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Foot Locker (FL) CEO Mary Dillon is already running at the sneaker retailer just seven months into the business.
“We’re a footwear company and we focus on all things sneakers,” Dillion said on Yahoo Finance Live (video above) at the ShopTalk conference in Las Vegas.
Dillon was named to the top position at Foot Locker last August and officially took over the position in January. Credited with creating the modern ULTA for eight years, Dillon wasted no time running a similar growth-oriented playbook at Foot Locker.
At Investor Day earlier this month, the company unveiled its “Lace Up” plan. As part of the plan, Foot Locker will close 400 underperforming stores, mostly in low-end malls, and focus on out-of-market locations. The company will aim to better diversify its various sneaker concepts.
The Foot Locker brand targets sneaker-heads, while Champs Sports targets the performance and athletic consumer.
Over time, Foot Locker sees it reach $10 billion in annual sales and an operating margin of 10%. The company today has sales of $8.5 billion and an operating margin of 7%.
Dillon admits 2023 is a reboot year as it works to clean up its store footprint and refine its operating model.
“2023 is a reboot year, we’ve been very clear about that. But we’re investing the next 50 in the capacity we need to really build the Foot Locker reputation, I’d call it. So I’m very, very excited about that,” Dillon added.
Wall Street is seeing the potential in Foot Locker and is crediting Dillon for its first round of initiatives.
We think a new steady-state algorithm with mid-single-digit percentage sales / + high-single-digit to low-double-digit EPS levels after a significant relaunch in 2023 is very realistic, Asia Licensing, restructuring Nike),” said Evercore ISI analyst Omar Saad.
Saad added, “But equally, we think Foot Locker will start to flip the script from an intermediary narrative to a grow-from-global-healthy-sneaker-demand narrative. And the shares will start trading at 9x forward EPS (and 5x target 2026 EPS), the model in the next quarters.” As the years change, we see the potential for the multiples to be in the low-to-mid-teens (FL traded mid-to-high-teens before the split).
Brian Sozzi Yahoo Finance is the editor-in-chief. Follow Sozzi on Twitter @BrianSozzi And on LinkedIn. Tips on the banking crisis? Email brian.sozzi@yahoofinance.com
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