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Could Foot Locker’s Sales Touch $10 Billion?

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Foot Locker’s longer-term revenue projections

Foot Locker (FL) is gearing up for further growth (RPG), aiming to become a top-quartile performer in its peer group. In a five-year projected growth update at the end of fiscal 2016, the company disclosed that it’s targeting growing its top line to $10 billion by fiscal 2021. It was $7.4 billion in fiscal 2016.

That’s a projected CAGR (compound annual growth rate) of 6.2% over the period, compared to a CAGR of 8% over the past five years. The forecast is unchanged from numbers released at its 2015 Investor Meeting in March 2015.

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Sources of sales growth upside

Foot Locker’s revenue growth is projected to come from sales (FXD) growth in key categories such as women’s, kids, European expansion, and web sales. We’ve already looked at these in detail in Parts 6–10 of this series.

The company is planning to open 50–60 new stores each year in the forecast period. It also expects to expand key shop-in-shop vendor partnerships with brands such as Nike (NKE), Adidas (ADDYY), Puma (PMMAF) (PPRUF) (PPRUY), and Under Armour (UA).

Foot Locker’s sales productivity per square foot could rise

Foot Locker is also aiming to increase sales productivity for its existing stores. The retailer (XRT) (RTH) is looking to raise sales per gross square foot to $600 by the end of the forecast period. It was $504 in fiscal 2016 and $333 in fiscal 2010.

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International sales growth

Foot Locker’s future sales growth is likely to be evenly distributed in terms of geographies. In fiscal 2016, which ended January 30, 2016, the company reported comps (comparables) sales growth at a mid-single-digit pace in the United States and more than 10% in currency-neutral terms in key international markets of Europe and Canada.

Fiscal 2017 sales growth projections

Foot Locker has made strong top-line projections for its five-year outlook. But consensus Wall Street analyst estimates for fiscal 2017, which will end January 31, 2017, project a slightly slower sales growth. Foot Locker’s revenue is expected to be ~$7.8 billion, a projected year-over-year growth rate of 4.6%. In fiscal 2Q17, analysts expect the company to generate $1.8 billion in revenue, a 4% rise year-over-year.

In the next part of our series, we’ll see why Foot Locker’s short-term growth outlook appears muted.

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