Foot Locker’s Strategic Overhaul Shows Early Success in Q2

In a pivotal moment for Foot Locker, the company’s second-quarter results point to the early success of its ambitious Lace Up Plan, which comprises initiatives to enhance its digital business, store experience, loyalty programs and brand building.

With a 2.6% increase in comparable sales, surpassing initial projections and the company’s first rise in six quarters, Foot Locker’s performance is progressing as it approaches the second half of the year with renewed confidence. Foot Locker President and CEO Mary Dillon highlighted the acceleration of the Lace Up Plan’s impact, marking a “meaningful inflection point” for the company.

“We’re approaching the back half of the year with confidence,” Dillon told investors and analysts during the company’s Q2 earnings call Wednesday (Aug. 28). “The impact of our Lace Up Plan is accelerating. The Lace Up Plan is working, as evidenced by our return to positive total and comparable sales growth as well as gross margin expansion in the second quarter. We’re really pleased to be returning to positive comps as we’re pulling back on promotions. Our execution is getting better in meeting customers’ needs.”

Foot Locker’s comparable sales increase was led by global Foot Locker and Kids Foot Locker comparable sales growth of 5.2%. The company also reported a 1.9% increase in total sales, to $1.896 billion, driven by a solid start to the back-to-school season and growth in its FLX Rewards program. This was countered by a net loss of $12 million.

The Lace Up Plan emphasizes simplifying and optimizing Foot Locker’s operations, focusing on core banners and markets. As Dillon shared during the earnings call, this strategy includes closing stores and eCommerce operations in South Korea, Denmark, Norway and Sweden, while transferring operations in Greece and Romania to local partners.

“We’re always evaluating the business,” Dillon explained. “For us, a key theme has been simplification and optimization. The lenses we use are size and scale of a market, growth potential, profitability, and customer segment priorities we’ve identified. We feel good about where we sit on the portfolio today and will continue to evaluate.”

Foot Locker’s digital transformation is also gaining momentum, with digital sales penetration rising to 15.9%. The company is enhancing its digital capabilities, including a new mobile app set to launch in Q4. The focus on digital integration is part of a broader strategy to drive customer engagement and streamline operations while the introduction of new digital tools and improvements in the online shopping experience are expected to support Foot Locker’s growth and competitiveness in the evolving retail landscape.

The relaunch of the FLX Rewards program in June has seen promising results, contributing to a 24% increase in sales through loyalty channels in Q2. Dillon aims for a 50% loyalty penetration by 2026.

Foot Locker recently unveiled its reimagined store (112 W. 34th St.) in Manhattan, showcasing the new “Home Court” concept developed in collaboration with Nike and Jordan. This multibrand basketball destination features the latest on-court and off-court products, driven by a customer-centric design aimed at elevating the global basketball experience.

The store integrates 3-D scanning technology for precise fitting and will feature products from Nike, Jordan, Adidas, Puma, New Balance and Under Armour. A notable addition is the Kids Foot Locker concept, designed with interactive elements and digital sizing assistance to enhance the shopping experience.

This store opening aligns with the Lace Up Plan, which has already transformed locations in Wayne, N.J., and Paris. Foot Locker is planning more expansions with new stores in Melbourne and Delhi, the latter marking the company’s debut in India.

As part of its broader strategy, Foot Locker will relocate its headquarters from New York City to St. Petersburg, Florida, by the end of 2025, a move expected to create better team collaboration and operational efficiency.

“We have a large center of gravity there already,” Dillon explained. “We think it’s a great place for us to continue to grow the business. We think it’s going to offer us better opportunities for collaboration. We’re not requiring relocation, so we think we’ll be able to retain our great talent.”