Foot Locker is expected to close more than 400 low-performing stores in shopping malls by the year 2026, as it shifts its focus to new concept stores.
The company's new Lace Up business plan was revealed by executives at an investor day in New York City on Monday. The plan included opening free-standing shops targeting niche consumers such as sneakerheads, children and higher-income shoppers.
Axios reported that Foot Locker is revitalizing its partnership with Nike, because they said the companies have a shared vision of the future, aligning growth plans and key strategic areas like basketball, kids and sneaker culture. In recent years, Nike has reduced the number of traditional retailers and websites it allowed to sell its products, as it shifted more to a direct-to- consumer strategy.
We have reestablished joint planning, data and insight sharing so that we can better serve customers and the fruits of our renewed commitment to one another will begin to show up and holiday this year, Dillon said.
There are approximately 1,300 Foot Locker stores in malls in North America, and the company expects to close as many as 420 by 2026 to shift its focus to better-performing stores. The company said that it will close 25% of its stores in A and B-rated malls and 50% of its stores in C and D-rated malls.
Senior vice president of store development Tony Aversa said that these 400 stores represent more than 10% of our total sales.
Mall ratings are based on sales per square foot. Foot Locker's presentation showed that sales at A- and B-rated malls increased by 8% since 2019 according to Business Insider.
By 2026, Foot Locker hopes to open more than 300 new concept stores. This includes shops located outside malls. According to the new business plan, 50% of the company's revenue will come from outside malls, a jump from the current 35%.
The company's goal is to increase its annual revenue by $1 billion to $9.5 billion by the year 2026, and it expects to have over 2,400 stores, which is 300 fewer than it currently has.
Three new store formats were detailed at investor day, including a 15,000 square foot community store for locations with strong affinity for sneakers and 10,000 square feet of power stores that would offer an elevated shopping experience for shoppers in shopping areas with a broad range of consumers. The company plans to open a 7,500 square-foot house of play stores that would market children's products.
A Foot Locker power store was recently opened near Dallas, Texas, which Dillon said is attracting an older and higher-income shopper. The median income of the Dallas Fort Worth store is 30% higher than our average in the fleet, Dillon said at investor day. These are just a couple of examples of early wins that we're seeing and our ability to expand wallet share and broaden customer reach, which gives us great confidence in our growth plans.