Footlocker AnalysisJoin now to read essay Footlocker AnalysisFoot LockerA case studyPart ITable of ContentsTable of ContentsPage 2Performance AssessmentPage 3-4Financial AnalysisPage 4-5SWOT AnalysisPage 5-8ReferencesPage 9AppendicesPage 10-14Performance AssessmentFoot Locker Inc. was first introduced to the retail market place in 1974 (1). Since it’s entry into the market it has grown tremendously. It now has close to four thousand stores in the US and nineteen other countries around the world (1). Foot Locker’s focus group is males and females ages twelve to twenty and plans it’s locations around that demographic (1). Foot Locker keeps itself looking attractive to the young people by offering a wide variety of athletic shoes as well as multiple venues to purchase that same variety. Foot Locker Inc. encompasses Foot Locker, Kids Foot Locker, Lady Foot Locker, the Foot Action chain, Foot Locker International, Champs Sports, and the online venues of Eastbay.com and Footlocker.com. These eight different entities make up one of the most widely known and chosen athletic shoe retailers in the world.
Foot Locker Inc. is facing today what every company in the United States is facing. Due to the dwindling economic situation the company has seen a dramatic decrease in sales and is currently trying to restructure itself to be better positioned for the future. With competitors such as Finish Line moving in on its territory Foot Locker Inc. is faced with an ultimatum to change or risk dying out.
Foot Locker is established in the Athletic Shoe business and its main competitor is an organization known as Finish Line. While Foot Locker is much larger than Finish Line as of late Finish Line has been moving in on Foot Locker’s business. Finish Line established a name for itself only a few years after Foot Locker did but did so under another franchise name, Athlete’s Foot. Eventually Finish Line stepped out from its franchise’s shadow and established itself as a major competitor in the Athletic Shoe market. Recently Foot Locker made a move to acquire another large athletic shoe chain known as Genesco for $1.2B and not only did Genesco not accept, but they took a $1.5B offer from Finish Line (3). Due to some legal issues the deal between Finish Line and Genesco never took place but the move goes to show that Finish Line, even though they are much smaller, is moving in on Foot Locker’s turf and is willing to pay big money to do it.
Foot Locker is being successful in certain areas outside of the United States. For example Europe; Foot Locker has plans to aggressively attack the European Market by opening approximately 30 new stores in 2008. The European Division of Foot Locker is currently outperforming the US Division; therefore to help boost sales in the US corporate has decided to promote President and CEO of Foot Locker Europe Keith Daly to President and CEO of Foot Locker US (4). Other plans that Foot Locker intends to help the US Division include aggressively reducing inventory by a major clearance strategy of slow moving product lines. He is also planning on closing several US stores that aren’t performing to standards and cutting losses before they hurt the company too much (4). The ship is rocky right now but with these new changes matched with the US Government’s plans to stimulate the economy could really improve Foot Locker’s standings in the United States.
Financial AnalysisFoot Locker Inc. is not performing fantastically right now, although as far as Apparel Stores in the Service Sector it is right in line. Unfortunately no one likes to be average therefore Foot Locker needs to step it up a bit. As far as financials go Foot Locker is much bigger than its closet competitor Finish Line. Foot Locker’s yearly revenue is $5.61B versus Finish Line’s $1.33B. But a true teller of a company’s performance is their P/E, Price to Earnings, ratio which can be directly compared to Foot Locker. Foot Locker currently has a P/E of 23.10 where its closest competitor Finish Line is at an even 25.00. Now this is not a huge difference but it is enough. If you bundle Finish Line’s bid for Genesco with their lead in their P/E Finish Line seems to be winning the race. When a company out performs you no matter how big they are it can mean trouble. Large
s of companies aren’t only dealing with a lower P/E though. It can mean that big companies tend to put down a lot of projects, or do things they don’t want to and make small investments.
In the Service Sector, there are many major retail stores, from supermarkets through department stores as well as convenience stores, for example, as well as bookshops and thrift stores. These retailers can run big companies, but they might not have all the same features as bigger retailers, etc. These big stores can also hold smaller company units which might have multiple people involved, so if each individual is an important part of the retail chain it can take time to decide what they will do with those small units. Most retail locations are in the center, often the heart of it, so it’s a lot of shuffling down to the smaller groups.
There are many retailers that are run differently as well as which are a good example of this. While Foot Locker is able to go with smaller retailers, they can’t always fit in as large a group, they want to run as big as possible and are very competitive when it comes to competing in this market.
Why did the market get this bad? From our experience it is more of a trickle down problem in retail that has spread to bigger and smaller retailers. These smaller retailers have to find their own niche to be successful and there is a lot that can go wrong in the current industry.
My Thoughts
I think Retailers Are Suck. There is a great variety and many unique types of services that these large, established, and experienced retail stores can offer, and it’s no wonder that retailers are getting sucked into this one.
That said. As mentioned above a great deal of the service industry needs to get serious about making good on its plans to move into the digital economy. There are many companies and industries that will not make good on their plan, and retail companies will have to develop and innovate to deal with the ever-growing amount of tech and digital technology. They will need to start focusing on finding ways to leverage these capabilities while making significant strides in their business.
My favourite part of this post is when I see a little piece of research in my blog, which I think is a great example of that. In my opinion a lot of this data can be compared directly to the stock market and this is when some good things will come out.
While some companies are on the cusp of something that really makes sense for a company, many companies also have a ton of things they can add to that potential, and some of those are truly huge. The bottom line is that if you want products that do what they want to do then you need new or less expensive competitors. In addition to having a proven track record at bringing new or less expensive products to market then you will need to start investing more in developing or expanding new product offerings. In other words, if you only can take 3-4 other companies for a spin then they will come along and do a better job than you would expect from a new and cheap competitor .
When companies compete there is only a small chance that it will be a better business. A lot of consumers in the retail service sector feel like this, with