Fit For A Potential Buyer
By Andrew Gaffney
There hasn’t been a lot of good news coming the headquarters at Foot Locker lately. The specialty athletic retailer recently notified analysts that they would post a second quarter loss, driven by significant inventory markdowns. Comp store sales are expected to drop between 7 and 8% for the period. On top of that, Foot Locker doubled the number of unprofitable stores to be shuttered this year to 250.
Foot Locker appears to be dress up its financial ledger for a potential buyer. The company recently announced that it retained Lehman Bros. to explore “strategic alternatives.”
Despite the slumping sales at Foot Locker, a few of the changes to point some silver linings for a potential buyer, including:
- The new executive suite looks strong, after a recent reshuffle. Keith Daly, current president/CEO of Foot Locker Europe, taking over the U.S. operation is a great move. Daly is one of the best merchants and will get the chain back in front of trends.
- The partnership with Nike on the planned House of Hoops stores could be the first fresh offering from Foot Locker in over a decade. This partnership is also significant because Foot Locker has had some fairly public feuds with Nike in the past, so the fact that two companies are working together on the Hoops concept can only be healthy for both.
- Outside of the U.S., Foot Locker is still doing fairly well. While they are closing unprofitable stores here in the U.S. they are planning to add up 30 new locations in Europe in 2008. Dick Johnson, another strong executive within the company, will be taking the reins in Europe from Daly so international growth should still be strong.