Friday, 12 December 2014

Why This Footwear Retailer Looks Like An Impressive Investment

The company has been consistently performing well, and brought about its ninth consecutive quarter of sales and bottom line growth. The only division which could not match up with other divisions was its Europe division, the reason being obvious as economic uncertainty took its toll. Even other shoe makers such as Wolverine World Wide (WWW) and Deckers Outdoor Corp. (DECK) have faced a similar situation in their recent quarterly results of low sales on account of weak demand in Europe.
Getting back to Foot Locker, the key driver for its eye popping results was the Champs Sports segment which posted an increase of 20% from last year. So what powered the demand for the retailer’s products? Let’s find out.

Product innovation

Variation in the styles and colors for the footwear and the apparel product lines spurred demand for its products. Nike (NKE) needs a special mention here for its new products introduced this year. With the launch of Nike Free, a lightweight running shoe, the company achieved a strong foothold in the tough European market. The magic of colors was evident with the outstanding increase in its basketball business for the quarter. Adding to these were the new colors and styles offered by the Converse brand drew customer attention.

Marketing efforts

Foot Locker spent a great deal on marketing their products which happened to benefit them in a big way by attracting more customers and increasing the overall footfall for the stores. Their marketing investment was in excess of $2 million for the quarter. They would continue to increasingly invest in marketing strategies in the coming months also.

Store expansion

The company laid stress on replacing the non profitable stores with the profitable ones by closing 34 stores in U.S. which were unproductive and opened 25 new stores in Europe where the company foresees profitability. The total store count for Foot Locker has become 3,360 at the end of the quarter. Most of its store expansion efforts were in the CCS skate and Foot Locker International stores highlighting their focus on the international market.

The footwear retailer plans to open Kids stores in selected markets in the year and also put special efforts to expand its women’s business in general. It targets to spend $10 million on the women’s business segment in the months to come.

Conclusion

Foot Locker has been in an active mode with lots of innovation, expansion and marketing efforts. The company did pretty well in the previous quarter and with the way things are going, it seems Foot Locker would keep getting bigger with time.
http://www.gurufocus.com/news/298298/why-this-footwear-retailer-looks-like-an-impressive-investment

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