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Foot Locker, Inc. (FL), Finish Line Inc (FINL): Which Shoe Fits Your Portfolio the Best?

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The business models pursued by shoe retailers Finish Line Inc (NASDAQ:FINL), Foot Locker, Inc. (NYSE:FL), and DSW Inc. (NYSE:DSW) provide good samplings of how marketing and sales have radically evolved in the footwear market. An understanding of how these listed companies are addressing the shoe retail market’s evolution should immensely help on whether to invest or not in their equities.

Finish Line Inc (NASDAQ:FINL)

Segmenting the footwear market

Essentially, the respective business plans of retailers in the mold of Finish Line Inc (NASDAQ:FINL), Foot Locker, Inc. (NYSE:FL), and DSW Inc. (NYSE:DSW) revolve on footwear product segmentation, focusing on the market niches wherein they believe the opportunities are more lucrative. Finish Line Inc (NASDAQ:FINL), for instance, concentrates on footgear for running, with the company’s foundation rooted on the running boom during the 1970s and 1980s.

As of this March, it has 655 mall-based stores in the U.S., including Finish Line Inc (NASDAQ:FINL)-branded outlets in five Macy’s, Inc. (NYSE:M) department stores. These shops are complemented by digital portals for online and mobile shopping.

Foot Locker, Inc. (NYSE:FL) is a much larger athletic shoe retailer with locations not only in the U.S., but also in Canada, Europe, New Zealand, and Australia. It has a total of 3,335 stores as of this February, and an additional 42 franchised outlets in South Korea and the Middle East.

Besides its Foot Locker, Inc. (NYSE:FL) brand, the company also uses other brand names as it defines the universe of its business. These brands include Lady Foot Locker, Kids Foot Locker, Footaction, East Bay, CCS, and Champs Sports. The company, which is known to emphasize basketball footgear, likewise operates digital direct-to-customers channels via the Internet and mobile devices for each of its brands.

DSW is a smaller shoe retailer with an operating model distinct from those of Finish Line Inc (NASDAQ:FINL) and Foot Locker, Inc. (NYSE:FL), both of which have a bias for athletic footwear and accessories. The concentration of DSW, on the other hand, is on style, offering select, fashionable branded footwear and accessories for men, ladies, and kids.

This company has 368 stores in the U.S., District of Columbia, and Puerto Rico. In addition, it has 348 leased locations for other retailers in the U.S. under the Affiliated Business Group. DSW, too, has an online marketing presence via an e-commerce site and a mobile site.

A struggling finisher

4th Quarter Sales % Change Comparable Store Sales
Finish Line $442.7 million 0.7%
Foot Locker $1.7 billion 7.9%
DSW $594.3 million 3.6%

Based on the most recent sales results of the three specialty shoe retailers as summarized above, it is obvious that Finish Line Inc (NASDAQ:FINL) is struggling in the race. Were it not for a 25.1% gain in digital revenue, which were included in comparable sales, its top-line performance would’ve been hobbled even more.

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