Foot Locker Expects Another Year of Deep Discounts in Sneaker Industry

Foot Locker said Wednesday it expects another year of deep discounts in the sneaker industry as its largest brand partner Nike continues its reset and relies on markdowns to clear through stale inventory.

Earnings and Sales Performance in the Holiday Quarter

The footwear giant delivered mixed results for its holiday quarter, beating Wall Street’s expectations on earnings but falling short on sales. In the year ahead, it anticipates that trend to reverse. For fiscal 2025, Foot Locker is expecting profits to be lower than Wall Street estimated, while the high end of its comparable sales guidance is better than analysts had forecast, according to LSEG and StreetAccount.

Financial Results

Here’s how Foot Locker performed in its fiscal fourth quarter compared with what Wall Street was anticipating, based on a survey of analysts by LSEG:

• Earnings per share: 86 cents adjusted vs. 72 cents expected
• Revenue: $2.25 billion vs. $2.32 billion expected

The company’s reported net income for the three-month period that ended Feb. 1 was $49 million, or 51 cents per share, compared with a loss of $389 million, or $4.13 per share, a year earlier. Excluding one-time items related to impairment charges and net losses from discontinued operations, Foot Locker reported adjusted earnings per share of $82 million, or 86 cents per share.

Sneaker Industry Trends and Expectations

Foot Locker improved profits by more than 100% compared with the prior quarter, but it’s not expecting that trend to continue in its current fiscal year, thanks to deep promotional activity across the sneaker marketplace. It’s expecting adjusted earnings per share to be between $1.35 and $1.65, well behind Wall Street estimates of $1.77, according to LSEG.

Nike Partnership and Challenges

Foot Locker’s largest brand partner, Nike, is in the midst of a turnaround under its new CEO Elliott Hill, and is relying on markdowns to clear out inventory. The company is aiming to drive full-price sales on its website, but first, it needs to aggressively liquidate old inventory through "less profitable channels," executives said. This presents a challenge for Foot Locker, as it makes it more likely that customers will buy from Nike directly, rather than from Foot Locker.

Diversifying Brand Mix and Store Fleet Refresh

Under CEO Mary Dillon’s direction, Foot Locker has worked to diversify its brand mix and is now doing a lot more business with buzzy companies like On Running and Hoka and legacy stalwarts like Ugg. The company is also doing a better job of keeping brands happy now that it’s working to refresh and remodel its aging store fleet, which is still responsible for more than 80% of sales. It now has eight "reimagined" locations across North America, Europe, and Asia, which are top-to-bottom remodels of the company’s store layout and approach.

Conclusion

Foot Locker is expecting another year of deep discounts in the sneaker industry, driven by its largest brand partner Nike’s reliance on markdowns to clear through stale inventory. While the company is working to diversify its brand mix and refresh its store fleet, it faces challenges in the year ahead, including the impact of Nike’s promotional activities on its business.

FAQs

Q: What is Foot Locker’s guidance for fiscal 2025?
A: The company is expecting adjusted earnings per share to be between $1.35 and $1.65, and comparable sales to rise between 1% and 2.5%.

Q: How is Foot Locker’s relationship with Nike?
A: Foot Locker’s relationship with Nike is "strong and fully reset," according to CEO Mary Dillon, and the company believes in the work Nike is doing to revitalize the brand.

Q: What is Foot Locker’s strategy to deal with Nike’s promotional activities?
A: Foot Locker is aligning closely with Nike to optimize its merchandise mix and inventory levels to support full-price sales and partner with Nike to bring health back to critical consumer franchises like Air Force 1, Dunk, and the AJ1.

The global labor movement has faced numerous challenges in recent years, with many countries experiencing crackdowns on trade unions and worker organizations. In this article, we will explore the current state of the global labor movement and the impact of these crackdowns on workers and their rights.

The Global Context

The global labor movement has been a driving force for social and economic change, advocating for better working conditions, higher wages, and improved labor rights. However, in recent years, many countries have seen a surge in anti-union legislation and attacks on workers’ rights. This trend is particularly pronounced in countries with strong economies and growing wealth disparities.

Crackdowns on Unions: Key Countries

Brazil

In Brazil, the government has been accused of cracking down on labor unions and workers’ rights. In 2017, the government passed a bill allowing employers to dismiss workers without cause, and in 2019, it introduced a new labor bill that would have made it easier for employers to fire workers. The bill was met with widespread resistance from labor unions and human rights groups, and was eventually withdrawn.

