Q1 2024 Foot Locker Inc Earnings Call
That's right.
Yes.
Yeah.
Uh huh.
Uh huh.
Yes.
Yeah.
Uh huh.
Yeah.
Right.
Yeah.
Yes.
[music].
Operator: Good morning, and welcome to Foot Locker's first quarter 2024 financial results conference call. At this time, all participants are in a listen-only mode.
Speaker Change: Good morning, and welcome to foot lockers first quarter 'twenty 'twenty four financial results conference call.
Speaker Change: At this time all participants are in a listen only mode.
Operator: Later, we will conduct a question and answer session. This conference call may contain forward-looking statements that reflect management's current views of future events and financial performance. Management undertakes no obligation to update these forward-looking statements, which are based on many assumptions and factors, including the effects of global economic and market conditions, currency fluctuations, and inflation, as well as customer preferences and other risks and uncertainties described more fully in the company's press releases and reports filed with the SEC, including the most recently filed Form 10-K or Form 10-Q.
Speaker Change: Later, we will conduct a question and answer session.
Operator: Any changes in such assumptions or factors could produce significantly different results, and actual results may differ materially from those contained in the forward-looking statement. Please note that this conference is being recorded. I will now turn the call over to Robert Higginbotham, Senior Vice President, FP&A, Investor Relations, and Treasurer. You may begin.
Speaker Change: This conference call may contain forward looking statements that reflect management's current views of future events and financial performance.
Speaker Change: Management undertakes no obligation to update these forward looking statements, which are based on many assumptions and factors, including the effects of global economic and market conditions.
Speaker Change: Currency fluctuations.
Speaker Change: Customer preferences and other risks and uncertainties described more fully in the Companys press releases.
Speaker Change: Our reports filed with the SEC, including the most recently filed Form 10-K or Form 10-Q.
Speaker Change: Any changes in such assumptions or factors could produce significantly different results and actual results may differ materially from those contained in the forward looking statements.
Speaker Change: Please note that this conference is being recorded.
Speaker Change: I will now turn the call over to Robert Higginbotham scene.
Speaker Change: Senior Vice President F TNA Investor Relations and Treasurer, you may begin.
Robert Higginbotham: Thank you, Operator. Welcome, everyone, to Foot Locker Inc.'s first quarter earnings call. We'll begin with prepared remarks by Mary Dillon, our President and Chief Executive Officer. Frank Bracken, our Executive Vice President and Chief Commercial Officer, will then give more detail on our results across our banners and geography. Then Mike Baughn, our Executive Vice President and Chief Financial Officer, will review our first quarter results in more detail, as well as our 2024 outlook.
Thank you operator, welcome everyone to foot Locker, Inc. 's first quarter earnings call. We will begin with prepared remarks by Mary Dillon, President and Chief Executive Officer.
Speaker Change: Frank Bracken, our executive Vice President and Chief Commercial Officer will then give more detail on our results across our banners and geographies.
Speaker Change: Then Mike Barnes, our executive Vice President and Chief Financial Officer will review, our first quarter results in more detail as well as our 2020 for outlook.
Robert Higginbotham: Following our prepared remarks, Mary, Frank, and Mike will take your questions. To note, today's call will reference certain non-GAAP measures. The reconciliation of GAAP to non-GAAP results is included in this morning's earnings release. We also have a slide presentation posted on our Investor Relations website with information that will be referenced during the call. Finally, for future planning purposes, we tentatively plan to release our second quarter 2024 results on Wednesday, August 28th. Now, I will turn it over to Mary.
Speaker Change: Following our prepared remarks, Mary Frank and Mike will take your questions.
Speaker Change: To note today's call will reference certain non-GAAP measures.
Speaker Change: A reconciliation of GAAP to non-GAAP results is included in this morning's earnings release.
Speaker Change: We also have a slide presentation posted on our Investor Relations website with information that will be referenced during the call.
Speaker Change: Finally for future planning purposes, we tentatively plan to release, our second quarter 2024 results on Wednesday August 28, and now I will turn it over to Mary.
Mary N. Dillon: Thank you, Rob. I'll start this morning with a brief overview of our first quarter results and then provide an update on the ongoing execution of our LASA plan. Our team delivered a solid start to the year with better than anticipated non-gap earnings per share and comparable sales performance in line with the guidance we provided on our last earnings call. Comps declined 1.8 percent, which was in line with our expectations of down flat to low single digits and which included a 220 basis point headwind from the repositioning of our Champs sports banner.
Mary N. Dillon: Thank you Rob I'll start this morning with a brief overview of our first quarter results and then provide an update on the ongoing execution of our lease up plan.
Mary N. Dillon: Our team delivered a solid start to the year with better than anticipated non-GAAP earnings per share and comparable sales performance in line with the guidance. We provided on our last earnings call Com.
Mary N. Dillon: Comps declined one 8%, which was in line with our expectations of down flat to low single digits, and which included a 220 basis point headwind from the repositioning of our Champs sports banner on a global basis, our foot locker and kids foot locker banners comped up one 1%.
Mary N. Dillon: On a global basis, our Foot Locker and Kids' Foot Locker banners comped up 1.1%, and we were pleased to see comps sequentially improve through the quarter, led by our stores, as customers responded to our fresh spring assortment. Our average unit retail prices were nicely positive, and gross margins were also in line with our expectations. We delivered improvements in our markdown levels compared to the fourth quarter. We also saw sequential moderation in our markdown levels throughout the first quarter as we began to dial down promotional levels.
Mary N. Dillon: And we were pleased to see comps sequentially improve through the quarter led by our stores as customers responded to our fresh spring assortments.
Mary N. Dillon: Our average unit retail prices were nicely positive and gross margins were also in line with our expectations. We delivered improvements in our markdown levels compared to the fourth quarter. We also saw sequential moderation in our markdown levels throughout the first quarter as we began to dial down promotional levels.
Mary N. Dillon: Non-GAAP earnings per share of $0.22 reflect our disciplined expense management as well as some favorable expense timing shifts from the first quarter into the second quarter, which Mike will give more color on later in the call.
Speaker Change: non-GAAP earnings per share of 22 cents reflect our disciplined expense management as well as some favorable expense timing shifts from the first quarter into the second quarter, which Mike will give more color on later in the call.
Mary N. Dillon: Importantly, our overall first half results are trending in line with our expectations, and we still expect a return to positive comp growth and EBIT margin expansion this year, as demonstrated by our reiterated $1.50 to $1.70 full year non-GAAP EPS guidance. While we continue to expect the external environment to remain dynamic as our customers contend with prolonged inflation, reduced savings balances, and higher interest rates, we remain committed to making progress this year towards our EBIT margin target of 8.5% to 9% by 2028.
Speaker Change: Importantly, our overall first half results are trending in line with your expectations and we still expect a return to positive comp growth and EBIT margin expansion. This year as demonstrated by our reiterated dollar 50 to $1 70 full year non-GAAP EPS guidance, while we continue to expect the external environment to remain.
Speaker Change: Dynamic as our customers contend with prolonged inflation reduced savings balances and higher interest rates, we remain committed to making progress this year towards our EBIT margin target of 8.5% to 9% by 'twenty 'twenty eight.
Mary N. Dillon: Now, I'll provide an update on our LASA plan and the strategic initiatives we're executing on to deliver sustainable growth and shareholder value creation. We continue to be guided by our vision for Foot Locker to be the go-to destination for discovering and buying sneakers globally and by our mission to unlock the inner sneaker head in all of us. And the LACE-UP plan is about giving us the tools to achieve our vision and mission.
Speaker Change: Now I'll provide an update on our release of plan and the strategic initiatives, we're executing on to deliver sustainable growth and shareholder value creation.
Speaker Change: We continue to be guided by our vision for foot locker to be the go to destination for discovery and buying sneakers globally and by our mission to unlock the inner sneaker head and all of us and the lease up plan is about giving us the tools to achieve our vision and mission.
Mary N. Dillon: We remain intently focused on creating a strong flywheel of demand, and we've made significant progress over the last several quarters. With all the efforts we have underway, we're exercising operating and investment discipline with an emphasis on maximizing return on investment. This discipline is coupled with the actions we're taking to right-size our cost structure, including through our Cost Optimization Program, which is expected to deliver $80 million in savings this year.
Speaker Change: We remain intently focused on creating a strong flywheel of demand and we've made significant progress over the last several quarters.
Speaker Change: With all of the efforts we have underway, we're exercising operating and investment discipline with an emphasis on maximizing return on investment.
Speaker Change: This discipline is coupled with the actions, we're taking to rightsize, our cost structure, including through our cost optimization program, which is expected to deliver $80 million in savings this year.
Mary N. Dillon: Now, let me walk you through how we progressed against our four strategic imperatives in the quarter. Starting with our first imperative, expand sneaker culture, which aims to serve more sneaker occasions and provide more choice. We continue to make great progress in meeting our customers' desire for choice and offering an exciting array of sneaker brands and styles. We've elevated our approach with our partners as we lead with customer insights unique to our business and collaborate on multi-year growth plans.
Speaker Change: Now, let me walk through how we progressed against our four strategic imperatives in the quarter.
Speaker Change: Starting with our first imperative expand sneaker culture, which aims to serve more sneaker occasions and provide more choice.
Speaker Change: We continue to make great progress in meeting our customers' desire for choice and offering an exciting array of sneaker brands and styles. We've elevated our approach with our partners as we lead with customer insights unique to our business and collaborate our multiyear growth plans.
Mary N. Dillon: Through this new approach, especially under our new merchant and buying team structure, we expect the composition, productivity, and flow of our assortments to continue to improve throughout the year. In addition, with our first quarter inventories well-positioned, we see flexibility in the second quarter and beyond as we pivot more of our open-to-buys toward higher productivity brands and franchises. We feel good about our brand diversification efforts and the composition of our inventory with our brand partners. Recall we exited the fourth quarter with 40% of sales being generated outside of our top brand, Nike.
Speaker Change: Through this new approach, especially under a new merchant and buying team structure, we expect the composition productivity and flow of our assortments to continue to improve throughout the year.
Speaker Change: In addition, with our first quarter inventories well positioned we see flexibility in the second quarter and beyond as we pivot more of our open to buys towards higher productivity brands and franchises.
Speaker Change: We feel good about our brand diversification efforts in the composition of our inventory with our brand partners.
Speaker Change: Recall, we exited the fourth quarter was 40% of sales being generated outside of our top brands Nike.
Mary N. Dillon: We believe we currently have an appropriate mix in our business, and, longer term, our intent is to deliver balanced growth across our entire portfolio of brand partners. Turning to our top partner, Nike. Frank and I were pleased to participate in Nike's innovation event in Paris in April. We're very encouraged by the pipeline of innovation that was shared beginning with the Paris Olympics and into the back half of 2024 and then 2025 as Nike accelerates their multi-year innovation cycle supported by powerful storytelling. As such, we remain excited to return to growth with them later this year during the holiday quarter.
Speaker Change: We believe we currently have an appropriate mix in our business and longer term, our intent is to deliver balanced growth across our entire portfolio of brand partners.
Speaker Change: Turning to our top partner Nike, Frank and I were pleased to participate in Nike's innovation event in Paris in April were very encouraged by the pipeline of innovation that was shared beginning with the Paris Olympics and into the back half of 'twenty 'twenty four and then 'twenty 'twenty five is Nike accelerates their multiyear innovation cycle support.
Speaker Change: By powerful storytelling.
Speaker Change: As such we remain excited to return to growth with them later this year during the holiday quarter.
Mary N. Dillon: Longer term, we believe we are well positioned to benefit as Nike refocuses on the wholesale channel as we continue to emphasize our sharp pillars with them of basketball, kids, and sneaker culture. We are confident that the investments we're making in our business will continue to enhance our partnership as we collaborate and build our capabilities in digital and loyalty, as well as through our investments and our in-store experience. This means you'll see us lean into our basketball business through The Clinic, our program with Nike and the Jordan brand, which continues to evolve as we celebrate the culture of basketball on and off the court.
Speaker Change: Longer term, we believe we are well positioned to benefit as Nike refocuses on the wholesale channel as we continue to emphasize our sharp pillars with them, a basketball kids and sneaker culture.
Speaker Change: We're confident that the investments, we're making in our business will continue to enhance our partnership as we collaborate and build our capabilities in digital and loyalty as well as through our investments in our in store experience.
Speaker Change: This means you'll see us lean into our basketball business through the clinic, our program with Nike and Jordan brand, which continues to evolve as we celebrate the culture of basketball on and off the court.
