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Details on Industry Insight.
One of Foot Locker's key initiatives in 2009 is to expand its skate shoe business, company executives said in a conference call with investors yesterday.
In addition to capitalizing on its recent acquisition of online skate retailer CCS, the company plans to expand the skate category in its brick-and-mortar stores.
Here are some excerpts from CEO Matthew Serra's comments about action sports and skate during the conference call:
"... We believe that we have a very meaningful opportunity in 2009 to enhance our business by expanding further in the action sports categories.
"Our purchase of CCS was a significant step in capitalizing on this opportunity. Our fourth quarter profit from CCS was in line with our expectation. ... CCS has an opportunity to generate double digit operating profit margins during 2009, in line with those of Footlocker.com.
"Additionally, we will continue to pursue opportunities to expand our skate business in the bricks and mortar segment of our business."
Other interesting notes from the call:
- While same-store sales declined 7.3 percent in the fourth quarter, the company's gross margin rate increased 330 basis points because Foot Locker saw the slowdown coming and reduced inventories and cut operating expenses. That meant they did not have to be promotional to chase sales.
- The company ended the year with inventories 13 percent lower than the same period last year.
- Tapout is a new apparel line in Foot Locker stores and the company said it is doing well.
- CCS was accretive to earnings in the fourth quarter.