Foot Locker 2005 Annual Report Download - page 8
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6
The Company's largest business, Foot Locker, which was
first introduced by the Company in 1974, today is the
world's largest athletic footwear and apparel retailer. At
year-end, Foot Locker operated a total of 2,121 stores
around the globe in 20 countries, with 1,398 stores locat-
ed in the United States, 501 stores in Europe, 128 stores
in Canada and 94 stores in the Asia/Pacific region. Its
stores average 3,600 gross square feet and target a 12-
to-20 year old male customer base that is influenced by
competitive sports and urban trends.
In the North American market, Foot Locker is actively
implementing several strategies with a goal of driving
comparable-store sales growth and reducing its operat-
ing costs as a percentage of sales. These strategies
include enhancing the portfolio of its store fleet by open-
ing new stores in markets with high sales potential, clos-
ing stores that are losing money and updating the
appearance of stores through a remodeling and reloca-
tion program. Of the North American Foot Locker stores
2005 financial results, the profit increase of Foot Locker
Canada was most notable, with its division profit margin
reaching double digits for the first time in its history.
For the past several years, Europe has represented the
most exciting region in which the Company has pursued
store growth. Foot Locker continued to implement suc-
cessfully a store expansion strategy in Europe during
2005, opening 22 new stores in countries where the
Company already operates, as well as testing two new
markets -- Greece and Switzerland. The operating results
for Foot Locker Europe in 2005 were disappointing, as a
combination of weak economic factors, coupled with a
more competitive marketplace, led to a contraction of its
division profit margin rate, which was, however, still in the
low double digit range.
The Company also sees an opportunity for store
growth in the Asia/Pacific region. In the near-term, new
store openings will be concentrated in the Australian and
New Zealand markets, which are regions where the
Company already operates profitably. Store growth into
new markets in this region is expected in the future, once
the Company is confident that a profitable business
model has been developed.
Foot Locker is actively implementing several strategies
with a goal of driving sales growth and reducing its
operating costs as a percentage of sales.