Mary N. Dillon: We will also leverage our proprietary home court basketball concept across all of our basketball partners to invite more consumers into the sport and lifestyle of basketball. This will be led by the greatest assortment of next-gen signature athletes, like Nike's Sabrina Ionescu, Devin Booker, and John Morant, Jordan's Jason Tatum, and Luka Doncic, as well as our exclusive franchises from Adidas, the AE1, and the MeloBall from P
Speaker Change: We will also leverage our proprietary homecourt basketball concept across all of our basketball partners to invite more consumers into the sport and lifestyle basketball. This will be led by the greatest assortment of Nextgen signature athletes like Nike Sabrina I N S SKU, Devin Booker and John Moran, Jordan's Jason paid them.
Speaker Change: And Luke advantage to our exclusive franchises from Adidas, the 81, and the mellow ball from Puma.
Mary N. Dillon: Next to that, we'll continue to celebrate the culture of basketball, particularly with our young multicultural consumer for whom the game is so important. From global events like the NBA All-Star Game Celebration to local community moments in cities like New York and Atlanta, we'll continue to invite even more consumers to wear and enjoy sneaker icons like the Dunk, Air Force One, AJ1, Superstar, New Balance 550, and others. We also see the running category as another powerful platform to expand sneaker culture by offering more choice and serving more consumers for more occasions.
Speaker Change: Next to that we will continue to celebrate the culture of basketball, particularly with our young multicultural consumer for whom the game is so important from global events like the NBA All star game celebration to local community moments in cities like New York, and Atlanta will continue to invite even more consumers to wear and enjoys.
Speaker Change: Meeker icons like the Dunk Air Force, one a J one superstar new balance 550, and others. We also see the running category as another powerful platform to expand sneaker culture by offering more choice and serving more consumers for more occasions.
Mary N. Dillon: First, we're happy to participate in the launch of the Nike Air Max DN in the first quarter. We welcome it as an exciting innovation for the Air Max family and look forward to delivering it to more doors going forward.
Speaker Change: First we're happy to participate in the launch of the Nike Air Max D. N in the first quarter, we welcome that as an exciting innovation for the air Max family and look forward to delivering it to more doors going forward.
Speaker Change: We also are seeing ongoing strength through the heritage running piece of our business New balance continues its momentum through door expansions in both womens and kids as well as like for like games.
Mary N. Dillon: We are also seeing ongoing strength through the heritage-running piece of our business. New Balance continues its momentum through door expansions in both women's and kids, as well as like-for-like gains. Next to that, we're seeing strong global momentum with ASICS in multiple franchises across men's, women's, and kids. On the performance side, we're catering to consumers seeking performance sneakers such as On and Hoka by increasing our allocations and adding new stores this year, including with kids in both On and Hoka.
Speaker Change: Next to that we're seeing strong global momentum with aces and multiple franchises across mens womens and kids.
Speaker Change: On the performance side, we're catering to consumers seeking performance sneakers, such as on and hope that by increasing our allocations and adding new doors this year, including with kids in both on in HOKA.
Mary N. Dillon: Finally, as we think about our lifestyle category, we again see strategic gains being made, specifically in the women's and kids' segments of our business. Adidas, through their terrorist leadership, is setting the pace for global style, and our current SpringTrend campaign with influencer Koi LeRae is helping to tell a worldwide story to female consumers.
Speaker Change: Finally, as we think about our lifestyle category, we again see strategic gains being made specifically in the womens and kids segments of our business.
Speaker Change: Adidas through their terrorist leadership are setting the pace for global style and our current spring trend campaign with Influencer or coiled array is helping to tell a worldwide story to female consumers.
Mary N. Dillon: Likewise, brands like UGG continue to be a larger part of our plans, and we look forward to a really productive back-to-school and holiday season with our partners there, as our consumer insights continue to drive strategic door growth and improve consumer acquisition campaign targets. And finally, as we drive greater distinction in our assortments, our exclusives penetration in the quarter was 13%, down 200 basis points year over year, as we saw some impacts from softer private label performance, in part from our reduced Champs Sports store count.
Speaker Change: Likewise brands like all good continues to be a large part of our plans and we look forward to a really productive back to school and holiday season with our partners. There is our consumer insights continue to drive strategic door growth and improve consumer acquisition campaign targeting.
And finally, as we drive greater distinction in our Assortments are exclusive penetration in the quarter was 13% down 200 basis points year over year as we saw some impacts from softer private label performance in part from a reduced Champs sports store count.
Speaker Change: Okay.
Mary N. Dillon: The second pillar of Lace Up is Power Up the Portfolio, which means transforming our real estate footprint and creating clear lanes for our banners. In Real Estate Transformation, we successfully unveiled our reinvented retail concept that truly brings the heart of sneakers to life this month at Willowbrook Mall in Wayne, New Jersey.
Speaker Change: The second pillar of lease up is power up the portfolio, which means transfer forming our real estate footprint and creating clear lanes for our banners.
Speaker Change: And real estate transformation, we successfully unveiled our reinvented retail concept that truly brings a hardest sneakers to life. This month and Willowbrook mall in Wayne New Jersey.
Mary N. Dillon: This immersive retail experience celebrates the Foot Locker brand in a visually elevated store environment designed to enhance the power of our strippers through modern technology and an improved customer shopping experience. Driven by powerful brand storytelling, enhanced visual merchandising across men's, women's, and kids, this 12,000-square-foot store features a distinct communal try-on zone designed to drive connectivity with our strippers and sneaker culture. Response to this new format has been very positive from both our stripers and our customers.
Speaker Change: This immersive retail experience celebrates the foot locker brand and a visually elevated store environment designed to enhance the power of our strains the burst through modern technology and an improved customer shopping experience.
Speaker Change: Driven by powerful brand storytelling enhanced visual merchandising across than women's and kids. This 12000 selling square foot store features a distinct communal try on zone designed to drive connectivity with our stripers and sneaker culture.
Speaker Change: Response to this new format has been very positive from both our stripers and our customers, we've seen higher traffic conversion levels and basket sizes, and meaningfully increased penetration of women's and store compared to the balance of the chain.
Mary N. Dillon: We've seen higher traffic, conversion levels, and basket sizes, and meaningfully increased penetration of women's in-store compared to the balance of the chain. In fact, the store has quickly become one of our top North American locations. Our survey work is also showing increases in how the customer perceives and connects with the Foot Locker brand after visiting the store. This positive response is echoed by our brand partners as this differentiated format enhances how shoppers are engaging with their brands through enhanced product presentations and elevated storytelling. We plan to launch four additional locations this year, including 34th Street in New York City, Melbourne, Delhi, and Paris, which is opening tomorrow in time for summer lunch.
Speaker Change: In fact, the store has quickly become one of our top North American locations.
Speaker Change: Our survey work is also showing increases in how the customer perceives and connect with the foot locker brand after visiting the store.
Speaker Change: This positive responses echoed by our brand partners is this differentiated format enhances how shoppers are engaging with their brands through enhanced product presentations and elevated storytelling.
Speaker Change: We plan to launch four additional locations this year, including 34th Street in New York City, Melbourne, Delhi in Paris, which is opening tomorrow in time for the Summer Olympics.
Mary N. Dillon: As we learn through this concept, elements and insights will be applied to our 2025 openings and beyond as these stores will provide the blueprint for how our stores show up as the heart of sneakers and the go-forward expression of our brand. Through this new concept, along with our other formats, we're continuing to evolve our in-store experience, with our new formats now representing 16% of our global square footage, up from 11% last year, and moving further towards our 2026 target of 20%.
Speaker Change: As we learned through this concept elements and insights will be applied to our 2025 openings and beyond as these stores will provide the blueprint for how our stores show up as the hardest sneakers and the go forward expression of our brand.
Through this new concept along with our other formats, we're continuing to evolve our in store experience with our new formats, now representing 16% of our global square footage up from 11% last year and moving further towards our 'twenty 'twenty sits target of 20%.
Mary N. Dillon: In addition to these new retail concepts, we're delivering a meaningful store refresh program that aligns with the design principles of our new retail concept and which aims to create a more consistent and elevated brand experience globally. In the first quarter, we completed 13 refreshes on top of the 100 we executed in the back half of 2023.
Speaker Change: In addition to these new retail concepts, we're delivering a meaningful store refresh program, which aligns with the design principles of our new retail concept in which aims to create a more consistent and elevated brand experience globally.
Speaker Change: In the first quarter, we completed 13 refreshes on top of the 100, we executed in the back half of 2023 and we will continue to scale the program through the balance of the year.
Mary N. Dillon: And we'll continue to scale the program through the balance of the year. We remain committed to refreshing approximately two-thirds of our global Foot Locker and Kids Foot Locker doors to the end of 2025. These refreshes are fairly capital light, and from a timing perspective, can be executed in under 72 hours in most cases.
Speaker Change: We remain committed to refreshing approximately two thirds of our global foot locker and kids foot locker doors to the end of 2020 five.
Speaker Change: These refreshes are fairly capital light and from a timing perspective can be executed in under 72 hours in most cases. This gives us confidence that we can execute the plan by the end of next year.
Mary N. Dillon: This gives us confidence that we can execute the plan by the end of next year. Early reads and our refreshes also remain positive, hitting our internal hurdle rates and payback period. And finally, we're making strides in our shift to Off Mall. Penetration reached 39 percent of North American square footage, up five points from a year ago and closer to our goal of 50 percent by 2026. In simplifying and creating distinct lanes, our repositioning of champ sports continues to take hold. Comps declined 13.4% in the quarter, a slight deceleration from the fourth quarter.
Early reads on our refresh has also remained positive hitting our internal hurdle rates and payback periods.
Speaker Change: And finally, we're making strides in our shift to off mall penetration reached 39% of North American square footage up five points from a year ago and closer to our goal of 50% by 2026.
Speaker Change: Within simplifying and creating distinct lanes or repositioning of Champs sports continues to take hold.
Speaker Change: Comps declined 13, 4% in the quarter, a slight deceleration from the fourth quarter.
Mary N. Dillon: Champs Sports continues its evolution into the home of head-to-toe sports style, and our assortments are getting sharper, more productive, and aligned with the updated positioning. Our brand partners have also been supportive of and have invested in our efforts at Champs Sports as we lead through the lens of the sports-style enthusiast and those with an active lifestyle, particularly in the areas of performance running, apparel, and accessories. In the first quarter, Champ Sports formally kicked off a monthly run club with events in Southern California, New York City, and Tampa.
Speaker Change: Champs sports continues its evolution into the home of head to toe sports style and our Assortments are getting sharper more productive and aligned with the updated positioning.
Speaker Change: Our brand partners have also been supportive of and have invested behind our efforts at Champs sports as we lead through the lens of the sports style enthusiasm and those with an active lifestyle, particularly in the areas of performance running apparel and accessories.
Speaker Change: In the first quarter Champs sports formally kicked off a monthly run club with events in Southern California, New York City and Tampa.
Mary N. Dillon: ASICS and Brooks have been strong partners of the program. Results have been encouraging, with the number of participants growing each month and strong repeat participation. Connecting to our target audience in authentic ways, such as the Run Club, speaks to the traction we're making in repositioning the banner through the lens of active performance. Just six quarters into the repositioning, Champs Sports is becoming a meaningful partner for our brands to represent their full offering. Case in point, in the first quarter, Champ Sports became the lead apparel partner for New Balance.
Speaker Change: Six in Brooks had been strong partners to the program results have been encouraging with the number of participants growing each month and strong repeat participation.
Speaker Change: Connecting to our target audience and authentic ways such as the run clubs speak to the traction we're making in repositioning the banner through the lens of active performance.
Speaker Change: Just six quarters into the repositioning Champs sports is becoming a meaningful partner for our brands to represent their full offerings.
Speaker Change: Case in point in the first quarter Champs sports became the lead apparel partner for new balance.
Mary N. Dillon: With clearer communication of the brand's positioning to come, we remain optimistic about CHAMP's sports potential in the marketplace. Our third pillar is deep in our relationship with our customers, which is focused on building brand equity, reaching a broader set of customers, and enhancing our loyalty and overall CRM capabilities. On building brand equity, as we discussed in our last earnings call, we celebrated NBA All-Star 2024 weekend in February with an interactive pop-up Foot Locker home court experience in downtown Indianapolis with supportive partners including Nike, Jordan Brand, Adidas, Puma, Converse, and Under Armour.
With clearer communication of the brand's positioning to come we remain optimistic about Champs sports potential in the marketplace.
Speaker Change: Our third pillar is deepen our relationship with our customers, which is focus on building brand equity, reaching a broader set of customers and enhancing our loyalty and overall CRM capabilities.
Speaker Change: On building brand equity as we discussed in our last earnings call. We celebrated NBA All star 'twenty 'twenty four weekend in February with an interactive pop up foot locker home court experience in downtown Indianapolis with a supportive partners, including Nike Jordan brand, Adidas, Puma converse and under armour.
