Foot Locker announces new strategic plan
New York City Chairman and CEO Ken C. Hicks of Foot Locker announced a new strategic plan on Tuesday, including a series of operating initiatives to grow its business and long-term financial objectives.
“The company has a strong financial position and many high potential opportunities to increase its sales and profits, both in U.S. and international markets,” said Hicks. “Our senior management team undertook a process over the past several months to thoroughly understand our position in the marketplace today and to develop strategic priorities for the future.”
Under the plan, the company said it will focus its efforts in the near term on achieving a higher level of sales and profits from its existing businesses.
Over the longer term, Foot Locker said it will pursue strategies to further its profitable growth by strengthening and expanding its brands and assortments to a more-diverse customer base, growing its business internationally and by pursuing new business opportunities, including potential acquisitions, which are consistent with its strategic vision.
To measure, monitor and be held accountable for its progress toward that end, Foot Locker established the following set of financial objectives that it will look to achieve over the next five years: Sales of $6.0 billion; sales per gross square foot of $400; a net income margin of 5%; a return on invested capital of 10%; and a higher turnover of 3.0 times
“The achievement of these financial objectives will require us to reach beyond what the company achieved during its most productive years of the past decade,” Hicks said. “We believe that they are realistic and attainable, but will require our team to stretch to achieve them.”
A perfect storm for shoplifters
Retailers are fortunate the majority of customers are honest and choose to pay for the items they need and want. However, even the most well intentioned shoppers can succumb to the allure of theft when their moral compass is exposed to the polarizing forces of a recessionary economy and a retail environment where the perceived risk of apprehension is low due to thinly staffed stores. As a result, retail theft characterized as amateur or opportunistic is on the rise, according to 78% of retailers responding to a survey conducted by the Retail Industry Leaders Association (RILA). While amateur and opportunistic thieves are more active, all types of theft have increased, with 74% of retailers reporting seeing an increase of stolen items found in online marketplaces, and 65% reporting increased theft by organized groups.
A rebound awaits in key categories
Target is the beneficiary of a perceived quality gap relative to Walmart, and that typically helps it in head-to-head comparisons where such categories as apparel and home are concerned. Unfortunately, consumer decision-making is seldom so linear, and Target has a slew of other retailers against whom it must compete, and recent sales results suggest it has work to do. Target has reported weak (flat or declining) results for its apparel and home categories and did so again in February. However, such companies as TJX, Ross and Kohl’s, which appeal to the same value-oriented shoppers as Target, produced solid gains. TJX said its February same-store sales increased 10%, Ross produced an 11% increase and Kohl’s was up 3.7%. Also producing gains were such competitors as Nordstrom, Macy’s and JCPenney, which serve customers squarely in the crosshairs of Target’s “expect more, pay less” value proposition. Macy’s reported a better-than-expected increase of 3.7%, and Nordstrom topped analysts’ views with a 10.3% increase. JCPenney’s same-store sales rose 1.2%, which was also better than expected.