By Sara Germano
Foot Locker Inc. posted higher profits and sales but reported
challenges in athletic apparel as competition to meet shoppers'
growing desire for workout clothes and training gear heats up.
Apparel sales were down in the mid-single digits, the company
said, and faced the steepest declines in Europe and at the Champs
Sports division, which has typically relied upon sales of licensed
apparel.
For Foot Locker, workout clothes, sports jerseys and training
gear have been used mainly as a tool to drive customers to its
stores to purchase shoes with three-quarters of last year's sales
last year coming from footwear.
The U.S. sportswear industry is shifting toward more fashion-
and lifestyle-focused athletic looks and away from technical sports
products, like running footwear and licensed apparel where Foot
Locker has traditionally done well. Retailers from department
stores like Macy's Inc. and Kohl's Corp. to high-end fashion houses
like Christian Dior S.A. and Chanel have been infusing sport-styled
looks into their offerings, in response to growing consumer desire
for workout clothes, a trend the industry calls "athleisure."
As the holiday season approaches with competitive promotions,
Chief Operating Officer Richard Johnson said Foot Locker is trying
to do more with smaller apparel offerings compared with department
stores like Macy's, which carries some of the same marquee athletic
brands, including Nike Inc.
"They do apparel different than we do. They can dedicate a lot
more space to apparel," said Mr. Johnson, referring to Macy's.
"It's not about more for us, it's about more of the right stuff for
us."
Net income through the quarter ending Nov. 1 rose 15% to $120
million from a year earlier and sales excluding newly opened and
newly closed stores rose 6.9%. Total sales grew 6.7% to $1.7
billion. Traffic fell less than 1% for the period, in part because
of some store remodeling.
Shares of Foot Locker fell 4.1% in midafternoon trading to
$54.62.
Foot Locker is also going through a management transition with
Mr. Johnson taking over as chief executive from Ken Hicks on Dec.
1, as announced earlier this month. Mr. Hicks will remain chairman
until May. He joined Foot Locker in 2009 from J.C. Penney Co. and
returned the sneaker and apparel retailer to profitability, after
three straight years of declining same-store sales and an $80
million loss in 2008.
Mr. Hicks said the timing of the transition will enable Mr.
Johnson to develop the company's next long-term plan which will be
announced next spring.
According to SportScanInfo, dollar sales of all sport licensed
softgoods which includes apparel fell 0.2% for the year through
Nov. 15. Matt Powell, a sport industry analyst with NPD Group, said
the drop in licensed gear can be partly attributed to the recent
World Series between two small-market Major League Baseball
teams--the San Francisco Giants and the Kansas City Royals--and
lackluster performances by major-market National Football League
teams, including both New York squads.
On the footwear side, sales were driven by double-digit
increases in basketball, led by Nike's Jordan brand and signature
shoe lines from several top swoosh players, including Kobe Bryant,
Kevin Durant, and LeBron James. Sales through the holiday period
will largely be driven by several hotly anticipated shoe releases,
including the initially-delayed Nike LeBron 12 NSRL shoe, now
scheduled for Dec. 1.
Foot Locker is also seeing some new basketball stars gaining
traction. "We're seeing the beginning of what we expect to be a
significant Kyrie Irving business in the future," said Mr. Johnson,
referring to the Cleveland Cavaliers' point guard.
Chelsey Dulaney and Angela Chen contributed to this article.
Write to Sara Germano at sara.germano@wsj.com
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