Mary N. Dillon: Our activations and events from the weekend earned Foot Locker and our partners over a billion media impressions. We also debuted The Clinic with Nike and the Jordan brand, which brings the best of the court and culture to basketball fans, sneaker enthusiasts, and local communities. We kicked off the clinic with our first NBA ad spot, starring Nike's Kevin Durant and Jordan Brand's Jason Tatum, which aired on broadcast TV, digital video, and social media channels. As the latest installment of The Clinic with Nike, we debuted an inspiring new story entitled Dropping Gems, featuring WNBA Seattle Storm superstar Jewel Lloyd.
Our activations and a bounce from the weekend earn foot locker and our partners over 1 billion media impressions.
Speaker Change: We also debuted the clinic with Nike and Jordan brand, which brings the best of the court and culture to basketball fans sneaker enthusiasts and local communities.
Speaker Change: We kicked off the clinic with our first NBA AD spot starring Nike's, Kevin Durant in Jordan brand's Jayson Tatum, which aired on broadcast television and digital video and social media channels.
Speaker Change: And the latest installment of the clinic with Nike, We debuted and inspiring new story entitled dropping jams featuring W. M. B, a seattle storms superstar Jewel Lloyd.
Mary N. Dillon: Powerful, co-branded marketing investments like these are continuing to support our already high levels of brand awareness. It's also encouraging to see how our investments in our basketball leadership, including our NBA partnership and the clinic, are lifting customer perception and consideration for the brand, as well as the association between basketball and Foot Locker. In particular, as we celebrate the Foot Locker brand's 50th anniversary this year, we recognize that basketball is a key part of our heritage and our positioning with our brand partners as well as with our customers.
Speaker Change: It's powerful co branded marketing investments like these that are continuing to support our already high levels of brand awareness.
Speaker Change: It's also encouraging to see how our investments in our basketball leadership, including our NBA partnership and the clinic are lifting customer perception and consideration for the brand as well as the association of basketball and foot locker.
Speaker Change: Particularly as we celebrate the foot locker brand 50th anniversary. This year, we recognize that basketball is a key part of our heritage and our positioning with our brand partners as well as with our customers through our investments were further cementing our leadership position at the intersection of basketball and Sneaker culture.
Mary N. Dillon: Through our investments, we're further cementing our leadership position at the intersection of basketball and sneaker culture. Turning to loyalty, 26% of our sales in the first quarter were through our current loyalty program, up 200 basis points compared to last year. Looking ahead, a key milestone for our business will be relaunching our loyalty program, FLX Rewards, across the U.S. following our successful Canadian pilot last year. The new program, which will launch here in the second quarter, will allow us to attract new customers and more deeply engage our existing customers. The addition of cashback and other perks is designed to drive frequency and share of wallets.
Speaker Change: Turning to loyalty, 26% of our sales in the first quarter were through our current loyalty program up 200 basis points compared to last year.
Speaker Change: Looking ahead, our key milestone for our business will be re launching our loyalty program F. L X rewards across the U S. Following our successful Canadian pilot last year.
Speaker Change: The new program, which will launch here in the second quarter will allow us to attract new customers and more deeply engage our existing customers. The addition of cash back and other perks are designed to drive frequency and share of wallet.
Mary N. Dillon: Through our Canada test, customer reaction to the program has been positive across a variety of KPIs, including higher engagement with first-time redeemers, higher average order values, higher units per transaction, and higher trip frequency. When we think about the opportunity with our Enhanced Loyalty Program, we know our average customer shops with us close to two times a year, but that they shop for our category between three to five times per year.
Speaker Change: Through our Canada test customer reaction to the program has been positive across a variety of kpis, including higher engagement with the first time Redeemers higher average order values higher units per transaction and higher trip frequency.
Speaker Change: When we think about the opportunity with our enhanced loyalty program, we know our average customers shopped with us close to two times a year, but that they shop for a category between three to five times per year driving that incremental purchase with us through the program has the potential to be a meaningful lever for our business.
Mary N. Dillon: Driving that incremental purchase with us through the program has the potential to be a meaningful lever for our business. Even for our most valuable customers, who shop with us multiple times a year across both stores and digital, we believe that we can see higher frequency and higher share of wallet, particularly as we enhance our own omnichannel and loyalty capabilities. As we leverage the program's wider appeal to reach our 50% target by 2026, we'll use this data to drive insights about our most valuable customers and their preferences.
Speaker Change: Even for our most valuable customers, who shop with us multiple times a year across both stores and digital we believe that we can see higher frequency and higher share of wallet, particularly as we enhance our own omnichannel and loyalty capabilities.
Speaker Change: As we leverage the programs wider appeal to reach our 50% target by 2026, we'll use this data to drive insights about our most valuable customers and their preferences.
Mary N. Dillon: This will help fuel our demand flywheel as we leverage that data for improved CRM and personalization of offers. With our partners, we can also deliver actionable insights as we collaborate through data sharing capabilities. We look forward to updating you on the wider rollout of our Reimagine FLX Rewards program here in the U.S. on our next call. And, turning to our final pillar, being best-in-class Omni, which means improving our digital presence and better integrating our customer journey across channels. Our digital penetration in the quarter increased to 17.1%, up 80 basis points year over year.
Speaker Change: This will help fuel our demand flywheel as we leverage that data for improved CRM and personalization of offers.
Speaker Change: With our partners. We can also deliver actionable insights as we collaborate through data sharing capabilities. We look forward to updating you on the wider rollout of our re imagine F. L X rewards program here in the U S on our next call.
Speaker Change: And turning to our final pillar to be best in class, omni, which means improving our digital presence and better integrating our customer journey across channels, our digital penetration in the quarter increased to 17, 1% up 80 basis points year over year.
Mary N. Dillon: On an enterprise level, global digital comps were up 4%, and we continue to make meaningful strides in our online conversion rate. In 2024, our focus is on additional improvements to the customer experience through elevated site content and messaging, enhanced navigation and search capabilities, and importantly, a full product detail page redesign. We're also on track to roll out a new Foot Locker mobile app later this year, which will provide a faster, more modern shopping experience, along with greater product inspiration and storytelling and serve as a hub for our new loyalty program.
Speaker Change: On an enterprise level global digital comps were up 4% and we continue to make meaningful strides in our online conversion rate.
Speaker Change: In 2024, our focus is on additional improvements to the customer experience through elevated site content and messaging enhanced navigation and search capabilities and importantly, a full product detail page redesign.
Speaker Change: We're also on track to rollout a new foot locker mobile App later, this year, which will provide a faster more modern shopping experience along with greater product inspiration and storytelling and serve as a hub for our new loyalty program.
Mary N. Dillon: We're making strong progress on our digital transformation and continue to target about 25% e-commerce penetration by 2026. Switching to stores at Foot Locker, we know our stripers are essential to the overall experience and drive our strong NPS results in stores. In the quarter, we continue to invest behind our expanded suite of striper training tools focused on driving advanced omni-selling behaviors. Through our store refresh activity alongside these new striper trainings, we're continuing to drive better conversion margins and overall productivity levels.
Speaker Change: We're making strong progress on our digital transformation and continue to target about 25% e-commerce penetration by 2026.
Speaker Change: Switching the stores of foot locker, we know our stripers or are central to the overall experience and drive our strong M. P. S results in stores in the quarter, we continued to invest behind our expanded suite of striper training tools focus on driving advance omni selling behaviors.
Speaker Change: Our store refresh activity alongside these new striper trainings were continuing to drive better conversion margins and overall productivity levels.
Mary N. Dillon: In closing, we're pleased with our performance in the first quarter and are on target to reach our full year outlook. Through the LASA plan, we're positioning Foot Locker to be the global destination for all things sneakers. Our strategies are continuing to gain momentum as we create a strong demand flywheel through our focus on leading with customer analytics and insights, elevating our in-store experiences through our store refreshes and new concepts, expanding our digital and loyalty capabilities, and differentiating our positioning by leaning to our iconic Stripers and Heart of Sneakers brand platforms. Now, let me hand it over to Frank to provide more details on our category and banner performance.
Speaker Change: In closing, we're pleased with our performance in the first quarter and are on target to reach our full year outlook through the laser planned we're positioning foot locker to be the global destination for all things sneakers, our strategies are continuing to gain momentum as we create a strong demand flywheel through our focus on leading with customer analytics and <unk>.
Speaker Change: Sites elevating our in store experiences through our store refreshes and new concepts, expanding our digital and loyalty capabilities differentiating our positioning by leaning into our iconic stripers and hardest sneakers brand platform now.
Speaker Change: Now, let me hand, it over to Frank to provide more details on our category and banner performance.
Franklin R. Bracken: Thank you, Mary, and good morning, everyone. I'm starting with the first quarter product and vendor performance. Footwear comp, positive, low, single digit. Our basketball business was driven by both performance and lifestyle franchises throughout the quarter. Nike's Sabrina 1, Jaw 1, and Book 1 sold very well throughout Q1, flanked by a strong performance from Jordan's Tatum 2. Meanwhile, our exclusive adidas AE1 continued to connect with consumers as Anthony Edwards established himself as one of the NBA's best players, and his sneaker became our fastest growing signature franchise. Alongside our exclusive Puma MBO3 franchise, Foot Locker continues to be the go-to destination for marquee basketball sneakers.
Franklin R. Bracken: Thank you Mary and good morning, everyone, starting with first quarter product and vendor performance footwear Comped positive low single digits, our basketball business was driven by both performance and lifestyle franchises throughout the quarter.
Speaker Change: Nike Sabrina one job one and book one sold very well throughout Q1 flanked by a strong performance in Jordan's treat them too.
Speaker Change: Meanwhile, our exclusive Adidas Aae, one continue to connect with consumers.
Speaker Change: Anthony Edwards establishes himself as one of the Nba's best players and as sneaker became our fastest growing signature franchise.
Speaker Change: Alongside our exclusive Puma Mbo three franchise foot locker continues to be the go to destination for marquee basketball sneakers.
Franklin R. Bracken: Within the culture of basketball, Nike's Dunk and Air Force One and the Jordan AJ-1 continue to be the icons that consumers demand most. As Nike rebalances supply in the marketplace to manage these critical franchises, we are confident that we are positioning Foot Locker to be a net winner as we reengage the young multicultural consumer through our elevated storytelling and marketing partnership programs, including the clinic, home court, and, of course, the NBA. And in a category unto himself, we are very pleased to be a key partner in the Kobe basketball journey in the first quarter.
Speaker Change: Within the culture of basketball, Nike's Dunk and Air Force, one and the Jordan a J one continued to be the icons that consumers demand most.
Speaker Change: As Nike rebalance of supply in the marketplace to manage these critical franchises. We're confident that we are positioning foot locker to be a net winner as we reengage the young multicultural consumer through our elevated storytelling and marketing partnership programs, including the clinic Homeport and of course the M. B a.
Speaker Change: And in a category on to himself we are very pleased to be a key partner in the Kobe basketball journey in the first quarter.
Franklin R. Bracken: As we respect and celebrate the legacy of Kobe and his love for the game and greater inclusivity, we were honored to help tell the story of his impact on basketball and how, together, we can make it more accessible to more consumers, especially young women. Further to that point, we view the momentum around women's basketball to be at a tipping point, whereby female participation, athlete innovation, fan excitement, and media coverage will continuously accelerate, making the game of basketball bigger, stronger, and more inclusive than ever, and Foot Locker looks forward to being a critical access point to female consumers for our brand partners as they invest to serve the needs of female athletes.
Speaker Change: As we respect and celebrate the legacy of Kobe and his love of the game and greater Inclusivity. We were honored to help tell the story of his impact on basketball and how together, we can make it more accessible to more consumers, especially young women.
Speaker Change: Further to that point, we view the momentum around women's basketball to be at a tipping point whereby female participation athlete innovation fan excitement and media coverage will continuously accelerate making the game of basketball bigger stronger and more inclusive than ever.
Speaker Change: And foot locker looks forward to being a critical access point to female consumers for our brand partners as they invest to serve the needs of female athletes.
Franklin R. Bracken: As we turn to the running category, New Balance continues to drive consumer excitement at scale. They are trending positively with consumers globally, importantly including our women's, men's, and kids' consumers. Franchises like the 9060, the 2002R, and the 530 are among our best sellers, commanding full-price retail and connecting to consumers with exceptional marketing and storytelling. With two exclusive packs in Q1, featuring Storm Reid and Jack Harlow, respectively, and our Q2 activation of New Balance Grade A on 5-16, and a coming campaign with Flow Millie in June, we are very enthusiastic about our partnership with New Balance for the remainder of 2024
Speaker Change: As we turn to the running category new balance continues to drive consumer excitement at scale as they are trending positively with consumers globally importantly, including our womens mens and kids consumers free.
