Foot Locker shares fall on 2022 outlook as Nike ramps up DTC strategy

Foot Locker shares dropped 35 percent after the US athletic apparel and footwear retailer said it expected a drop in sales and profitability in 2022.

It comes as Nike, Foot Locker’s key supplier, ramps up its efforts to sell directly to customers.

While Foot Locker didn’t name Nike directly, it said “no single vendor is expected to represent more than approximately 60 percent of total purchases for fiscal 2022, down from 70 percent in 2021, and 75 percent in 2020”.

It said this change “reflects the accelerated strategic shift to DTC by one of the company's vendors”.

Foot Locker now expects like-for-like sales to drop by between 8 to 10 percent in its 2022 financial year.

Fiscal 2021 results

In the fourth quarter ended January 29, Foot Locker reported a 6.9 percent year-on-year increase in sales to 2.3 billion dollars, while its net income fell to 103 million dollars from 123 million million dollars a year earlier.

For fiscal year 2021, the retailer’s sales increased 18.7 percent to 9 billion dollars, while its net income increased to 893 million dollars from 323 million dollars in fiscal 2020.

“We closed out a record year by delivering solid fourth quarter results that reflect the ongoing momentum we have built in our business in the midst of an evolving market,” said CEO and chair Richard Johnson in a statement.

He added that the company made “significant progress diversifying our brands, categories and channels in 2021, as well as expanding our customer base across demographics and high-growth geographies with the acquisitions of WSS and atmos”.