Mary Dillon Named CEO of Foot Locker
Mary Dillon is making the leap from beauty to sneakers.
The former Ulta Beauty chief has been named president and chief executive officer of Foot Locker Inc. starting next month.
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Investors, hopeful that Dillon can work some of the magic she used to build Ulta into a beauty leader, sent shares of Foot Locker up 20.1 percent to $38.40.
She takes the reins from Richard Johnson, who will stay on as executive chairman through the end of January, when Dona Young will become non-executive chair.
Dillon called Foot Locker “iconic” and said the company “possesses a strong set of values and focus on the customer experience as well as tremendous growth opportunities.
“It is clear how Foot Locker sits at the heart of the global sport and sneaker community,” she said. “I look forward to working closely with Dick to ensure a smooth transition, and to partnering with the board, leadership team and nearly 50,000 team members around the world to build on Foot Locker’s strong foundation and help shape the company’s future.”
Johnson is capping a three-decade career at Foot Locker, which he has led as CEO since 2014, growing the business from $7 billion that year to $9 billion in 2021.
Second-quarter results, which the company also revealed on Friday, showed that adjusted earnings per share sunk to $1.10 from $2.09 a year ago and that gross margins declined 340 basis points “driven mainly by higher markdowns, as the promotional environment started to normalize after last year’s unusually favorable backdrop, followed by supply chain costs, and occupancy deleverage.”
Sales tallied $2.1 billion, marking a decline of 9.2 percent from a year earlier, but an increase of 16.4 percent from two years ago, in the second quarter in 2019.
The outgoing CEO said: “It has been a privilege and an honor to lead Foot Locker and work alongside the best team in retail for nearly 30 years. Together, we have built a broad house of brands and banners fueled by a shared passion for the global sneaker community. We have turned a brick-and-mortar company into an interactive retail community poised for long-term growth in the digital era. The board and I have worked closely together on a thoughtful succession plan, and with a strong foundation in place and ongoing momentum against our strategic objectives, we believe now is the right time to complete the CEO transition. We are confident that Mary is the ideal person to serve as Foot Locker’s next CEO and lead the company forward. Mary has established a remarkable track record in the retail industry, and she brings an incredible mix of talent, experience and commitment to take Foot Locker to the next level.”
Just what that next level might be has analysts and investors very interested.
Dillon is widely regarded as the driving force behind Ulta’s powerhouse success in beauty retailing.
Ulta’s market capitalization grew from about $6 billion when she took the reins in July 2013 to more than $17 billion when she stepped down in June 2021. During that period, Dillon focused on growing consumer awareness around Ulta, opening more of the retailer’s signature off-mall locations, and bringing in powerhouse brands, including MAC and Kylie Jenner’s Kylie Cosmetics.
Foot Locker, which has a market cap of $3.6 billion after the CEO-switch bump, would like to replicate that growth curve.
Certainly, playing in the still uber-hot sneaker category, the company has continued potential.
Analysts on a conference call tried to get some sense of Dillon’s plans from current management, but the full reveal will have to wait.
“Over the years, we have turned a brick-and-mortar company into a broad house of brands with an increasingly engaged and interactive online retail community,” Johnson said. “We have a tremendous foundation, and I’m excited to see Mary take the business to its next level. I’ll certainly be sharing [in on Foot Locker’s] future successes and as the team continues to advance the company’s core purpose of inspiring and empowering youth culture.”
The outgoing CEO later added: “As we think about the digital opportunity, as we think about the things that Mary accomplished with Ulta, her understanding of off-mall retailing and big-box retailing, all things that we’re moving toward, she became a logical choice, and I think a great choice to take the leadership over at the company.
“Those things are all strengths that she’s got and she aligns very much [with],” he said. “Strategically, she understands where we’re going, certainly, she’ll come in and take a look at the work we’ve got in progress. But she’s such a quality leader, a quality person that I think that I’m very confident about the timing of this and the candidates that we’ve selected.”
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