Speaker Change: [noise] franchises like the 90 62002 are in the $5 30 are among our best sellers commanding full price retails and connecting to consumers with exceptional marketing and storytelling.
Speaker Change: With two exclusive packs in Q1, featuring storm Reed and Jack Harlow, respectively, and our Q2 activation of new balance Great day on $5 16, and coming campaign with flow Milli in June we are very enthusiastic about our partnership with new bound for the remainder of 2024.
Franklin R. Bracken: We were also very pleased to celebrate Air Max Day in March alongside our partners at Nike, helping to launch the Air Max DN across all of our geographies. Dynamic Air represents a new platform that is responding well with our young, diverse consumer and provides compelling innovation across style and comfort.
Speaker Change: We were also very pleased to celebrate air Max day in March alongside our partners at Nike, hoping to launch the air Max Dia and across all of our geographies.
Speaker Change: Dynamic air represents a new platform that is resonating well with our young diverse consumer and provides compelling innovation across style and comfort.
Franklin R. Bracken: With our exclusive Tuned Air franchise, the Romero 5, and the P6000 franchises, we are seeing AURs and productivity improvement within our Nike lifestyle running business that is very encouraging. And with the Olympics beginning towards the back half of our Q2, we believe that momentum will continue to build behind the Nike brand with an even stronger pipeline of running innovations to come. Additionally, On Running continues to fuel growth as that brand becomes younger and more multicultural through access to our Foot Locker customer base. The Cloud Monster and Cloud Tilt are two of the franchises that are bringing innovation, style, and comfort that our customers are adopting as part of their sneaker wardrobe.
Speaker Change: With our exclusive tuned air franchise, the Romero five and P. 6000 franchises, we are seeing aur's and productivity improvement within our Nike lifestyle running business that is very encouraging.
And with the Olympics, beginning towards the back half of our Q2, we believe that momentum will continue to build behind the Nike brand with an even stronger pipeline of running innovations to come.
Speaker Change: Additionally, on running continues to fuel growth as that brand becomes younger and more multicultural through access to our foot locker customer base.
Speaker Change: The cloud Monster and cloud tilt are two of the franchises that are bringing innovation style and comfort that our customers are adopting as part of their sneaker wardrobe.
Franklin R. Bracken: Meanwhile, we more than doubled the HOKA business again this quarter, as consumers increasingly get to know the performance and comfort characteristics of the HOKA brand. As momentum builds between our two companies, we are sharing consumer insights that will help us drive sustained growth through customer acquisition and inventory productivity. Turning to the lifestyle category, the Adidas brand continued to accelerate in Q1 across all of our global retail divisions. This impressive growth was led by our women's business but also included strong global momentum in men's and kids. Samba, Gazelle, and Campus have formed a formidable foundation upon which we will drive continued sales growth in Q2 and into the fall and holiday seasons.
Speaker Change: Meanwhile, we more than doubled the HOKA business again, this quarter as consumers increasingly get to know that performance and comfort characteristics of the HOKA brand.
Speaker Change: As momentum builds between our two companies we are sharing consumer insights that will help us drive sustained growth through customer acquisition and inventory productivity.
Speaker Change: Turning to the lifestyle category. The Adidas brand continued to accelerate in Q1 across all of our global retail divisions.
Speaker Change: This impressive growth was led by our women's business, but also included strong global momentum in men's and kids.
Speaker Change: Samba Gazelle in campus performed a formidable foundation upon which we will drive continued sales growth in Q2 and into the fall and holiday seasons.
Franklin R. Bracken: As we layer in strong marketing and improved in-store presentation in support of the Adidas brand, we're very pleased to have returned to offense with this critical partner. However, challenges persist in our apparel business with Komp's down mid-teens, as we know we have work to do to stabilize the category, including delivering more innovation and more compelling brand stories and also improving transitions between seasons. We have seen some bright spots in our shorts and bottoms business, as well as new collections from Jordan, New Balance, and our private label, Offer.
Speaker Change: As we layer in strong marketing and improved in store presentation and supported the Adidas brand. We're very pleased to have returned to offense with this critical partner.
Speaker Change: Challenges persisted in our apparel business with comps down mid teens as we know we have work to do to stabilize the category, including delivering more innovation and more compelling brand stories and also improving transitions between seasons.
Speaker Change: We have seen some bright spots in our shorts and bottoms business as well as new collections from Jordan, new balanced and our private label offering.
Franklin R. Bracken: Finally, our accessory business comp is down low single digits. Switching to channel performance, comparable sales in our stores decreased 3%. While traffic and transactions were down year-on-year, average tickets saw nice gains led by increases in our AURs as well as UPTs.
Speaker Change: Finally, our accessory business comped down low single digits.
Speaker Change: Switching to channel performance comparable sales in our stores decreased 3%.
Speaker Change: While traffic and transactions were down year on year average ticket saw nice gains led by increases in our aur's as well as U P T.
Franklin R. Bracken: Our Store Refresh Program, alongside our new Striper Selling Behaviors, will continue to help drive better conversion, margin profile, and overall store productivity. Meanwhile, digital comps increased 4%. We were pleased to see growth in our customer file in the quarter across both new and reactivated customers, and we delivered higher digital conversion levels for the quarter as our agile digital product teams continue to make progress in improving the omni-customer experience. Now for performance by Banner and Geograph.
Speaker Change: Our store refresh program alongside our new stripers selling behaviors will continue to help drive better conversion margin profile and overall store productivity.
Speaker Change: Meanwhile, digital comps increased 4% we were pleased to see growth in our customer file in the quarter across both new and reactivated customers and we delivered higher digital conversion levels for the quarter as our agile digital product teams continue to make progress in improving the omni customer experience.
Speaker Change: Now for performance by banner and geography.
Franklin R. Bracken: In North America, overall comps were down 2.5%, including a 320 basis point negative impact from the Champ Sports repositioning efforts. At Foot Locker North America, comps rose by 0.8% as customers responded to our fresh assortments into March and April, especially within our basketball, running, and women's categories. Kids Foot Locker comps were up 6.4% as we continue to see this differentiated concept demonstrate momentum and take share in the marketplace. At Champ Sports, comps were down 13.4% as repositioning efforts are continuing to take hold.
Speaker Change: In North America overall comps were down 2.5%, including a 320 basis point negative impact from the Champs sports repositioning efforts.
Speaker Change: At foot locker, North America comps rose by 0.8% as customers responded to our fresh assortments into March and April, especially within our basketball running and womens categories.
Speaker Change: Kids foot locker comps were up six 4% as we continue to see this differentiated concept demonstrate momentum and take share in the market place.
Speaker Change: Champs sports comps were down 13, 4% as repositioning efforts are continuing to take hold importantly.
Franklin R. Bracken: Importantly, while top-line results remain down year over year, results are in line with our expectations. Also noteworthy, markdown levels at the Champs banner meaningfully moderated as we move throughout the quarter as customers are beginning to respond to the Champs improved assortment and in-store presentation. Moving to WSS, the banner delivered comps down 5.8% in the first quarter, as ongoing inflationary pressures continue to impact the discretionary spend of the WSS shopper. The WSS management team continues to focus on delivering compelling value and selection to their core consumer, including strengthening our assortments in the sub-100 footwear category, the culture of football, as well as the work and private label category.
Speaker Change: Importantly, while topline results remained down year over year results are in line with our expectations.
Speaker Change: Also noteworthy markdown levels at the Champs banner meaningfully moderated as we moved throughout the quarter as customers are beginning to respond to Champs improved assortment and in store presentation.
Speaker Change: Moving to WNS, the banner delivered comps down five 8% in the first quarter as ongoing inflationary pressures continue to impact the discretionary spend of the WSI shopper.
Speaker Change: The W. S. S management team continues to focus on delivering compelling value and selection to their core consumer including strengthening our assortments in the sub 100 footwear the culture of football as well as the work in private label categories.
Franklin R. Bracken: Turning to Europe, costs for our Foot Locker banner were up 1.6%. The environment in Europe remains dynamic across many countries, so we were pleased to grow in that region. The team there continues to focus on improving the customer experience through our store refresh program and flowing productive assortments to our stores and digital sites. And our team in France is very excited to help host the 2024 Olympic Games beginning in July, where our stores will be an important connection point for our brand partners in the delivery of innovation, athlete, and sports style storytelling. In Asia-Pacific, comps were down 5.5%. The Foot Locker banner saw Komp's fall 8.7 percent, reflecting a challenging Australian marketplace as consumer confidence continues to be impacted by higher inflation.
Speaker Change: Turning to Europe comps were our foot locker banner were up one 6%.
Speaker Change: The environment in Europe remains dynamic across many countries. So we were pleased to grow in that region.
Speaker Change: The team there continues to focus on improving the customer experience through our store refresh program and flowing productive assortments to our stores and digital sites.
And our team in France is very excited to help play host to the 'twenty 'twenty four Olympic games, beginning in July where our stores will be an important connection point for our brand partners and the delivery of innovation athlete and sports style storytelling.
Speaker Change: In Asia Pacific comps were down 5.5%.
Speaker Change: The foot locker banner saw comps fall eight 7%, reflecting a challenging Australian marketplace as consumer confidence continues to be impacted by higher inflation.
Franklin R. Bracken: And finally, at Atmos, comps were up 0.3%, reflecting a resilient domestic business in Japan. The team also opened two beautifully remodeled stores during the quarter, including our flagship property at Sendagaya in Tokyo and our Shinsabashi store in Osaka. To conclude, as Mary referenced in her remarks, we have built a new commercial offense that is grounded in consumer analytics and insights, that is enabled through our elevated in-store experience and emerging digital capability, and that is differentiated through our Stripers and Heart of Sneakers brand platforms.
Speaker Change: And finally at Atmos comps were up 0.3%, reflecting a resilient domestic business in Japan.
Speaker Change: Team also opened two beautiful your remodeled stores during the quarter, including our flagship property at centre, Gaia, and Tokyo, and our Shins Dabashi store in Osaka.
Speaker Change: To conclude as Mary referenced in her remarks, we have built a new commercial offense that is grounded in consumer analytics and insights that is enabled through our elevated in store experience and emerging digital capability and that is differentiated through our stripers in hardest sneakers brand platform.
Franklin R. Bracken: And we remain confident that Momentum is continuing to grow within our brand partner relationships as well as with our consumers, specifically for those variables that we can control. I'll now hand the call over to Mike to go over the financials and guidance in more detail.
Speaker Change: And we remain confident that momentum is continuing to grow within our brand partner relationships as well as with our consumers specifically for those variables that we can control.
Michael Baughn: I'll now hand, the call over to Mike to go over the financials and guidance in more detail.
Michael Baughn: Thank you, Frank, and good morning, everyone. In the first quarter, starting with revenue, total sales fell by 2.8 percent, led by comps down 1.8 percent, which was in line with our prior guidance of flat to down low single digits. As Mary noted, the Champs sports repositioning represented a 220-basis point comp headwind. February was down mid-single digits, March was down low-single digits, and April was approximately flat. Accounting for the Easter shift, combined, our March and April comp trends show progression from February, and we're down low single digits and better overall compared to the first quarter trend.
Michael Baughn: Thank you Frank and good morning, everyone in.
Michael Baughn: In the first quarter, starting with revenue total sales fell by two 8% led by comps down one 8%, which was in line with our prior guidance of flat to down low single digits.
Speaker Change: As Mary noted the Champs sports repositioning represented a 220 basis point comp headwind.
Speaker Change: February was down mid single digits, Mark which was down low single digits in April was approximately flat.
Speaker Change: Accounting for the Easter shift combined our March and April comp trends show progression from February and were down low single digits and better overall compared to the first quarter trend.
Michael Baughn: Moving to margins, gross margin for the quarter declined 120 basis points to 28.8%. Merchandise margins fell by 140 basis points, driven by sequentially improved markdown levels compared to the holiday quarter, as we worked to transition the consumer off of an elevated promotional cadence.
Speaker Change: Moving to margins gross margin for the quarter declined 120 basis points to 28, 8%.
Speaker Change: Merchandize margins fell by 140 basis points, driven by sequentially improved markdown levels compared to the holiday quarter as we worked to transition to consumer off of an elevated promotional cadence.
Michael Baughn: Importantly, our markdown cadence improved throughout the quarter as well, which also coincided with our improvement in comp trends into March and April. Occupancy as a percent of sales leveraged 20 basis points, which was in line with our plan. Approximately $10 million of gross margin savings from our cost optimization programs also flowed through our cost of goods line. For the quarter, our SG&A rate came in at 24.6%, representing a de-leverage of 220 basis points.
