Foot Locker Looks to Continue Defying "Dying Mall" Trend

Jacob Harper |

The mall is a withering institution, replaced “wholesale” by online all-in-one retailers like eBay (EBAY) and Amazon (AMZN) . The hardest hit of the mall denizens have been those who have nearly always existed in malls. Clothiers like Abercrombie and Fitch, American Eagle and the like, born and bred under fluorescent lights and a Muzak soundtrack. Never having known much of a life outside of the mall’s spacious digs, let alone learn to adapt to life outside of it, these retailers with their scant online presence and declining revenues look all but too ready to die alongside them.  

This might come off as excessively harsh, and in cases like Abercrombie, changes in leadership and approach are sparking surprising turnarounds. But many former mainstays of the mall landscape are just as quickly dissipating. One of them reports earnings before the bell on May 23, and will paint a clearer picture of how to transition from the Shopping Mall Age to the Digital Shopping Age. It’s Foot Locker Inc. (FL) – and despite dying physical shopfront culture, they are looking to thrive.

They’ll have to defy the recent reports of a fellow mall resident. Urban Outfitters ($UO) reported earnings the week prior, and as we feared, they disappointed. Post-holiday sales have been sluggish, and despite Urban Outfitter’s relatively advanced online presence, they have not been able to mitigate losses.

So what makes Foot Locker different? They’re quite a little comeback story, having increased more than tenfold since 2009. Kudos on that front must be given to CEO Ken Hicks, who has emphasized physical retail’s main selling point over e-commerce: customer service.

While Urban Outfitters and the like have been playing catch-up in the online space, Hicks went on a hiring spree, adding hundreds of employees to amp up the retailer’s lauded customer service.

It seems counterintuitive. They’re responding to the encroaching digital age by doubling down on their brick-and-mortars. But rather than run in the back of the pack in the online space, they’re running first in the physical.

The question is whether or not this unique approach will continue, and see them surprise where Urban Outfitters faltered. Foot Locker is expected to notch $1.07 earnings per share this quarter, up 50 percent from two quarters prior.

Their focus on customer service, along with a more aggressive move into athletic wear (they’re a major carrier of red-hot brand Under Armour (UA) Foot Locker looks to maintain growth, if not surprise.

DISCLOSURE: The views and opinions expressed in this article are those of the authors, and do not represent the views of equities.com. Readers should not consider statements made by the author as formal recommendations and should consult their financial advisor before making any investment decisions. To read our full disclosure, please go to: http://www.equities.com/disclaimer

Companies

Symbol Name Price Change % Volume
FL Foot Locker Inc. 78.10 -1.10 -1.39 1,572,543
EBAY eBay Inc. 29.97 0.55 1.87 13,548,980
UA Under Armour Inc. Class A 28.81 -0.01 -0.03 4,014,148
AMZN Amazon.com Inc. 768.66 1.33 0.17 2,470,923
GZDIF Grizzly Discoveries Inc 0.04 0.00 0.00 0

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