Foot Locker Shares Fall After CEO Announces Retirement

after saying Chief Executive Officer Ken Hicks is retiring and will be succeeded by Richard Johnson, the sneaker chain’s chief operating officer.

Hicks, 61, who joined Foot Locker in 2009 from J.C. Penney Co., plans to step down on Dec. 1 and will continue as executive chairman through the annual shareholder meeting in May, the New York-based company said today in a statement.

Since arriving at Foot Locker, Hicks has revamped store layouts and merchandising while closing weaker locations. He also added more running footwear just as the category took off. In August, the company’s stock reached an all-time high after earnings beat estimates for the 17th time in 18 quarters. The shares have surged almost fivefold during his tenure.

“People liked Ken and they are afraid about what happens next,” said Sam Poser, a New York-based analyst at Sterne, Agee & Leach Inc. who recommends buying the shares. But “he has set up a very good team, and that will show itself going forward.”

Foot Locker’s shares declined 4.5 percent to $53.63 for the biggest drop since Feb. 3. The stock had gained 36 percent this year through yesterday, compared with a gain of 9.2 percent for the Standard & Poor’s 500 Index. The stock closed at $11.35 on Aug. 14, 2009, the last trading day before Hicks became CEO. In the same span, the S&P 500 roughly doubled.

Johnson’s History

Johnson, 56, joined Foot Locker in 1997, when it purchased sports-equipment seller Eastbay. Before becoming COO in 2012, he oversaw the company’s retail stores and headed up the Foot Locker chain in the U.S., its largest division.

One of the biggest early tasks for Johnson will be developing the next phase of the company’s long-term strategic plan that will be released early next year.

Johnson said the company has several opportunities to keep driving sales growth and highlighted its kids and women’s businesses.

The retailer is in the process of making its SIX:02 chain its main play to go after women. While Lady Foot Locker focuses on sneakers, SIX:02 is concentrated on athletic apparel, which is one of the fastest-growing parts of the industry. There are 14 stores open with another 20 slated for next year.

“We are starting to see it start to bear fruit,” Johnson said in a joint interview with Hicks. It will be “our women’s banner of the future.”

Johnson led the sales improvement in the U.S. by redefining the target customers for the company’s various chains so that each was going after a more specific demographic, preventing them from stealing sales from each other, Hicks said.

Sales Improve

For example, Johnson shifted Foot Locker to target sneaker enthusiasts while its Champs unit catered more to young male athletes, Hicks said. Johnson made similar moves with Foot Locker Kids and Footaction, according to Hicks. That helped sales per square foot grow to $460 last year from $333 in 2009.

“By defining that, our real estate became much more productive,” Hicks said. “We’re much more targeted and focused.”

As for Hicks’s future, he said he’s not looking for a job but would be open to another executive position. He had been mentioned as a possible candidate to become CEO at J.C. Penney, a position filled last month.

“I don’t know what I’m going to do,” Hicks said. “I’m young enough that I could do something else but old enough that if I didn’t, that would be fine too.”


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