Speaker Change: Importantly, our markdown cadence improved throughout the quarter as well, which also coincided with our improvement in comp trends into March and April.
Speaker Change: Occupancy as a percentage of sales leveraged 20 basis points, which was in line with our plans.
Speaker Change: Approximately $10 million of gross margin savings from our cost optimization programs also flowed through our cost of goods line.
Speaker Change: For the quarter, our SG&A rates came in at 24, 6% representing deleverage of 220 basis points.
Michael Baughn: Investments in technology and brand building, as well as ongoing inflationary pressures, were partially offset by savings from the cost optimization program of approximately $10 million. Collectively, our cost optimization program generated total savings of approximately $20 million in the first quarter.
Speaker Change: Investments in technology and brand building as well as the ongoing inflationary pressures were partially offset by savings from the cost optimization program of approximately $10 million.
Speaker Change: Collectively our cost optimization program generated total savings of approximately $20 million in the first quarter.
Michael Baughn: The quarter benefited from ongoing expense discipline, as well as a shift in the timing of expenses out of the first quarter and into the second quarter, which approximated $9 million. Finally, EPS was $0.09 for the quarter, and non-GAAP earnings came in at $0.22 per share. Turning to the balance sheet, we ended the quarter with $282 million in cash and total debts of $446 million. Our $600 million credit facility remained undrawn, with zero outstanding at the end of the quarter.
Speaker Change: The quarter benefited from ongoing expense discipline as well as a shift in the timing of expenses out of the first quarter and into the second quarter, which approximated $9 million.
Speaker Change: Finally, EPS was <unk> <unk> for the quarter and non-GAAP earnings came in at 22 per share.
Speaker Change: Turning to the balance sheet, we ended the quarter with $282 million of cash and total debt of $446 million.
Our $600 million credit facility remained undrawn with zero outstanding at the end of the quarter.
Speaker Change: At quarter end inventories were down five 6% versus last year as we remain committed to keeping our inventories controlled flowing product to better match customer demand and improving our overall inventory turns in 2024.
Michael Baughn: At quarter end, inventories were down 5.6% versus last year, as we remain committed to keeping our inventories controlled, flowing product to better match customer demand, and improving our overall inventory turns in 2024. Now, on to our 2024 outlook. We're reaffirming our full-year non-GAAP EPS guidance of $1.50 to $1.70. It's important to note that our guidance assumes ongoing challenges with the consumer and macro backdrop as we still anticipate that our customers will be choiceful with their discretionary dollars amid ongoing inflation, reduced savings levels, and higher interest rates.
Speaker Change: Onto our 2024 outlook.
Speaker Change: We're reaffirming our full year non-GAAP EPS guidance of $1 50 to $1 70.
It's important to note that our guidance assumes ongoing challenges with the consumer and macro backdrop as we still anticipate that our customers will be choice full with their discretionary dollars amid ongoing inflation reduced savings levels and higher interest rates.
Michael Baughn: We still expect full-year comps of plus 1% to plus 3% as we build momentum through the year. This will be driven by several factors, including the rollout of our enhanced FLX rewards program in the U.S. in the second quarter. Improving assortments and product flows from our new merchant to buying team structure beginning in the second quarter. Productivity Impacts of a New Workforce Management Tool Refresh activity in the stores building from the over 100 projects executed today, returns on our ongoing brand building and marketing efforts, the launch of our new mobile app, and the return to growth with Nike in the fourth quarter. This outlook embeds the following drivers.
Speaker Change: We still expect full year comps of plus 1% to plus 3% as we build momentum through the year.
Speaker Change: This will be driven by several factors, including the rollout of our enhanced <unk> rewards program in the U S. In the second quarter.
Speaker Change: Improving assortments in product flows from our new merchants are buying team structure beginning in the second quarter.
Speaker Change: Productivity impacts of a new workforce management tool.
Speaker Change: Refresh activity in the stores building from the over 100 projects executed today's.
Speaker Change: Returns on our ongoing brand building and marketing efforts.
Speaker Change: The launch of our new mobile App and the returned to growth with Nike in the fourth quarter.
Speaker Change: This outlook Embeds the following drivers.
Michael Baughn: Overall, our store count will be down approximately 4% in 2024, with square footage down approximately 1%. We still expect to open roughly 40 new stores in the year and to close approximately 140. Including an approximate one point drag from lapping the extra week, total sales for 2024 are expected to be down 1% to up 1%. On gross margin, we still expect gross margin expansion of 210 to 230 basis points to a rate of 29.8 to 30% for the year, as we begin to recapture the promotional pressure from 2020.
Speaker Change: Overall, our store count will be down approximately 4% in 2024 with square footage down approximately 1%.
Speaker Change: We still expect to open roughly 40, new stores in the year and to close approximately 140.
Speaker Change: Including an approximate one point drag from lapping the extra week total sales for 2024 are expected to be down 1% to up 1%.
Speaker Change: On gross margin, we still expect gross margin expansion of 210 to 230 basis points to a rate of 29, 8% to 30% for the year as we begin to recapture the promotional pressure from 2023.
Michael Baughn: On SG&A, we expect D leverage between 170 and 190 basis points to a rate of 24.4% to 24.6%. This is driven by our ongoing investments in technology, digital, and brand building, as well as a return to more normalized levels of incentive compensation. As Mary noted earlier, we remain committed to operational and investment management with a constant eye on maximizing returns, coupled with ongoing progress on our cost optimization program, through which we continue to target $80 million in savings this year.
Speaker Change: On SG&A, we expect deleverage between 170, and 190 basis points to a rate of 24, 4% to 24, 6% driven by our ongoing investments in technology digital and brand building as well as a return to more normalized levels of incentive compensation.
Mary N. Dillon: As Mary noted earlier, we remain committed to operational and investment management with a constant eye on maximizing returns coupled with the ongoing progress on our cost optimization program through which we continued to target $80 million in savings this year.
Michael Baughn: Switching to cash flows, our capital expenditure outlook for the year remains approximately $345 million and is driven by our investments in the store experience as well as technology. While annual CAPEX figures may vary in the next few years, we are still committed to that $1 billion figure cumulatively from 2024 to 2026. Looking to the second quarter, let me also provide some additional context for our expectations. On the top line for the second quarter, we expect ongoing acceleration in our comps and that we will deliver a flat to slightly positive comp sales result in Q2.
Mary N. Dillon: Switching to cash flows our capital expenditure outlook for the year remains approximately $345 million and is driven by our investments in the store experience as well as technology.
Mary N. Dillon: While annual Capex figures may vary in the next few years, we are still committed to that $1 billion figure cumulatively from 2024 to 2026.
Looking to the second quarter, let me also provide some additional context for our expectations.
Mary N. Dillon: On the topline for the second quarter, we expect ongoing acceleration in our comps and that we will deliver a flat to slightly positive comp sales results in Q2.
Michael Baughn: With momentum continuing to build through the year based on the initiatives I called out earlier, we expect to deliver comps of plus 1% to plus 3% for the year. On gross margin, we expect reported levels to be approximately flat year-over-year in Q2, with progress building towards the back half of the year against last year's easier comparisons and as our initiatives take hold. Recall that we will see an impact of $15 million, or an approximate 10 cent EPS charge, from our initial FLX loyalty rewards transition in the second quarter, which flows through our sales line but impacts our gross margin rate.
Mary N. Dillon: With momentum continuing to build through the year based on the initiatives I called out earlier, we expect to deliver comps of plus 1% to plus 3% for the year.
Mary N. Dillon: On gross margin, we expect reported levels to be approximately flat year over year in Q2 with progress building towards the back half of the year against last year's easier comparisons and as our initiatives take hold.
Mary N. Dillon: Recall that we will see an impact of $15 million or an.
Mary N. Dillon: <unk> 10 cents EPS charge from our initial F. L X loyalty rewards transition was in the second quarter, which flows through our sales line, but impacts our gross margin rate excuse.
Mary N. Dillon: Excluding that impact our underlying gross margin rates in the second quarter would be up to last year improving sequentially from the first quarter.
Mary N. Dillon: On SG&A, we expect deleverage year over year, including the impact of a shift in the timing of our expenses out of the first quarter and into the second quarter, which will approximate $9 million.
Mary N. Dillon: In terms of earnings recall that last quarter, we talked to our first quarter, representing 5% to 10% of annual earnings in the second quarter being approximately breakeven.
Mary N. Dillon: Post our first quarter results, we still expect our first half to be that same 5% to 10% of annual earnings and are pleased to be reiterating our full year non-GAAP EPS outlook of $1 50 to $1 70.
Mary N. Dillon: We remain focused on building our momentum through our laser planned execution and look forward to updating the market on our progress next quarter.
Michael Baughn: Excluding that impact, our underlying gross margin rates in the second quarter would be up to last year, improving sequentially from the first quarter. On SG&A, we expect D leverage year over year, including the impact of a shift in the timing of our expenses out of the first quarter and into the second quarter, which will approximate $9 million. In terms of earnings, recall the last quarter we talked about our first quarter representing 5 to 10 percent of annual earnings and the second quarter being approximately break-even. Post our first quarter results, we still expect our first half to be that same 5-10% of annual earnings and are pleased to be reiterating our full year non-GAAP EPS outlook of $1.50 to $1.70. We remain focused on building our momentum through our LASA plan execution and look forward With that, Operator, please open the call for questions.
With that operator, please open the call for questions.
Operator: We will now begin the question and answer session. To ask a question, you may press star then 1 on your touchtone phone. If you are using a speakerphone, please pick up your handset before pressing the keys. To withdraw your question, please press star then 2. At this time, we will pause momentarily to assemble our roster. The first question today comes from Cristina Fernandez with Chelsea Advisory Group. Please go ahead.
Speaker Change: We will now begin the question and answer session.
Speaker Change: To ask a question you May Press Star then one on your Touchtone phone.
Speaker Change: If you are using a speakerphone please pick up your handset before pressing the keys.
Speaker Change: To withdraw your question. Please press Star then two.
Speaker Change: At this time, we will pause momentarily to assemble our roster.
Speaker Change: Okay.
Speaker Change: The first question today comes from Cristina Fernandez with Telsey Advisory Group. Please go ahead.
Cristina Fernandez: Good morning, and thank you for taking my questions. I wanted to ask you about the dynamics you saw in the first quarter as it progressed. You were able to pull back on promotions, the calm trends, improve a little bit sequentially. As you look at that, how much is it, you know, the industry getting better inventories, cleaner, better innovation versus some of the company specific changes you've made?
Cristina Fernandez: Good morning, and thank you for taking my question I wanted to ask about the dynamic you saw in the first quarter as it progressed you weren't able to pullback on promote changed the comp trends improved a little bit sequentially.
Speaker Change: You look at that how much you said the industry getting better inventories cleaner better innovation versus some of the company specific changes you've made.
Mary N. Dillon: Well, Cristina, thank you. It's Mary.
Mary N. Dillon: Well Cristina. Thank you, it's Mary I'll start let me just.
Mary N. Dillon: I start by saying you know there are several factors that have come together that we see that's helping our laser plan gained traction. So I'm pleased that we trended in line with expectations on comps and gross margin and are in.
Mary N. Dillon: I'll start. Let me just start by saying, you know, there are several factors that have come together that we see that's helping our LASA plan gain traction. So I'm pleased that we trended in line with expectations on COMPs and gross margin. And what I would say in terms of the COMPs is that we saw sequential improvement as we went through the quarter and also as we were pulling back on promotions. So that's a good thing.
Mary N. Dillon: And what I would say in terms of the comps that we saw sequential improvement as we went through the quarter and so as we also as we're pulling back on promotions. So that's a good thing we were happy to see that also are ours are positive, which does show our customers' willingness to pay for our assortment at full price.
Mary N. Dillon: We're happy to see that. Also, our AURs were positive, which does show our customers' willingness to pay for our assortment at full price. And we saw Foot Locker and Kids Foot Locker global COMP up one.
Mary N. Dillon: And also we saw foot locker kids foot locker global comp up one so I think those are all good factors you know as we're looking ahead, we expect to consider continue to see comp improvement versus the fourth the first quarter trends are and we're on track to meet expectations for the year.
Mary N. Dillon: So I think those are all good factors. As we're looking ahead, we expect to continue to see COMP improvement versus the first quarter trend. And we're on track to meet expectations for the year. And so, in terms of COMP progression through the year, we think there are several dynamics, you know, in terms of industry. But really, what I guess we control in our go-to-market strategy. So, you know, one thing is that our brand partner relationships are reinvigorated.
Mary N. Dillon: And so in terms of comp progression through the year. We think there are several dynamics in terms of industry, but really what I guess, we control and our go to market strategy. So you know one is that we our brand partner relationships are reinvigorated and we're really I think leading to a consumer insights joint multi year growth planning, our new merchant buying in play.