India

In India, the government has also been accused of suppressing labor movements and union activities. The government has introduced laws to increase the minimum wage and reduce labor laws, but critics argue that these measures will only benefit large corporations and hurt small businesses and workers. The government has also been accused of using security forces to suppress labor protests and demonstrations.

United States

In the United States, the labor movement has also faced significant challenges. In 2018, the Supreme Court ruled in the Janus v. AFSCME case that public-sector workers cannot be required to pay union dues, a decision that has been criticized for weakening the power of public-sector unions. Additionally, many states have introduced "right-to-work" laws, which make it more difficult for unions to organize and bargain collectively.

Poland

In Poland, the government has passed laws to restrict collective bargaining and make it easier for employers to fire workers. The laws have been criticized by the European Union and human rights groups, who argue that they violate international labor standards and undermine workers’ rights.

Impact on Workers and the Economy

The crackdown on labor unions and workers’ rights has significant implications for workers and the economy. When workers are unable to bargain collectively or organize, they are more likely to be exploited and have their rights violated. This can lead to lower wages, poor working conditions, and increased inequality. In the long term, this can have negative effects on economic growth and social stability.

Conclusion

The global labor movement is facing significant challenges, with many countries experiencing crackdowns on trade unions and workers’ rights. The impact of these crackdowns is far-reaching, with workers and the economy being negatively affected. It is essential for governments and international organizations to recognize the importance of protecting workers’ rights and promoting collective bargaining. By doing so, we can create a more just and equitable society, where workers are valued and respected.

FAQs

• What are the main challenges facing the global labor movement?

  • Crackdowns on trade unions and workers’ rights, anti-union legislation, and erosion of collective bargaining rights.

• Which countries have experienced significant crackdowns on labor unions and workers’ rights?

  • Brazil, India, United States, and Poland.

• What are the implications of these crackdowns on workers and the economy?

  • Increased exploitation, poor working conditions, lower wages, and increased inequality, with negative effects on economic growth and social stability.

• What can be done to protect workers’ rights and promote collective bargaining?

  • Governments and international organizations should recognize the importance of protecting workers’ rights and promoting collective bargaining, and take steps to prevent anti-union legislation and erosion of collective bargaining rights.

Walgreens to Go Private in $10 Billion Deal with Sycamore Partners

Walgreens, the struggling drugstore chain, has agreed to be taken private by private equity firm Sycamore Partners in a deal valued at around $10 billion. The company will receive $11.45 per share in cash, representing an 8% premium to its closing price on Thursday. Shareholders could also receive up to $3 more per share in the future from the sale of Walgreens’ primary-care businesses, including Village Medical, Summit Health, and CityMD.

Background

Walgreens has been struggling to regain its footing as a public company, with its market value shrinking to under $8 billion in late 2024 due to competition from its main rival CVS, grocery chains, big-box retailers, and Amazon, among other challenges. The company has been squeezed by the transition out of the Covid pandemic, pharmacy reimbursement headwinds, softer consumer spending, and a troubled push into healthcare.

Deal Details

The deal, which is expected to close in the fourth quarter of this year, values Walgreens at an equity value of around $10 billion. The company will maintain its headquarters in Chicago and currently has over 310,000 employees globally and 12,500 retail pharmacy locations across the U.S., Europe, and Latin America.

CEO’s Commentary

Walgreens CEO Tim Wentworth, who took the role in 2023, commented, "While we are making progress against our ambitious turnaround strategy, meaningful value creation will take time, focus, and change that is better managed as a private company." He added, "Sycamore will provide us with the expertise and experience of a partner with a strong track record of successful retail turnarounds."

What’s Next?

Walgreens will continue to operate as a private company, and its second-quarter earnings will be released on April 8. The company plans to close roughly 1,200 of its drugstores over the next three years, including 500 in fiscal 2025 alone. It has also scaled back its push into primary care by cutting its stake in provider VillageMD.

Frequently Asked Questions

Q: What is the value of the deal?
A: The deal is valued at around $10 billion in equity value.

Q: How much will shareholders receive per share?
A: Shareholders will receive $11.45 per share in cash, with the possibility of up to $3 more per share in the future from the sale of Walgreens’ primary-care businesses.

Q: When is the deal expected to close?
A: The deal is expected to close in the fourth quarter of this year.

Q: What will happen to Walgreens’ operations after the deal?
A: Walgreens will continue to operate as a private company, with its headquarters in Chicago, and will maintain its current operations, including its retail pharmacy locations and primary-care businesses.