Foot Locker's Turnaround Shows Signs of Life

Foot Locker saw comparable sales decline 1.8 percent during its fiscal first quarter, far better than the 3.1 percent drop-off that analysts expected, according to StreetAccount. The sneaker retailer also reaffirmed its fiscal year guidance, which projects sales to be between a 1 percent decline and a 1 percent gain, compared with a decline of 0.6 percent that analysts had forecast, according to LSEG. Shares of Foot Locker surged 15 percent on Thursday. Mary Dillon, the former CEO of Ulta Beauty, has been working to turn Foot Locker around, focusing brand partnerships, full-price selling, loyalty program upgrades, and revamped stores.

Total Retail's Take: While it hasn't been easy or fast, Foot Locker is starting to turn the corner. The efforts of Dillon and the organization's "Lace Up" turnaround plan are beginning to yield positive results. That said, there's a tremendous amount of work still to be done. Comparable store sales in Q1 were still in the red, and capturing increased wallet share from a low-income consumer during a period of high inflation won't be easy. To combat these headwinds, Foot Locker is investing in brand partnerships, most notably with Nike back in the fold, and re-evaluating its retail footprint. Specifically, the retailer is opening off-mall locations, closing underperforming stores, and refreshing existing locations, putting the spotlight on its desirable brands. The question now will be can Foot Locker maintain its positive Q1 momentum.