Foot Locker (FL) CEO Mary Dillon has hit the ground running at the sneaker retailer some seven months into the job.
"We are the OG of sneakers and are really refocusing on all things sneakers," Dillion said on Yahoo Finance Live (video above) at the Shoptalk conference in Las Vegas.
Dillon was named to the top spot at Foot Locker last August and assumed the position officially in January. Credited for creating the modern-day Ulta (ULTA) as CEO for eight years, Dillon is wasting no time running a similar growth-minded playbook at Foot Locker.
Earlier this month at an investor day, the company revealed its "Lace Up" plan. As part of the plan, Foot Locker will shutter 400 underperforming stores mostly in lower-tier malls and focus more on off-mall locations. The company will aim to better segment its various sneaker concepts, too.
The Foot Locker brand will target sneaker-heads, while Champs Sports will target performance and athleisure shoppers.
Over time, Foot Locker sees itself reaching $10 billion-plus in annual sales and a 10% operating margin. The company today is at about $8.5 billion in sales and a 7% operating margin.
Dillon acknowledged that 2023 is a reset year as it works to clean up its store footprint and refine its operating model.
"2023 is a reset year, we've been very clear about that. But we're investing in the capabilities that we need to really build the next 50 years of Foot Locker fame, I'll call it. So I'm very excited about that," Dillon added.
Wall Street is seeing the potential in Foot Locker and praising Dillon for her early round of initiatives.
"We think a new steady-state algorithm of ~mid-single-digit percentage sales / +high-single-digit to low-double-digit EPS level is very realistic following a significant reset in 2023 to a much healthier base (shrinking Champs, licensing Asia, resetting Nike)," said EvercoreISI analyst Omar Saad.
Saad added: "But equally importantly, we think Foot Locker will start to flip the script away from a disintermediation narrative to a grow-with-secularly-healthy-sneaker-demand narrative. And with shares trading at just 9x forward EPS (and 5x target 2026 EPS), we see the potential for the multiple to expand to low-to-mid-teens (FL traded mid-to-high-teens prior to disintermediation concerns) as the model transforms in the coming quarters."
Brian Sozzi is Yahoo Finance's Executive Editor. Follow Sozzi on Twitter @BrianSozzi and on LinkedIn. Tips on the banking crisis? Email [email protected]
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