Founded in 1879, Foot Locker Inc. (NYSE: FL) has been forced to change business operations over time to accommodate the athletics market. Today, it provides goods to athletes regardless of gender, geographical location or sport of choice. To do so, it operates numerous subsidiaries and brand names that specialize in a specific product or sport. Foot Locker reported Q2 2018 earnings on August 16, 2018. The retail footwear company reported $1.78 billion in revenue this quarter, compared to $1.70 billion over the same period last year. Foot Locker is expected to report Q3 2018 earnings after the bell on November 20, 2018.
The following companies helped Foot Locker report a record $7.78 billion in sales in fiscal year 2017.
With stores in the United States, Puerto Rico, and the Virgin Islands, Champs Sports is among the largest mall-based athletic footwear and apparel retailer. It sells numerous athletic brands, carries merchandise for professional sports teams and offers products from a range of professional athlete clothing lines. Champs' unique market position relates to the range of athletic products offered, as it provides apparel across sports and apparel lines. As of August 4, 2018, Foot Locker has 537 Champs Sports locations internationally.
East Bay is a subsidiary of Foot Locker and provides athletes with footwear, apparel, equipment and private-label merchandise for numerous sports. Founded in 1980, it has operated as Foot Locker’s direct mail division since 1997. Headquartered in Wausau, Wisconsin, East Bay is among the largest direct marketers in the United States.
The main division of Foot Locker is the Foot Locker line of business. One of the global leaders in athletic apparel and footwear retail sales, Foot Locker operates 1822 stores in 23 countries as of August 2018, with more than 900 stores operating in the United States alone. Foot Locker offers products relating to a multitude of sports, including basketball, running and general fitness.
Footaction targets the young male demographic through the offering of athletic footwear and apparel. The merchandise offered by Footaction focuses less on functionality and more on athletic style. As of August 2018, Foot Locker operates 256 Footaction stores in the United States.
Kids Foot Locker
Kids Foot Locker provides children’s athletic apparel in the United States, Puerto Rico, Virgin Island, Europe and Canada. With 431 stores worldwide as of August 2018, Kids Foot Locker offers the largest selection of brand-name athletic gear, including footwear, apparel, and accessories. Kids Foot Locker outlets operate with approximately 1,500 square feet per store, which is almost less than half of the square footage of the adult Foot Locker stores.
In 2013, Foot Locker acquired Germany-based Runners Point Warenhandelsges (RPG) for $94 million. The specialty athletic store operated 200 stores in Germany, the Netherlands, Austria, and Switzerland. RPG’s banner stores included Runner’s Point, Sidestep and an online subsidiary called Tredex. The intention of the acquisition was to not only bolster Foot Locker's European sales but also to leverage the digital capabilities of these stores to expand its e-commerce business.
In 2015, Foot Locker announced a strategic decision to wind down operations of Lady Foot Locker stores, although there are still 74 locations internationally. This is not an indication that Foot Locker is giving up on the women’s athletic apparel market, however, as the company intends to expand operations of its standalone store called SIX:02. The intention of this store is to sell yoga and training apparel while providing an intimate customer service experience. The total number of locations has increased from three stores in 2012 to 31 stores in August 2018, with the business plan calling for more openings in the future.
The Bottom Line
Foot Locker’s market capitalization of $5.64 billion is a result of various product lines. By diversifying merchandise offerings to the public through the companies mentioned above, Foot Locker has a stake in multiple facets of the athletics market by offering different items to various customer bases.