Foot Locker (FL) , a nostalgic mall retailer that thrived in the ’80s and early 2000s, has managed to stay afloat as its peers have either gone out of business or significantly decreased their retail footprints across the nation.
Foot Locker lives on, but the retailer has recently been struggling to attract customers into its stores. In the company’s fourth-quarter earnings report for 2024, it revealed that its total sales declined by almost 6% year-over-year, while total revenue shrunk by 5.7%.
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Foot Locker’s sales decline during the 2024 holiday season happened during a time when mall visits were down nationwide in December. According to data from Placer.ai, indoor mall visits in December fell 0.6% year-over-year, while visits to outdoor malls declined by 1.8%.
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Foot Locker suffers a major loss
During an earnings call on March 5, Foot Locker Chief Commercial Officer Frank Bracken said that while the company saw shoe brands such as Adidas, New Balance, UGG, Crocs, etc., increase in sales, it continued to see challenges in its apparel business. Revenue in that business was “down in the mid-teens.”
In December last year, Bracken first warned investors that Foot Locker’s apparel sales were struggling due to a lack of innovation in silhouettes, colors, and materials.
“As innovation within apparel is lagging compared to our footwear business, we see this manifest in a more promotional environment as consumers clearly are seeking more newness and innovation in the category,” said Bracken during an earnings call on Dec. 4.
A shopper walks into a Foot Locker store at Fashion Valley, an upscale shopping mall on December 13, 2024 in San Diego, California.
In its latest earnings call, Foot Locker also flagged that in February, it continued to see customers pull back on their spending, which is hurting sales.
“We saw consumers be more cautious and sensitive, which has impacted our business quarter-to-date,” said Robert Higginbotham, Foot Locker interim chief financial officer, during the call. “We’re seeing consumers respond and come out to spend during compelling activations, key shopping events, and product launches or newness. They spend when there’s a call to action, but they are more cautious in those in-between periods.”
The retailer’s concern about the shift in customer behavior has caused it to predict that in 2025, its total sales will either decline by 1% year-over-year or increase by only 0.5%.
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“What we’re just looking at is consumers with some uncertainty,” said Foot Locker CEO Mary Dillon during the call. “So, our customers are young, by definition, they’re more limited in their discretionary budgets. This is for sure a category that they prioritize in their lives. But we’re watching – as they’re thinking about overall cost of living, plus some uncertainty about tariffs. So, we factored that into our 2025 outlook.”
Foot Locker’s cautious outlook comes after U.S. consumer spending declined for the first time in two years. In January, economic activity decreased by 0.2% after spiking by 0.8% in December, according to the Bureau of Economic Analysis.
Foot Locker announces major change to win back shoppers
As shoppers across the country change their tune, Foot Locker is planning to refresh about 300 stores this year after revamping 400 stores last year.
The change is part of Foot Locker’s Refresh program, which first launched last year. It involves giving stores an updated layout that is more “modern and streamlined.” This includes adding new sections in stores such as a “sneaker hub” and “communal try-on area.”
These stores will also have advanced technology and new and exclusive product releases.
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Foot Locker is also planning to open 80 new stores this year that have this new store concept.
“Coming out of 2025, there will be over 800 stores that we’ve elevated through our Refresh program in a 2.5-year timeframe,” said Dillon.
Since 2019, Foot Locker has closed 20% of its stores globally. In 2025, it expects its store count to decline by 4%, or roughly 110 stores.
Foot Locker’s stock has fallen about 71% since peaking at $64.60 in 2021.
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