Foot Locker, Inc. reported a decline in financial performance for the fiscal year ending February 1, 2025, with total sales of $7.97 billion, a decrease of 2.2% from $8.15 billion in the previous year. The company's net income was $12 million, a recovery from a net loss of $330 million in 2023. This improvement was attributed to a higher gross margin rate of 28.9%, up from 27.7% in the prior year, driven by reduced promotional activity and better occupancy cost management. The company also generated $105 million in free cash flow, marking a return to positive cash generation after a negative cash flow in the previous year.
In terms of operational changes, Foot Locker closed 139 underperforming stores as part of its strategic "Lace Up" plan, which aims to optimize its store portfolio. The company also announced the shutdown of operations in South Korea, Denmark, Norway, and Sweden, while entering into agreements to sell its businesses in Greece and Romania. The company is focusing on enhancing its omni-channel capabilities, with direct-to-customer sales increasing to 18.2% of total sales, up from 17.2% in the previous year. The launch of the FLX Rewards program in North America is expected to drive customer engagement and retention.
Foot Locker's store count decreased to 2,410 locations across 26 countries, down from 2,523 the previous year. The company reported a 6.2% increase in direct-to-customer sales, while store sales saw a slight increase of 0.4%. The footwear segment continued to dominate sales, accounting for 84% of total revenue, with a notable 3% increase in footwear sales compared to the prior year. The company also reported improvements in inventory turnover, which increased to 2.8 times, reflecting better inventory management practices.
Looking ahead, Foot Locker plans to invest approximately $270 million in capital expenditures for 2025, focusing on the remodeling and relocation of stores, including the opening of 80 "Reimagined" concept stores. The company aims to enhance its in-store experience and continue its digital transformation. Despite the challenges posed by a competitive retail environment and changing consumer preferences, Foot Locker remains committed to its strategic initiatives to drive growth and profitability in the coming years.
About FOOT LOCKER, INC.
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