The Motley Fool’s readers have spoken, and I have heeded your cries. After months of pointing out CEO gaffes and faux pas, I’ve decided to make it a weekly tradition to also point out corporate leaders who are putting the interests of shareholders and the public first and are generally deserving of praise from investors. For reference, here’s my previous selection.
This week, we’ll “step” into the retail sector and examine why Foot Locker, Inc. (NYSE:FL) CEO, Ken Hicks, is truly a class act.
Kudos to you, Mr. Hicks
Ken Hicks took the reins at Foot Locker, Inc. (NYSE:FL) during one of the toughest times in recent retail history. Since becoming CEO on Aug. 17, 2009, Foot Locker’s dividend-adjusted share price has catapulted by 268%, or an average of about 2.9% per month!
However, the retail industry certainly isn’t a walk in the park — even for Foot Locker, Inc. (NYSE:FL). Shoe retailers and footwear companies have all struggled to some extent as higher payroll taxes and delayed tax refunds have weighed on consumer spending habits domestically. Overseas, slower GDP growth in China has drastically slowed down NIKE, Inc. (NYSE:NKE)‘s plans of dominating the region. In NIKE, Inc. (NYSE:NKE)’s most recent quarterly report, it grew its sales in all regions, except for China and Japan, where it was forced to step up discounting to move higher-than-expected inventories.
Constantly changing fashion styles also require continued innovation to keep customers loyal. Deckers Outdoor Corp (NASDAQ:DECK) , the company behind the Ugg brand, has struggled in recent quarters as sheepskin costs have risen and its styles haven’t clicked with younger consumers as well as they had in the past.
Even the stores themselves haven’t fared too well. Finish Line Inc (NASDAQ:FINL)‘s fourth-quarter results pointed to domestic weakness in its previously high-growth running business, which is a serious cause for concern.
Source: commons.wikimedia.org.
And then there’s Foot Locker, Inc. (NYSE:FL), which increased its net sales last year by 11.4% on a 9.4% rise in same-store sales in spite of all these concerns. Foot Locker’s success has come about because of a number of growth and cost-cutting initiatives.
First, Ken Hicks has kept a tight lid on expenses and worked on closing underperforming locations over the previous couple of years. Even the nation’s biggest companies have stores that struggle, and recognizing which stores are unsuccessful and not allowing them to remain a drag are one of the keys to great leadership.
Hicks has also re-emphasized his company’s focus on running shoes. Although Finish Line Inc (NASDAQ:FINL) is seeing weakness with this category, Foot Locker, Inc. (NYSE:FL) has capitalized by rapidly expanding its direct-to-consumer offerings, targeting a younger generation of consumers, and giving consumers an unparalleled selection of name-brand footwear to choose from.
A step above his peers
The interesting aspect about Foot Locker is that’s is so much more than just its bottom-line results. Ken Hicks has completely transformed the culture at Foot Locker, Inc. (NYSE:FL) for shareholders, employees, and its surrounding communities.
On top of the huge 268% surge in Foot Locker’s share price since Hicks took over, shareholders have also seen a gigantic boost in their quarterly payout.
Source: Nasdaq.com. *Assumes payout of $0.20 per quarter for remainder of 2013 and 2014.
Since 2003, Foot Locker, Inc. (NYSE:FL)’s quarterly payout has risen 567%, from just $0.03 to what is now a $0.20 quarterly payout. With the yield currently at 2.2%, you’ll struggle to find better dividend growth in the retail sector.
