Foot Locker’s Opportunities in Growing Apparel Business



Foot Locker and women’s apparel

Foot Locker’s (FL) emphasis on growing (IVW) its women’s business will likely be tied to the growth of its apparel products. Currently, most of the retailer’s sales (XLY) (XRT) stem from the sales of footwear products.

The tilt toward footwear has become more pronounced over the past few years. In fiscal 2016, Foot Locker derived 82% of its sales from footwear and 18% from apparel. In fiscal 2007, the proportion was 74% for footwear and 26% for apparel.

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How Foot Locker will increase its apparel sales

Foot Locker is focused on increasing its apparel sales. It’s primarily targeting women and children. FL’s store strategies are likely to reflect the growth of the activewear industry, particularly among women.

As we saw in the previous part of the series, FL has been converting its existing Lady Foot Locker banner stores to SIX:02 stores. SIX:02 stores are expected to carry more of a fashion edge, signing on with celebrity endorsers and marketing via social media.

FL also expects to allocate dedicated space to women’s products at existing stores, particularly in the ongoing renovations at flagship stores in New York. A premium store experience is also likely to spur higher sales per square foot and improve FL’s margins.

Retailers such as Lululemon Athletica (LULU) that target the premium segment have some of the best sales per square foot metrics in the industry. Under Armour (UA) is also slated to launch its own sportswear line in the fall of 2016. It will likely cater to the high-end market. Nike (NKE) and Adidas (ADDYY) already have successful sportswear lines that also cater mostly to the premium end.

SIX:02 is expected to launch its own e-commerce website this year. That should boost sales, particularly in view of its current limited store base. Next, let’s take a look at Foot Locker’s e-commerce growth drivers.


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