April 20, 2024

Foot Locker is pulling a page out of Adidas’s playbook with a new loyalty program it’s been pilot testing in Canada.

“What we saw in Canada was exactly what we hoped to see. Bigger baskets, increased frequency and more engagement,” said Mary Dillon, Foot Locker’s chief executive officer, during a fireside chat at J.P. Morgan’s 10th Annual Retail Round-Up investor conference on Wednesday.

The sportswear company is eyeing a North America rollout later this year, with plans to globally launch the program afterwards.

Dillon said the new loyalty program will be an improved iteration of its free FLX Rewards program, which only contributed to a “small part of the business.”

FLX was structured as an “access to launch” tool rather than a developed program, Dillon added, explaining that what Foot Locker is missing is a program where the more customers spend, the more points they can gather to get future discounts.

Adidas’s free adiClub Membership program lets customers earn points as they spend to unlock certain perks and discounts.

Meanwhile, Foot Locker plans to launch a new mobile app with the loyalty program. The company’s goal is to have 25% digital penetration by 2026. Dillon did not say whether the new loyalty program would require a payment fee or be free to all customers.

In early March, Foot Locker’s stock fell drastically after the company reported a loss for its 2023 fourth quarter and a gloomy 2024 financial outlook. Moreover, the company said it would need to delay its profitability goal by two years because of its underperformance during the previous fiscal year.

Mike Baughn, Foot Locker’s chief financial officer, said the company expected to reach an EBIT margin target of 8.5% to 9% in the timeframe.

During the fiscal 2024 year, Foot Locker plans to close 140 stores while opening 35. Dillon said the company plans to “refresh” two-thirds of its remaining stores by the end of 2025 after 100 refreshed U.S. stores lifted sales.

The athletic and apparel retailer has approximately 2,500 retail stores in 26 countries, including North America, Europe, Asia, Australia, and New Zealand.

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