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Top Bulls Reasons To Buy — Vote below!
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Closing Stores Improves Future Performance |
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Movement into Low-Performance Footwear Protects Sales |
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| Company: | Foot Locker (FL) |
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![]() edit Closing Stores Improves Future PerformanceAfter Foot Locker's company-wide operating margin fell to 6.6% in 2006 (from 7.2% in 2005), the company began an initiative to improve efficiency and profitability by changing their store base. This strategy comprised opening new stores, relocating existing stores to optimal locations and closing down unproductive stores. During 2007, Foot Locker closed 157 stores on net (opening 117 new stores while shutting down 274 underperforming locations). The store closings have continued in 2008 as in the first quarter of FY08, Foot Locker closed 60 more stores, while simultaneously opening 33 new locations for a net decrease of 27 stores. The initiative is still incomplete, as management plans on closing about 140 stores during 2008, while opening about 60 stores and remodeling/re-locating around 200 stores. Although this initiative is very costly, once completed, FL's stores will be much more efficient and profitable in the future.
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![]() edit Movement into Low-Performance Footwear Protects SalesIn November 2008, Foot Locker acquired Delia's CCS business for $103.2 million. CCS is a direct-to-consumer (internet and catalog) retailer of skateboarding apparel, footwear and accessories, mailing approximately 18 million catalogs annually. The move represents an attempt on Foot Locker's part to appeal to a younger target market, particularly in the rapidly growing action and extreme sports categories as FL's staple high-performance footwear segment declines because of a weakening economy and spending environment.
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