Foot Locker chairman talks about Nike price increases

Foot Locker chairman talks about Nike price increases

Nov. 22–Foot Locker chairman Kenneth Hicks told investment analysts Friday that his retail chain is seeing the impact of a Nike policy to strategically increase its footwear prices.

Hicks pointed to an overall 30 percent price bump on Nike Basketball Air Foamposite shoes to illustrate his point.

Hicks said Foot Locker worked with Nike to determine pricing. A Nike spokesperson confirmed the footwear company suggests the price, but the retailer makes the final call.

“We talk to them about what we think appropriate price points are for shoes,” Hicks told analyst Eric Tracy of Janney Montgomery Scott LLC. “We’ve seen Foamposites go from $200 and $220 to deuce and a quarter, all the way up to $260.”

The analyst’s question harkened back to Nike’s Investor Meeting in early October when some of the footwear and apparel company’s executives talked about using a more strategic approach to setting prices to better reflect the popularity of some products.

Jeanne Jackson, Nike president of distribution and merchandising, said in the last year the company had “created a team to generate analytics for our merchants, to inform their pricing decisions.

“Our philosophy here is really quite simple, which is the price where the consumer will expect the price to be given our superior technology and brand strength. It’s a delicate balance but one where we know we have headroom. And early pilots here have been really quite encouraging.”

Chief executive Mark Parker also talked about pricing, saying, “we were a bit reactive in the past more than we are today. I think we’re more proactive, more consumer-based in our view on pricing.”

Also during the conference call Friday, Mitchel Kummetz, analyst with Robert W. Baird Co. Inc., asked about Foot Locker’s plans for a new store-within-a-store concept called “Nike Fly Zone.”

Richard Johnson, Foot Locker’s chief operating officer, said with one store open, two others are near opening, also. The first opened last Saturday at Palisades Mall in West Nyack, N.Y.

“It’s a transformational space in the Kids Foot Locker store that’s really focused on Nike and Jordan basketball product,” Johnson said on the call. “If you think about it as a junior version of a House of Hoops, I guess, is the best way to put it, both from a square footage and a product perspective.”

House of Hoops is a store-within-a-Foot-Locker store that features Nike brand basketball footwear and apparel.

“As we’ve done many times, we prototype things,” Johnson said. “We test them, and we develop a rollout plan based on those tests. So we like what we see so far. But we’re a week into the process at this point. So I think there are opportunities with the Fly Zone.”

— Allan Brettman