Mary N. Dillon: And we're really, I think, leading through consumer insights and joint multi-year growth planning. Our new merchant buying and planning team structure is working really well and is really well integrated with our marketing team. That's all leading to better assortment, access, planning, receipt flows, and, I'd say most importantly, how we're showing up to customers to drive demand. And so as we look through the year, we see several COMP potential future drivers, which is, you know, we're going to continue to improve our experience in-store and online.
Mary N. Dillon: Don and team structure is working really well and really well integrated with our marketing team.
Mary N. Dillon: That's all leading to better Assortments access planning receipt flows and I'd say, most importantly, how we're showing up to customers to drive demand and so as we look through the year, we see several comp potential future drivers, which is you know we're going to continue to improve our experience in store and online.
Mary N. Dillon: Think refresh activities, digital improvements. We'll continue to invest in our brand building, such as the Heart of Stakers campaign and the NBA. We're also rolling out our new loyalty FLX program, which we think is going to be a nice enhancement. We tested that in Canada.
Mary N. Dillon: Think refresh activities digital improvements will continue to invest in our brand building such as the hardest Stinkers campaign. The M. B a we're also rolling out our new loyalty F. L X program, which we think is going to be a nice enhancement, we've tested that in Canada, launching a new mobile app and we see growth with all of our brands.
Mary N. Dillon: Launching a new mobile app. And, you know, we see growth with all of our brand partners, and I call out specifically the return to growth with Nike in the fourth quarter. So on top of all that, we remain committed to keeping our inventory fresh, which allows our customers to keep seeing new and exciting things.
Mary N. Dillon: Partners and I'd call out specifically returned to growth at Nike in the fourth quarter. So on top of all that we remain committed to keeping our inventory fresh which allows our customers to keep seeing new and exciting things.
Mary N. Dillon: Thank you. And then a second question. Can you expand on your conversations with Nike in the past few months? Has anything changed as it relates to the inventory allocations for the rest of the year and how the brand's going to show up, and your stores are aligned with their refocus on wholesale partnerships?
Thank you and then a second question can you expand on your conversations with Nike in the past few months has anything changed as it relates to the inventory of locations for the rest of the year and how the brand is going to show up in their storytelling.
Speaker Change: Line would the refocus on wholesale partnerships.
Mary N. Dillon: Yeah, I mean, overall, we feel like we're really well-positioned with Nike. We feel very good about the relationship. You know, we focus on areas that differentiate Foot Locker in the marketplace, so our sharp focus on basketball, kids, and sneaker culture with Nike is very important, as is our young and diverse trend-setting customer base.
Yeah, I mean, I would say overall, we feel like we're really well positioned.
Speaker Change: With Nike, we feel very good about the relationship.
We focus on areas that differentiate foot locker in the marketplace. So our sharp focus on basketball kids of Sneaker culture with Nike is very important in our young and diverse trendsetting customer base.
Mary N. Dillon: So we've been working very closely on multi-year growth plans. Our teams are working closely together. We were at the Paris Innovation Summit, as Frank said, and saw some very exciting innovation coming in-air. You know, we're really pleased to support the D.N. launch, that Max Air D.N.
Speaker Change: So we've been working very closely and multiyear growth plans. Our teams are working closely together we were at the Paris innovation summit as Frank said and saw some very exciting innovation coming in are we.
Mary N. Dillon: launch and their innovation pipeline that we see. We're really excited about that, and that we'll be returning to growth with them by the fourth quarter. I think we're well-positioned as we focus on wholesale, and we're committed to driving growth together. And I'd say as we raise our game, which is improving the customer experience in-store and online, you know, a more enticing loyalty program, better data sharing, et cetera, I think that's good for our brand partners, too, including Nike. Yeah, I would just add that our team's route in Portland to
Speaker Change: We're really pleased to support the D N launch that Max or Dan launch and their innovation pipeline that we see it we're really excited about that and that will be returned to growth with them by the fourth quarter.
Speaker Change: We're well positioned as they refocus on wholesale and we're committed to driving growth together and I'd say as we raise our game, which is improving the customer experience in store and online.
Speaker Change: A more enticing loyalty program better data sharing et cetera, I think that's good for our brand partners to including Nike.
Franklin R. Bracken: Yeah, I would just add that our team was out in Portland two weeks ago working very carefully and looking at both the innovation pipeline and assortment and then combining that with our 25 commercial plans. And I think we're reiterating our return to growth at Holiday with our Nike partners but also see line of sight to strong growth in 2025 backed by an even stronger product pipeline. And also the new capabilities that we talked about, FLX Rewards, Store Refresh, Store the Future, as well as our co-investment in the clinic and basketball culture. So we feel very optimistic. The relationship is in a very good place, and we're spending a lot of time together working on combined joint go-to-market plans.
Speaker Change: Yeah, I would just add that our teams were out in Portland, two weeks ago, working very carefully and looking at both the innovation pipeline and assortment and then combining that with our 25 commercial plans I think we are reiterating our return to growth at holiday with our Nike partners, but also see line of sight to strong growth in 2025 backed by an even stronger.
Speaker Change: Product pipeline and also the new capabilities that we talked about F electric reward store refresh store of the future as well as our co investment in the clinic in basketball culture. So we feel very optimistic the relationship is in a very good place and we're spending a lot of time together working on combined joint go to market plans.
Speaker Change: Thank you.
Tom Nikic: The next question comes from Tom Nikic with Wedbush. Please go ahead.
Speaker Change: The next question comes from Tom that Nick <unk> with Wedbush. Please go ahead.
Franklin R. Bracken: Hey everyone, thanks for taking my question. I wanted to ask about the WSS. That's been a laggard the last couple quarters, and I know that Mary, when you first came aboard, you were pretty excited about the opportunities there. Can you talk about turning that around, because it kind of seems like the core Foot Locker banner is, you know, comping positive again, and champs obviously is going through a reset. WSS kind of seems like the straggler here, so I'm just kind of wondering.
Hey, everyone. Thanks for taking my question.
Speaker Change: I want to ask about.
Speaker Change: WSI.
Speaker Change: That's been Oh.
Speaker Change: Laggard.
Speaker Change: The last couple of quarters and I know.
Speaker Change: Mary when you first came aboard you're pretty excited about the opportunities there.
Speaker Change: Can you talk about.
Speaker Change: Turning turning that around because you already kind of seems like.
Speaker Change: Core foot locker banner.
Speaker Change: Comping positive again and.
Speaker Change: Obviously, it is going through a reset them.
Speaker Change: WSI is kind of seems like we are.
Speaker Change: The straggler here, so I'm just kind of wondering.
Speaker Change: The plan is there.
Mary N. Dillon: Got it. Let me start by saying, you know, we believe that the banner is really well positioned against an important and growing segment of the population in the U.S., which is Latino families. And as you know, WSS serves family needs from work to sports to fashion, everything in between. And right now, especially with our concentration in certain states, I'd say a customer that's under a little bit more pressure economically, and so that puts some pressure on their disposable income.
Speaker Change: Got it let me start by saying, we believe that the banner is really well positioned against an important and growing segment of the population in the U S, which is the let Latino families and as you know WSI serves the family needs from work to sports to fashion everything in between that is right now, especially with a concentration in.
Speaker Change: Certain states I'd say, a customer that's under a little bit more pressure economically and so that put some pressure on there.
Mary N. Dillon: And so we're seeing that. We're feeling that a bit in the business. And I think what we're doing is just making sure that we've got, first of all, a great leadership team. We're sharpening, you know, how we execute in the stores. We're looking at our pace of new store growth as that happens, as we're waiting to see the customer get a little bit stronger in terms of their discretionary spend. But we feel committed to the concept and who we're positioned against for the long term, as well as our brand partners, who also support our work.
Speaker Change: Disposable income and so we're seeing that we're feeling that the business and I think what we're doing is just making sure that we've got so we've got a great leadership team. We're sharpening how we execute in the stores, where we're looking at our pace of new store growth as that is happening is we're waiting to see the customer get a little bit stronger in terms of discretionary spend but we feel committed to the concept.
Speaker Change: And who are positioned against for the long term as well as our brand partners also support our work in that area.
Franklin R. Bracken: Yeah, I would just add that with the new management team there, they've really sharpened our positioning and are looking at our assortment. You know, a couple of areas that we're working really hard on, sub $100 footwear, where there has probably been sort of a lack of innovation over the last several years. And so as the vendor community sort of re-engages that consumer at that price point, WSS will certainly benefit from that. We're also looking really closely at the culture of football in an Olympic year or World Cup year.
Speaker Change: Yeah, I would just add that with the new management team there, they're really sharpen our positioning and looking at our assortment.
Speaker Change: Full of areas that we're working really hard sub $100 footwear, where there has probably over the last several years has been sort of a lack of innovation and so as the vendor community sort of reengage with that consumer and that price point Ws SaaS will certainly benefit from that we're also looking really closely at the cultural football in an Olympic year World Cup year, I think that category resonates really well.
Franklin R. Bracken: I think that category resonates really well, and we are starting to see some green shoots there, and the team is building some better assortments, in-store presentations, and some connectivity to the consumer. Also, workwear is a category that we continue to build really strongly across both footwear and apparel. And then lastly, we see opportunity in private label, particularly from a value standpoint, to be a little more aggressive and deliberate there. So again, I think I'll reiterate what Mary said about our long-term belief in that consumer, that population growth continues to be very, very positive, and we're optimistic about that.
Speaker Change: And we are starting to see some green shoots there and the team is building so better assortments in store presentations and some connectivity to the consumer also workwear is a category that we continue to build really strongly across both footwear and apparel and then lastly, we see opportunity in private label, particularly from a value standpoint to be a little more aggressive.
Mary N. Dillon: And deliberate there so again I think I'll read it right here, what Mary said is our long term belief in that consumer the population growth.
Mary N. Dillon: <unk> continues to be very very positive and we're optimistic about that we're just working through some of the some of the transitory economic challenges that that consumers really facing and again recall, California, I think Mary alluded is over 70% of our store base and therefore, our consumer population, where we're seeing high inflation and high cost of living so working through that.
Franklin R. Bracken: We're just working through some of the transitory Economic Challenges that that consumer is really facing. And again, recall California, which I think Mary alluded to is over 70% of our store base and, therefore, our consumer population where we're seeing high inflation and a high cost of living. So we're working through that.
Operator: You understand. Thanks very much and best of luck for the rest of the year.
Speaker Change: Understood. Thanks, very much and best of luck.
Michael Charles Binetti: The next question comes from Michael Binetti with Evercore ISI. Please go ahead. Thanks, guys.
Speaker Change: The next question comes from Michael Binetti with Evercore ISI. Please go ahead.
Michael Baughn: Congratulations on a nice quarter. I'm just curious, are you, with the 2Q guidance pointing to the long-awaited shift to positive comps here? Congratulations on that; happy to see it. What are you seeing today and maybe what are some of the, you know, impactful changes to the KPIs that you think will drive that inflection, I guess, in the second quarter, in the one year, and in the multi-year run rate in the business today?
Speaker Change: Hey, guys congrats on a nice quarter.
Speaker Change: I'm just I'm curious are you with the <unk> guidance pointed to the long awaited shift you are positive comps here congrats on that happy to see it what.
Are you seeing that today and maybe what are some of the.
Speaker Change: Impactful changes of Kpis.
Speaker Change: Do you think will drive that inflection I guess in the second quarter and the one year and the multi year run.
Michael Baughn: I know you have, the reason I ask, I know you have a number of different initiatives rolling out at different times of the year, so I'm just trying to understand what we'll see a little bit sooner versus what we'll see a little bit later in the year. And then on loyalty and refreshes, could you give us a couple tangible examples of the better use of data you've been able to deploy in the Canada test? and how you pencil that out as you launch in the US and then if you're willing to share or frame any kind of sales lift you're seeing in the early days in the refresh store.
Speaker Change: Our run rate in the business today I know you have the reason I ask I know you have a number of different initiatives rolling out at different times in the year. So I'm just trying to understand what we'll see a little bit sooner versus later in the year and then on.
Speaker Change: Loyalty and the refreshes could you guys give us a couple of tangible examples.
Speaker Change: The better use of data you've been able to deploy in the Canada tests.
Speaker Change: How you pencil that out as you launched in the U S. And then if you're willing to share.
Speaker Change: Our frame any kind of sales lift you're seeing early days and we'll refresh stores. Thanks.
Okay.
