Mary Dillon: Okay. Thank you all for your time and attention to our Lace Up Plan today. I know there’s been a lot to digest. I have complete confidence that we can deliver this plan, and I can’t tell you how excited I am to lead the transformation of this company. We have, I would say, a few things to remind you about. We’re in an amazing industry, we have strong partnerships with our brands, and we are clear-eyed about the actions that we need to take to simplify and make our business more efficient. That said, we are just as clear about the possibilities ahead. And as we begin to execute against these strategic imperatives and get after our Lace Up Plan, we believe we truly will unleash the inter sneakerhead in everyone. And this team is a team is ready to take the field and win.
I have to tell you, I couldn’t be more proud or excited to lead this organization. The folks at Foot Locker have loved for the customer, the category and our store teams that is truly unmatched. So 2024 is our 50th year, and we are focused on lacing up for the next 50 years of growth. So let’s go. Thank you so much. We’re going to take a 1-minute break and then come back and do Q&A. Thank you.
Unidentified Company Representative: , VP of Corporate Communications. We’re now at the QA portion of the conversation. . Let’s get started.
Katharine McShane: Kate McShane from Goldman Sachs. Thanks for the great presentation today. Just with the focus on loyalty, we had wondered what the role might be in linking loyalty programs with some of your vendors as we’ve seen from some of your other competitors?
Mary Dillon: Great. Okay. Thank you, Kate. Thanks for being here today. I’ll start broadly, which is that, as I think Frank said well, we have a big opportunity with loyalty, and we’re very excited to really go after the opportunities to really use that tool to broaden beyond access to launch, but really to reward customers for their loyalty and grow share of wallet. So in addition, it’s going to allow us to unleash new capabilities using CRM, just a much more personalized manage and over time. And absolutely, the way I think about this with our brand partners is, one, we already shared some data and insights with our brand partners today to help them understand how things are going. Our ability to connect a loyalty program is contingent on our ability to have a better loyalty program than we have today, write more data, more riches, more agility.
So over time, I think about it in 2 ways. One is that we will absolutely work with our brand partners to help drive profitable growth for all. And we have — I think we mentioned this, but we are talking — with Nike, we plan over time to have a connected loyalty program, but it’s just too early to do that today. We’re building a path towards that.
John Kernan: John Kernan from TD Cowen. Mary, how have your conversations with Nike and Jordan Brands gone since you’ve joined the organization? And what are you most excited about? And how are things changing with that relationship?
Mary Dillon: Yes, I talked about this at the beginning. So I would say that to me — and one of the things that beauty that I did was develop brand partnerships across a broad range of types of companies, and that’s critical as a multi-branded retailer. With Nike from day 1, as I said, the company had welcome me to the industry, and we’ve been spending a lot of time revitalizing our relationship. And I’d say, kind of stepping back, we expected that post this period of reset, we would go back to growth and that will happen starting at holiday of this year. What we’ve been doing is having very constructive conversations about what we uniquely bring to the marketplace as a multi-branded retailer that connects with customers in different ways.
And in fact, not everybody wants to buy online. In fact, most people in this category like to come into a multi-brand shopping kind of situation. So we play a unique role there as well as our credibility and connection into sneaker culture. And then what we did is really focus on areas that we could really mutually drive growth. So — and I know Chris talked about this, but whether it’s basketball, sneaker culture, kids, these are areas that are unique strengths for Foot Locker that are important to Nike as well. I would say Nike probably like all of our brand partners, is excited about us also raising our games in terms of all things as a retailer being even better at omni-channel and digital. So at a high level, and I will ask if either one of you guys want to add more, please do.
But that’s been the context of the conversations. And Chris showed a lot today. I’m very excited about the plans that we have going forward with Nike as well as our other brand partners. If there’s anything you guys want to add?
Chris Santaella: Coming through the period of COVID, there was just a lot of uncertainty about consumer supply chain. Obviously, product innovation was somewhat impaired through that period. Now that we have, I will say clarity, but there’s a clear road and path to where the consumer or what the entire ecosystem and supply chain looks like. And then to Mary’s point, the continuity of consumer strategies, it’s all driven by being complementary, having transparent, open and long-term strategic conversations. It’s not a season-to-season allocation conversation. It’s about how do you mutually create benefit for consumers. She outlined the 3 short points, the scale of our fleet, our access to consumers who love sneaker culture, our position around kids and just the authenticity and our ability to authenticate things and sneaker culture is valued by Nike as well as other brand partners.
Lorraine Hutchinson: Lorraine Hutchinson from Bank of America Merrill Lynch. I wanted to dig into the 3% to 4% long-term same-store sales target a little bit. Understanding this is a reset year, can you talk a bit about how you think about getting exclusives driving e-commerce growth and then square that with what we’re hearing from a lot of the athletic brands and their interest to have more of a DTC approach?
Mary Dillon: Yes. So if you guys don’t mind, I’ll start high level on this, and then Rob, you can direct from there. But one of the things that I think is clear in most consumer categories and we see this in sneakers is that there’s a role for both. There’s a role for direct-to-consumer and there’s absolutely a role for multi-branded retailers like Foot Locker. And it’s because there’s multiple needs that people have. And nobody’s — very few people are buying just one brand and very few people are buying only online. Again, this is true for most consumer categories. At the combination of both in-store and online, those create your best shoppers because they’re more engaged and they’re spending the most. And as we try to demonstrate today, in this category, there’s all sorts of opportunities for more people to participate in more ways and that requires having multiple brands that you can browse and look at and learn about, right?
So when people come into our stores, they love that ability to browse and look as well as get insights from our stripers who are really knowledgeable. So that doesn’t mean that DTC for brands isn’t also important. I think they both are important. And that’s, I think, we play a unique role in the ecosystem. What I would say is that, as it relates to our growth plans, and Rob, I’ll let you go take it where we want from here. But we think that all — we know that all the things we outlined today, which relates to how we think about relaunching our brands, our brand access, our tools to create our own demand around loyalty, better e-commerce, CRM capabilities, all add — and really optimizing where we place those resources, right, thinking about the best growth banners and putting our resources there drive that growth that we’re talking about.
We’re expecting to grow at least with the category. It’s a great growth category. And we have tools in place that we believe can also drive market share growth beyond that.
Robert Higginbotham: Yes. Just add on e-commerce, when we talk about our digital penetration going from 17% to 25%, to be very clear, that’s not about shifting dollars from the store to the e-com channel, rather that we see that as true sales incremental dollars. And one reason we’re confident in saying that going back to some of that information Peter presented, our conversion rate is 3.5x below — our peers were 3.5x above our conversion rate. So we know that we’re leaving money on the table through our digital channels. And we don’t think and certainly don’t see those loss transactions making their way to our stores. So if we can close that conversion gap, we’re really confident that we cannot only hit that penetration target but actually do that through incremental sales dollars.
Jay Sole: Jay Sole from UBS. My question is just on Champs. Can you maybe just elaborate a little bit on the repositioning? Talk about where Champs has been in terms of what it stood for versus where it’s going to start, it’s going to be going forward? And then when you see the stores reset, where do you see that banner eventually going?
Mary Dillon: Great. Frank, you want to take that?
