Foot Locker CEO highlights chain’s sales outlook across sneaker categories at investor day

Foot Locker stock drops amid its investor day and sales guidance outlook that is reprioritizing its sneaker lines across categories.

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JOSH SCHAFER: Foot Locker is closing some stores, but let's take a look at another part of the business first. Shares taking a step back as the company's 2023 guidance for same store sales and adjusted EPS came in lower than Wall Street had been expecting. Now the company also hosting its investor day with new CEO Mary Dillon sporting a fresh pair of Nike Air Max 97's, detailing Foot Locker's new lace-up strategy. She talked about Foot Locker's longstanding place in sneaker culture. Again, those Air Max 97's, Dave, she was highlighting them. And the current connection to the younger consumer-- about 66% of the company's buyers fall in the 18- to 34-year-old range.

Now I want to point out one slide shown during the investor day highlighting Foot Locker's plans to maintain a strong relationship with Nike, while also growing revenues from other brands to about 40% of the company's revenue. Foot Locker also hoping to grow sales in its exclusive categories from 15% currently to 25% by 2026, so sort of playing up a space in that sneaker culture, Dave. I thought it was funny, Mary Dillon highlighting those sneakers, but also just their role in sneaker culture that they feel like they've played and they belong in moving forward here.

DAVE BRIGGS: You've got me googling the Air Max 97, Josh. What is the new lace-up system? Is it no tying of the laces?

JOSH SCHAFER: No, sorry. Lace-up--

DAVE BRIGGS: That's what it appears.

JOSH SCHAFER: Lace-up is the plan that Foot Locker is calling their overall strategy. Air Max 97 is the shoe that she's wearing.

DAVE BRIGGS: Right, but you don't tie them, correct? I know I'm getting us a bit off track here, but it does not--

JOSH SCHAFER: You could wear--

SEANA SMITH: You're one of the sneakerheads here. You should tell us.

JOSH SCHAFER: You could wear Air Max 97s without tying them.

DAVE BRIGGS: I do.

SEANA SMITH: Yeah.

DAVE BRIGGS: OK, yes!

JOSH SCHAFER: You could wear without tying them. There was a direct correlation there. I was more just going for she was wearing cool kicks.

DAVE BRIGGS: All right. Sorry, you got me distracted. I was checking them out. What jumped out to me was really the closures of 400 primarily mall stores, but also they hinted at opening 300 new concept stores, which is really interesting. And we're going to talk about this later in the program with the Build-a-Bear CEO. Malls were going through a really rough patch, and then they became experiential. What Foot Locker appears to be doing is closing these 400 mall stores and opening experiential stores. I can't help but wonder if Build-a-Bear fits in the middle there where they are both.

But they have these youth related stores. They have stores where you can play games and get involved. And so it's an interesting play. But we also see inventory has been a problem for them, up 30% year over year from the quarter a year ago. And that's just been a story we have heard over and over and over again in the last year in retail.

SEANA SMITH: Yeah, certainly, something that Foot Locker and a number of other retailers are going to need to work out over the coming quarters. It's interesting also when you look at the Street's reaction because they were pretty mixed, even though the Q4 numbers were very strong. Some questions about the outlook, how realistic some of their sales guidance is going to be over the next fiscal year. So I think that's part of the reason why we're seeing shares off just about 5% today.

DAVE BRIGGS: Yeah, the stock was up quite a bit originally on the news, and then it fell back down towards the close. OK.