Michael Baughn: Michael, this is Mike. Thanks for the questions. I'll start on the guidance items and then, Frank, maybe you can jump in on FLX. So, from a guidance perspective, you know, we're pleased with how Q1 shaped up and the progression that we saw in the March-April timeframe, with the combined period being low single digits and better than the overall quarter trend, combined with, you know, starting to pull back on the markdown levels and seeing the resulting improvement.
Michael Baughn: Michael This is Mike Thanks for the questions I'll start I'll start on the guidance items and then Frank maybe you can jump in on F. L X.
Franklin R. Bracken: So from a guidance perspective, we're pleased with how Q1 shaped up and the progression that we saw in the March April time frame with a with a combined period being low single digits and better than the overall quarter trend.
Franklin R. Bracken: Combined with starting to pull back on the markdown levels and seeing the resulting improvement that's what has really given us the confidence here is our ability to reduce the markdown levels and see the movement in sales in the right direction to give the guidance for Q2 for the flat to slightly positive comp sales a couple.
Michael Baughn: You know, that's really given us the confidence here is our ability to reduce the markdown levels and see the movement in sales in the right direction to give the guidance for Q2 for flat to slightly positive comp sales, coupled with, you know, margin that we're indicating as approximately flat. It is important to note in there, though, that that approximately flat includes a headwind from the FLX accounting charge that will occur this quarter. Without that charge, we would be delivering a positive margin profile within the second quarter.
Franklin R. Bracken: Coupled with margin that we're indicating as approximately flat important to note within there those that that approximately flat includes.
Franklin R. Bracken: <unk> includes a headwind from the F. L X accounting charge that will occur within this quarter without that charge, we would be delivering a positive margin profile within the second quarter from an initiative build perspective.
Michael Baughn: From an initiative build perspective, the launch of FLX rewards in the U.S. is obviously impactful for Q2. Our refreshes will accelerate. We talked about 13 in the first quarter.
Franklin R. Bracken: The launch of <unk> rewards in the U S is obviously impactful to Q2.
Michael Baughn: That will meaningfully accelerate the rate of refresh activity in the second quarter. Additionally, our workforce management tool will be rolling out across the back half of the second quarter. And then I think we've also indicated that our new merchant and buying structure, those teams, and their product flows and their inventory buys really start to impact us in the second quarter if you're heading into back to school. Beyond Q2, we've really got the mobile app later this year, the return to growth with Nike, and all throughout the year. I think we're confident that the improvements we've made in our brand building and marketing efforts are paying off across the year. Yeah, Michael. This is Frank.
Franklin R. Bracken: Our refreshes will accelerate we talked about 13.
Franklin R. Bracken: In the first quarter that will meaningfully accelerate the rate of refresh activity in the second quarter.
Franklin R. Bracken: <unk>, our workforce management tool will be rolling out across the back half of the second quarter and then I think we've also indicated that our new merchant and buying structure those teams and their product flows in their inventory buys really start to impact us in the second quarter here heading into back to school.
Franklin R. Bracken: Beyond Q2, we've really got the mobile App later this year the returned to growth with Nike.
Franklin R. Bracken: All throughout the year I think we're confident that the improvements we've made in our brand building and marketing efforts are lifting across the year.
Franklin R. Bracken: Yeah, Michael, this is Frank. I'll just add a couple of tangible notes that you inquired about. So in FLX Rewards, we're definitely seeing enrollment in the program, so just the consumer response to the added benefits, so the penetration of sales through loyalty in Canada has improved. We're also seeing engagement with the program significantly outpace our current baseline program, and thereby, we're seeing frequency and also basket increases with the consumer, which is also obviously driving net revenue in the top line.
Franklin R. Bracken: I'll just add a couple of tangible sort of things
Franklin R. Bracken: Yeah. Michael This is Frank I'll, just add a couple of tangible sort of notes that you inquired about so in F. L X rewards, we're definitely seeing enrollment in the program. So just the consumer response to the added benefits. So the penetration of sales through through loyalty in Canada has improved we're also seeing engagement with the program significantly outpace our current base.
Franklin R. Bracken: Klein program and thereby we're seeing frequency and also basket increases with the consumer which is also obviously driving net revenue on the top line up in terms of the store refresh as we look at the comps, we're seeing a comp improvement versus the balance of chain. So the top line is showing a nice beat to the balance of chain also are healthier.
Franklin R. Bracken: In terms of the store refresh, as we look at the comps, we're seeing a comp improvement versus the balance of the chain, so the top line is showing a nice beat to the balance of the chain. Also, a healthier margin profile as we've done some of our assortment planning and put in some of our better assortments and worked through our visual merchandising and improved service. We're seeing sell-through rates, as well as the margin profile, improve in those stores.
Franklin R. Bracken: Margin profile as we have done some of our assortment planning and putting in some of our better assortments and working through our visual merchandising and improve service, we're seeing that the sell throughs as well as margin profile improve in those stores and then lastly, consumer satisfaction, we measure it through NPS is beating balance of chain. There so really feel good about that.
Franklin R. Bracken: And then lastly, consumer satisfaction, we measure it through MPS, is beating balance of chain there, so we really feel good about that. Mike mentioned we did 13 refreshes in Q1, and that's going to accelerate to well over 100 refreshes per quarter globally to help us stay on pace there, so we feel very good about the investment and the return in payback we're seeing.
Speaker Change: Mike mentioned, we did 13 refreshes in Q1 and that is going to accelerate to well over 100 refreshes per quarter globally to help us stay on pace. There. So we feel very good about the investment and the return and payback we are seeing.
Speaker Change: Thanks, a lot guys.
Franklin R. Bracken: The next question comes from Adrienne Rabbi with Guggenheim. Please go ahead. Hi, good morning.
Speaker Change: The next question comes from Adrian Robotics with Guggenheim. Please go ahead.
Adrienne Eugenia Yih: Hi, good morning, thanks for taking our questions. Can you please expand on women's?
Speaker Change: Hi, good morning.
Speaker Change: Thanks for taking our questions can.
Speaker Change: Can you please expand on women what are the biggest win so far it it sounded like you made great progress on the basketball business.
Adrienne Eugenia Yih: What are the biggest wins so far? It sounded like you made great progress in the basketball business. I guess, also, what are the challenges, the low-hanging fruit going forward, categories, brands that are doing well, and I guess, can you please also talk about the actual commercial impact of the Paris Olympics this year? I don't know if you can quantify it, but I'm just trying to grasp the commercial significance of the event versus just the innovation brand showcase.
Speaker Change: I guess what are the challenges of low hanging fruit going forward category brands that are doing well and I guess can you. Please also talk about the actual commercial impact from the Olympics. This year I don't know if you can quantify I'm just trying to grasp the commercial significance of the van versus just the innovation showcase thank.
Speaker Change: Thank you.
Speaker Change: Okay.
Operator: Hi, sorry, we couldn't hear you very well. Could you repeat the question and maybe speak a little more directly into your phone? Yes, sorry. Can you hear me?
Speaker Change: Hi, sorry, we couldn't hear you very well could you repeat the question and maybe speak a little directly more into your phone.
Adrienne Eugenia Yih: Yeah, sorry, can you hear me now? Yeah, that's better. Awesome.
Speaker Change: Yes, sorry can you hear me now.
Speaker Change: Yeah, that's better.
Awesome I'm sorry can.
Adrienne Eugenia Yih: Can you please expand on women's? I guess the biggest win so far. I know you guys made great progress in basketball. What are the challenges there also, like low-hanging fruit, any categories, or brands that are doing well? And I guess, can you please also talk about the actual commercial impact of the Paris Olympics this year? I don't know if you can quantify it, but I'm just trying to grasp the commercial significance of the event versus the innovation brand showcase.
Speaker Change: Can you please expand on women's I guess the biggest win so far I know you guys made a great progress on basketball what are the challenges. There also like low hanging fruit any categories and brands that are doing well and I guess can you. Please also talk about the actual commercial impact from the Paris Olympics. This year I don't know if you can quantify it just trying to grasp the commercial significance of the events versus the <unk>.
Speaker Change: <unk> been showcase.
Franklin R. Bracken: Yeah, I'll start with that one. On the consumer side, specifically what we're seeing, certainly one of the big structural changes post-COVID is that more consumers are wearing sneakers. And amongst those new consumers, women are really leading not only the commercial side of it, but also their leading trends. So when we think about court, when we think about terrorists, and the next trend which we think is coming is low profile, it's really women, and specifically teen girls, who are leading those trends.
Speaker Change: Yeah, I'll start with that one on the consumer side, specifically, what we're seeing certainly one of the big structural changes post COVID-19 as more consumers are wearing sneakers and amongst those new consumers women are really leading not only the commercial side of it but also they are leading trend. So when we think about court when we think about tariffs and the next trend.
Speaker Change: Which we think is coming is low profile, it's really women and specifically the teen girl, who are leading those trends. So it was amongst our fastest growing categories globally across all of our core banner. So feel very good about that and the other thing is that our vendor partners are really investing resources in.
Franklin R. Bracken: So it was amongst our fastest growing categories globally across all of our banners. So I feel very good about that. And the other thing is that our vendor partners are really investing resources in product creation, as well as demand creation. And then we are backing it up with more in-store space, better storytelling, and better service to our female consumers. And I'll just plug our store of the future. You know, our women's section is outperforming the balance of the chain by significant margins. So we feel very good in terms of both our refresh and our store of the future concept. Turning to basketball, I was feeling very good.
Speaker Change: Product creation as well as demand creation and then we are backing it up with more in store space, better storytelling and better service to our female consumer.
Speaker Change: Put in a plug for our store of the future are women's section is outperforming Bal.
Speaker Change: Balance of chain by significant margin. So we feel very good in terms of both our refresh in store of the future concept.
Speaker Change: Turning to basketball feeling very good and in fact I'd say it's.
Franklin R. Bracken: In fact, I'd say it's one of the areas we feel best about moving forward. We see brand diversification in terms of signatures. So we've talked about Nike, Jordan, Adidas, Puma, and Under Armour all having great signature offerings, and we are the go-to destination for that.
Speaker Change: One of the areas, we feel best about moving for we see brand diversification in terms of signature. So we've talked about Nike, Jordan and Adidas Puma and under armor, all having great signature offerings and we are the go to destination for that and then we also are going to see I think a resurgence in the culture of basketball and we will continue to invest in partnerships like homecare.
Franklin R. Bracken: And then we are also going to see, I think, a resurgence in the culture of basketball. And we will continue to invest in partnerships like HomeCourt, the NBA, the clinic with Nike and Jordan to make sure that we keep those franchises in a pull state and that we're realizing better margins and also doing our part for demand creation and elevating the storytelling and service. So I think I feel very good about the culture of basketball and where that's headed. Lastly, in the Olympics, you know, France is our strongest. It's actually our number one country in Europe. We have about 145 stores there.
The MBA the clinic with Nike and Jordan to make sure that we keep those franchises in a poll state and that we're realizing a better margin and also doing our part for demand creation and elevating the storytelling in service. So I think we feel very good about culture basketball and where that's headed.
Speaker Change: Lastly in the Olympics.
Speaker Change: France is our strongest since our actually our number one country in Europe, we have about 145 stores. There. So we do expect a local impact to the games more importantly, we think our stores are going to be an important consumer connection point for our brand partners to tell great stories around innovation around athletes and sports style and so we're partnering with several of them.
Franklin R. Bracken: So we do expect a local impact from the games. But more importantly, we think our stores are going to be an important consumer connection point for our brand partners to tell great stories around innovation, around athletes, and sports style. And so we're partnering with several of our brand partners to do store takeovers, pop-ups, and some special experiences across a number of cities in France later this summer for the Olympic Games.
Our brand partners to do store takeovers pop ups and some special experiences across a number of cities in France.
Speaker Change: Later this summer for the Olympic games so.
Franklin R. Bracken: So it's an important cultural and sport culture moment, a sneaker culture moment. And so we see it as a bit of an ignition point. I think, you know, we talked about some of the great work that our partners at Nike have done in terms of the running innovation and basketball innovation that'll be unveiled there. So we feel very, very good and very bullish that that's going to be an ignition point for the category. I got it.
Speaker Change: And it's an important cultural and sport culture moment, sneaker culture moment, and so we see it as a bit of an ignition point I think we talked about some of the great work that our partners at Nike have in terms of the running innovation in basketball innovation that'll be unveiled there. So we feel very very good and very bullish that that's going to be an ignition point for the category.
Operator: Got it. Thank you. Best of luck.
Speaker Change: Got it thank you best of luck.
Jay Soule: The next question comes from Jay Soule with UBS. Please go ahead.
Speaker Change: The next question comes from Jay sole with UBS. Please go ahead.
