGET $200M SG&A Corporate Overhead Store Operations Procurement NEW SAVINGS $150M Merch. Margin (~50%) Price Optimization Supply Chain Optimization $150M To Fuel Investments $200M To The Bottom Line and INVEST IN CORE TIMING 2022: ~10% 2023: ~40% 2024/2025: ~50% Occupancy (~50%) Bulk Lease Negotiation
2022 2023* 2024 2 025 2026 2023 a reset year R ESE T • Nike penetration • Champs Sports repositioning • Fleet optimization • Absorb exit costs • Increase tech investments • Drive cost savings $3 . 35 - $3 . 65 Down ~30% NON - GAAP EPS $4. 9 5 * 53 - week basis
R ESE T 2023 sales reset STORE COUNT ~90 ~125 ~40 ~ 25 ~2,480 Down ~230 (Open ~100 / Close ~330) Stores - 9% Average store size +5% Footage - 4% Comps - 3.5% to - 5.5% Sales - 4.5% to - 6.5% (52 - week) - 3.5% to - 5.5% (53 - week) 2,714
2023 EBIT margins down as near - term pressures offset cost saves 202 2 - 202 3 E BI T MARGI N BRIDG E ( MID - POINT OF GUIDANCE) 1.6% 7. 9% - 1.8% 5.7%* - 1.0% Technol ogy Wages - 1.0% Early 2023 * 52 - week basis
2023 OUTLOOK (53 - WEEK YEAR) Commentary Outlook Inc. ~1% from the extra week Down 3.5% to 5.5% Total Sales Down mid - to high - singles in first half Down low - single digits in second half Down 3.5% to 5.5% Comp Sales Champs Sports rationalization, Sidestep and Asia closures Down ~9% Store Count Average box size increasing Down ~4% Square Footage EMEA + Asia ~$20 million Licensing Revenue Promotional pressure early in year + Occupancy deleverage 30.8% to 31.0% Gross Margin Cost savings offset by investments and expense deleverage 22.6% to 22.8% SG&A Rate ~$205 million D&A ~$12 million Net Interest 31.5% to 31.7% Tax Rate (Non - GAAP) Inc. $0.15 from the extra week $3.35 - $3.65 Non - GAAP EPS Inc. capitalized Tech. expense ~$305 million Capital Expenditures
GROWTH 2024 - 2026 sales growth F OO T A G E CA G R Average store size +6 % Stores - 1% Footage ~5 % Total Foot Locker KFL Champs Sports WSS atmos ~ 5 % ~50% Average sales per foot @ Comps +3 - 4% Sales + 5 - 6 % * * From a 52 - week 2023
Path to 8.5 - 9% EBIT margin and beyond 1 . 7% 0.3% 0 . 8% 0 . 15% 0 . 2% 8.5 - 9.0% 10.0 % + • Occupancy • Overhead • Real estate mix • Further cost saves • Fulfillment opt imizati on • Sales leverage 5.7%* - 0.1% * 52 - week basis
Focus On Organic Growth • Invest In Stores, Digital, Supply Chain And Technology Capabilities To Grow The Business • Less Focus On M&A (Outside Of Capabilities) • Less Focus On Minority Investments Growing Dividend • Stable, Growing Dividend That Targets ~30 - 35% Payout Consistent Share Repurchase • Excess Free Cash Flow Directed To Buybacks • Targeting ~LSD Lift To EPS From Buybacks Beyond 2023 WE ARE ESTABLISHING A MORE EXPLICIT AND DISCIPLINED CAPITAL ALLOCATION FRAMEWORK CAPITAL ALLOCATION
SALES GROWTH C O M P G R OWT H E B I T M A R G I N SQUARE FOOTAGE GROWTH EBIT GROWTH SHARE BUYBACKS E P S G R OWT H High - teens to Low - twenties Low single digits Low - to mid - twenties 2024 - 2026 EARNINGS ALGO* LICEN S I N G REVE N U E +5 - 6% 3 - 4% ~5% ~$30M 8.5 - 9% * From a 52 - week 2023
Roadmap to >25%+ total shareholder return +Mi d - tee n s % chg +5 - 6% +Low - single % ~3 - 4% >25% EPS GROWTH LOW - TO MID - TWENTIES
Our targets and long - term aspirations EXPAND SNEAKER CULTURE POWER UP THE PORTFOLIO DEEPEN OUR RELATIONSHIP WITH CUSTOMERS BE BEST IN CLASS OMNI SIMPLIFY / INVEST / GROW FR O M W E W IL L LONG - TERM ~$8.5B of revenue >$10B of revenue 15% exclusive >70% Nike >25% exclusive >40% non - Nike vendors 30% off - mall In NA 8% in new formats >50% off - mall in NA >20% in new formats 25% sales from loyalty >70% sales from loyalty 17% eCommerce >25% eCommerce <7% EBIT margin <10% ROIC >10% EBIT margin Low to Mid - Teens ROIC CREATE VALUE FOR ALL STAKEHOLDERS
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Customers ‘All Things Sneakers’ Team Members Career Opportunities Communities Investment and Engagement Brand Partners Sustained Growth Investors Attractive & Consistent Returns Foot Locker Unlocks The “Inner Sneakerhead” In All Of Us – Sparking Discovery And Igniting The Power Of Sneaker Culture. FOOT LOCKER VISION
THANK YOU
BR E A K 5 M I N U T E S
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GAAP to Non - GAAP Reconciliations
GAAP to Non - GAAP Reconciliations (cont.) The notes to the non - GAAP reconciliation tables are contained in the full text of this morning’s press release . Additionally, the Company provides earnings guidance only on a non - GAAP basis and does not provide a reconciliation of the Company’s forward - looking guidance to the most directly comparable GAAP financial measures because of the inherent difficulty in forecasting and quantifying certain amounts that are necessary for such reconciliations .