Franklin R. Bracken: Great, thank you so much. Frank, I want to just follow up on that answer that you just gave to the last question. You know, Nike has had some great innovation over the last few years, like the Upply series and running, but it seems like it hasn't necessarily, that the credit from the consumer for those innovations hasn't necessarily cascaded down to the mass market and driven the running business, you know, broadly, and some of just the, you know, even the lifestyle running business broadly.
Franklin R. Bracken: Great. Thank you so much Frank I wanted just follow up on that answer that you just gave to the last question. Nike has had some great innovation over the last few years like the five series and running but it seems like hasnt necessarily that the credit from the consumer for those invasions hasnt necessarily cascaded down to the mass market and driven the running business broadly.
Franklin R. Bracken: Some of them, even the lifestyle running business broadly do you think that the innovation that you're talking about it you are seeing from Nike is going to lead to just a halo around the brand and that leads to strong growth really across the brand across all the running and running connected part of the assortment that can benefit footlocker. Thank you.
Franklin R. Bracken: Do you think that the innovation that you're talking about, that you're seeing from Nike, is going to lead to just a halo around the brand that leads to strong growth, really across the brand, across all the running and running-related parts of the assortment that can benefit Foot Locker?
Franklin R. Bracken: Thank you.
Speaker Change: Yeah. So you know again, I think Mary mentioned, John and Craig were kind enough to invite us to Paris to see the innovation summit and also get a sneak peek into the the late 'twenty four 'twenty five 'twenty six pipeline and feel very good about the innovation work that they're doing around Pegasus structure Triac Romero and then also some of the lifestyle platform.
Franklin R. Bracken: Yeah, so, you know, again, Mary mentioned John and Craig were kind enough to invite us to Paris to see the Innovation Summit and also get a sneak peek into the late 24, 25, 26 pipeline and feel very good about the innovation work that they're doing around Pegasus, Structure Triax, Vomero, and then also some of the lifestyle platforms. You know, we talked about the launch of Air Max DN and some of the derivatives that will come off of that, and we feel very good about that.
Speaker Change: <unk>, we talked about the launch of the air Max Dia and in some of the derivatives that will come off of that and feel very good about that.
Franklin R. Bracken: You know, look, I think it's fair to say Nike's going back on offense. Some of the demand creation and brand marketing that they gave us a quick preview of in Portland last week was incredibly exhilarating, the kind of thing that makes your hair stand up on your arms and gets you really excited. And so, you know, we couldn't be more proud of the progress we've made in our relationship with them. So across running, across basketball, and across lifestyle, we feel very good about our return to growth and then also just their pipeline and their demand and brand creation efforts that they're investing in.
Speaker Change: Look I think it's fair to say Nike is going back on offense some of the demand creation and brand marketing that they gave US a quick preview of in Portland last week.
Speaker Change: Was incredibly exhilarating kind of thing that makes your hair stand up on your arms and gets you really excited and so we couldnt be more proud of the progress we've made in our relationship with them so across running across basketball and across our lifestyle. We feel very good about our return to growth and then also just their pipeline and their demand and brand creation efforts at their.
Speaker Change: <unk>.
Franklin R. Bracken: Maybe just follow up on that too. I mean, you mentioned in your prepared remarks that women's basketball seems to be at a tipping point. I mean, can you just talk about your outlook for women's basketball for that footwear business? I mean, how meaningful can it be? I mean, presumably, it's a very small part of the basketball business today. So what can it be? And then, are there any other brands in women's basketball besides Nike that are meaningful?
Speaker Change: Maybe just a follow up on that do you I mean, you mentioned in your prepared remarks, a women's basketball seems to be at a tipping point I mean can you just talk about your outlook for women's basketball for that footwear business I mean, how meaningful can it be I mean, presumably its a very small part of the basketball business today. So what can it be and then are there any other brands in women's basketball, Besides Nike that are meaningful.
Franklin R. Bracken: Yeah, absolutely. So there's already been some great progress we've made with Nike around the Sabrina 1, and Puma with the Stewie signature line has been great. And needless to say, Caitlin Clark has brought another level of excitement, and having just signed with Nike, we were very bullish and optimistic about the plans there. But if you look across the league, again, we referenced excitement in the media, grassroots participation in terms of females playing, and then also just the commercial opportunity.
Speaker Change: Yeah, absolutely. So so there's already been some great progress we've made with Nike around the Sabrina one Puma with the Stewie signature line has been great and a needless to say Caitlin Clarke has brought another level of excitement in having just signed with Nike. We are we're very bullish and optimistic about the plans there, but if you look across the league again.
Speaker Change: We referenced excitement and media grassroots participation in terms of females, playing and then also just the the commercial opportunity. So we think it's going to be a place where our brand vendors invest across the board. So we think about Nike, we think about Jordan Adidas Puma under armour I think all of them are going to have.
Franklin R. Bracken: So we think it's going to be a place where our brand vendors invest across the board. So we think about Nike, we think about Jordan, Adidas, Puma, Under Armour, I think all of them are going to participate in the female side of basketball. And we're going to be right there to invest in storytelling, with some open to buy, and some co-marketing to help support that growth. So we're very excited that this is going to help round out and increase participation inclusivity in the sport.
Speaker Change: And in the female side of basketball and we're gonna be right there to invest with storytelling with some open to buy with some co marketing to help support that growth. So we're we're very excited that this is going to help round out and increase participation inclusivity in the sport.
Franklin R. Bracken: And then maybe just a comment on apparel. Obviously, it's still a work in progress. What's next? What's the plan going forward to get that business to where you want it to be?
Speaker Change: Got it and then maybe just comment on apparel obviously.
Speaker Change: All work in progress Whats next whats the plan going forward to get that business to where you wanted to be.
Franklin R. Bracken: Yeah, so I'd say there is, you know...
Franklin R. Bracken: Yeah, so I'd say there are some things that, as an industry, we need to get back on offense in terms of innovation. And so delivering innovation through material, through fabric, through color, I think we have an opportunity. You know, COVID, there was certainly a strong sort of athleisure moment there, but a lot of neutrals and basics and grays, blacks, and whites. And we think a return to color and then some more interest beyond fleece in terms of maybe nylons and some mixed materials is an opportunity.
Speaker Change: Yeah, So I'd say, there's some things that as an industry, we need to get back on offense in terms of innovation and so delivering innovation through material through fabric through color. I think we think is an opportunity COVID-19. There was certainly a strong sort of athleisure moment, there, but a lot of neutrals and basics and Grays and blacks.
Speaker Change: And whites and we think a return to color and then some more interest beyond fleece in terms of.
Speaker Change: Maybe nylons and some mixed materials as an opportunity, but also just seasonal transitions things that we can control. We're working on that so we're going to more of a I'd say a key item focused that allow us to make sure. We're we're in depth and in stock in color and size for the most important items in the category for our consumers and so that those are some of the things that we're doing as well.
Franklin R. Bracken: But also just seasonal transitions, things that we can control, we're working on that. So we're going to more of a, say, a key item focus that allow us to make sure we're in depth and in stock and color and size for the most important items in the category for our consumers. And so that those are some of the things that we're doing as well, some of the demand creation, and then also just, you know, connectivity head to toe back to the sneaker and telling better stories from an integrated head to toe look is something that we probably lost a little bit of discipline as an industry, as a company that we're going back to with supply chain now sort of normalized, we're able to deliver those packages and more harmony, which allows us to deliver them to the store and get them on our websites at the same time and tell better stories.
Speaker Change: Some of the demand creation and then also just connectivity head to toe back to the sneaker and telling better stories from an integrated head to toe look it's something that we probably lost a little bit of discipline as an industry as a company that we're going back to you with supply chain now sort of normalize we're able to deliver those packages and more harmony, which allows us to deliver them to the.
Speaker Change: Store and get them on our website at the same time until better stories.
Speaker Change: Got it thank you so much.
Janine Marie Hoffman Stichter: The last question today comes from Janine Stichter with BTIG. Please go ahead.
Speaker Change: The last question today comes from Jeanine pitcher with BT AG. Please go ahead.
Franklin R. Bracken: Got it. Thank you so much. The last question today comes from Janine Stichter with BTIG. Please go ahead. Hey, good morning. You've got Ethan on for Janine.
Speaker Change: Hey, good morning, you've got eaten on for Janine.
Speaker Change: Got a couple of questions. So first on the new store in Wayne New Jersey, just would love to hear how you're planning the planning to incorporate any of the learnings here into future stores and on top of that what your expansion plans are for these store formats beyond the four additional locations opening this year and then secondly, if you could just give some color on what you're seeing in terms of the.
Speaker Change: Current macro environment, and especially you know how the lower income versus upper consumed lower income versus upper income consumers are each performing that would be helpful. Thanks.
Mary N. Dillon: Great, let me start with the view of the consumer and then we'll go backwards from that, which is that I think we all know that the consumer has been exposed to prolonged inflation, you know, reduced savings, higher interest rates, and that does affect discretionary income, no question about it. That said, you know, sneakers are the discretionary category for our consumers that they prioritize, and I would say spending with purpose. So for the right exciting product at the right key moments, call it Mother's Day, Father's Day, back to school holiday, you know, they're spending.
Speaker Change: Great. Let me start with the the view of the consumer and that will go backwards to that which is that I think we all know that the consumer has been exposed to prolonged inflation reduced savings higher interest rates and that does affect discretionary income no. No question about it that said you know sneakers is a discretionary category for our consumers that they prioritize.
Speaker Change: And I would say spending with purpose so for the right exciting product at the right key moments call at mother's day father's day back to school holiday you know their spending so I think it's just it's our job to serve up to our guests what they want when and how they want it and that's what our lease up plan is focused on doing and so for us it's about continuing to pay close to.
Mary N. Dillon: So I think it's just, it's our job to serve up to our guests what they want, when and how they want it, and that's what our Lace-Up plan is focused on doing. And so for us, it's about, you know, continuing to pay close attention to how our customers are feeling, but really executing with excellence is really what it's about to capture their discretionary dollar in a category they care a lot about Yeah, and I'll pick it up from there.
Speaker Change: Tension to how our customers feeling but really executing with excellence is really what it's about to capture their discretionary dollars and a category they care a lot about.
Franklin R. Bracken: Yeah, I'll pick it up from there in terms of Store of the Future and Refresh. So it was really one brief that sort of guided our work on both of those endeavors, and they're happening in parallel, and they're very closely connected. But our goal there was really to improve the consumer journey and help with discovery and tell consumers what's most important in the store. We also listened to the voice of our brand partners, and so brand storytelling and merchandising were also a critical part of the brief.
Yeah, and I'll pick it up from there in terms of store of the future and refreshed. So it was really one brief that sort of guided our work on both of those endeavors and they are happening in parallel and they're very closely connected but our goal there was really to improve the consumer journey and help with discovery and telling consumers. What's most important in the store, we also listen to the voice of our brand.
Speaker Change: Partners and so brand storytelling and merchandising was also a critical part of the grief a brief and then lastly, really just elevating our service and our stripers in making them a bigger and more important part of the journey and so the store of the future really accomplishes that very well, we're seeing the diversification of brands the consumer diversification come through in the result.
Franklin R. Bracken: And then lastly, really just elevating our service and our stripers and making them a bigger and more important part of the journey. And so the Store of the Future really accomplishes that very well. We're seeing the diversification of brands and the consumer diversification come through in the results very strongly. And it's also informed our Store of Refresh program, which I said we were seeing outsized results there, and we're going to continue to invest throughout the rest of 2024 and then into 2025.
Speaker Change: <unk> very strongly and it's also informed our store refresh program, which I said were seeing outsize results there and we're going to continue to invest throughout the rest of 2024 and then into 2025.
Speaker Change: Got it that's helpful. Thank you Pete.
Mary N. Dillon: Great, so let me just wrap this up. Thank you everybody for joining us today. I remain confident that we're on the path towards delivering sustainable, profitable, long-term growth in shareholder value. Through the LASA plan, we're positioning Foot Locker to be the global destination for all things sneakers. I wanna extend my thanks to the entire Foot Locker team, and in particular, our global Striper community, for their passion and their commitment to working with excellence every day across our entire enterprise, our stores, and our distribution centers. We look forward to updating you on our progress next quarter. Thank you.
Speaker Change: So let me just wrap this up thanks, everybody for joining us today I remain confident that we're on the path towards delivering sustainable profitable long term growth and shareholder value through the lease up plan, we're positioning foot locker to be the global destination for all things sneakers I want to extend my thanks, the entire foot locker team and in particular, our global Striper community for.
Speaker Change: Their passion and their commitment to working with excellence every day across our entire enterprise our stores and our distribution centers. So we look forward to updating you on our progress next quarter. Thank you.
Operator: The conference staff included. Thank you for attending today's presentation. You may now disconnect.
The conference has now concluded. Thank you for attending today's presentation you may now disconnect.