WSJ : Iconic ‘Great Wave’ Print Sells for $2.8 Million at Christie’s

Iconic ‘Great Wave’ Print Sells for $2.8 Million at Christie’s
The woodblock print inspired artists across the East and West, including Monet and Van Gogh


Who knew it was still possible to collect an iconic work of art for under $3 million? Case in point: On Tuesday, Christie’s in New York sold Katsushika Hokusai’s “Under the Well of the Great Wave off Kanagawa” for $2.8 million—a new record high for the 1830-32 woodblock print.

Christie’s only expected the work to sell for between $500,000 and $700,000, but six bidders pushed it higher in a battle that lasted 13 minutes. The telephone bidder, fielded by Christie’s deputy chairman Tash Perrin, remains anonymous. Dealers said they might start looking among a younger generation of contemporary-art collectors who have lately started pivoting to prints, particularly well-known works that look like bargains.

“To contemporary guys, it’s nothing to spend over $1 million to own an absolute icon,” said Sebastian Izzard, a longtime Japanese prints dealer in New York. “Hokusai has become a big deal.”

One of the most famous images in Asian art, the “Great Wave” poised to crest claw-like onto a trio of tiny boats with Mount Fuji in the distance has proven wildly popular since the artist created it at the age of 70 during the waning years of isolationist Edo, now Tokyo. Although intended to appeal to everyday audiences in Japan who bought and swapped such prints for small sums, Hokusai’s “Great Wave” influenced rivals like Utagawa Hiroshige and Utagawa Kuniyoshi, who soon attempted their own tsunami scenes, including the latter’s circa-1835 “Monk Nichiren Calming the Stormy Sea,” now owned by the Metropolitan Museum of Art.

Hokusai’s “Great Wave” eventually made its way out of cloistered Japan—likely as a sailor’s souvenir—and made an equally big splash among artists in Europe. Curators credit the “Great Wave” with helping inspire Claude Monet’s roiling coastal seascapes as well as Vincent Van Gogh’s “Starry Night,” who substituted the wave itself in his composition for roiling, moonlit clouds. Claude Debussy’s three symphonic sketches from 1905, “The Sea,” also took Hokusai’s work as their muse.

The “Great Wave” remains a paragon of popular culture today, reproduced on everything from calendars to carpets to the cover of Gabrielle Zevin’s current bestselling novel, “Tomorrow, and Tomorrow, and Tomorrow.” On Tuesday, Google listed around 125 million search results for Leonardo da Vinci’s “Mona Lisa”; the search engine logged nearly 1.4 billion hits for the “Great Wave.”

Despite this ubiquity, versions of Hokusai’s masterpiece still tend to sell for a fraction of anything painted by Monet—and that price gap largely explains why the “Great Wave” appeals to younger, international collectors, said Takaaki Murakami, head of Japanese and Korean art at Christie’s New York.

“With the ‘Great Wave,’ new buyers come out of the blue,” Mr. Murakami said.

Wading into the Hokusai market requires navigating the vagaries of the prints market. Whereas paintings are prized as being one of a kind, the “Great Wave” was printed in untold multiples over several decades, with print runs extending long after Hokusai died in 1849. Hokusai, hailed as a celebrity in Edo during his lifetime for his detailed depictions of Japanese landscapes, was commissioned by publisher Nishimuraya Yohachi to create the “Great Wave.” But once the artist signed off on its woodblock design, the publisher had free rein to issue as many copies as possible. It’s unclear how many “Waves” exist in the world, so collectors must be wary of potential fakes.

Mr. Izzard said he’s probably sold 40 versions of the “Great Wave” over the course of his career, with prices easily tripling over the past decade for worthy versions, he said. The most recent version surpassed a “Great Wave” sold at Christie’s in 2021 for $1.5 million, over its $250,000 high estimate.

He said collectors tend to pay more for “Great Wave” prints whose lines remain crisply sharp because it means they were printed on the woodblock early on—as opposed to later, fuzzier versions created once the block itself had worn down from use. Another way to tell: Early versions, like the one Christie’s sold, show the subtle outline of a cloud against a pale pink sky.

Collectors also rank Hokusai’s works higher if the prints aren’t torn or creased, and Christie’s “Great Wave” was never folded, Mr. Murakami said. The anonymous family selling the work bought it in the early 1900s, he added, and it helped that they hadn’t moved it much since.

Mr. Murakami said Tuesday’s “Wave” was also spared attempts to touch up its quivering black outlines or fill in its Prussian blue ink—a deep indigo hue that defined Hokusai’s series of “Thirty-six views of Mount Fuji,” a paean to the mountain that the artist saw as sacred.

Savvy collectors know the artist actually created 46 distinct views, with Japanese collectors long preferring a different scene from the series known as “Red Fuji,” Mr. Izzard said. “Red Fuji” prints have sold at auction for as much as $1.4 million, according to auction database Artnet.

But Mr. Izzard said for whatever reason, curators and collectors in the West—and now, China—tend to gravitate to the Hokusai they know best, the “Great Wave.”

“Hokusai is the Japanese equivalent of Rembrandt,” he said, “and this is his icon.”

FT : Global commodity traders open to increasing Russian oil volumes

Global commodity traders open to increasing Russian oil volumes
Trafigura and Vitol bosses say they would increase activity if governments and banks give approval

Commodity traders Trafigura and Vitol have said they would consider trading more Russian oil this year if they received clear guidance that governments and banks would accept them doing so.

The world’s two largest independent energy traders both wound down their large oil businesses with Russia following President Vladimir Putin’s invasion of Ukraine last year.

Trafigura chief executive Jeremy Weir said his company’s position was “under review” but would only change if there was broad-based agreement from banks, insurance companies and western governments that major traders needed to re-engage to facilitate the smooth and safe movement of Russian oil.

“You have to have all stakeholders involved to do this thing properly and professionally, and have buy-in,” Weir told the Financial Times’ commodities global summit in Lausanne.

Trafigura currently lifted only a “limited” number of cargoes of refined products, permitted under exemptions in the west’s sanctions, having completely stopped trading Russian crude last year, he added.

Russell Hardy, Vitol chief executive, said the company was in full compliance with the west’s restrictions and currently traded less than 100,000 barrels a day of Russian oil.

“Is that number going to move up marginally in the event of some slightly stronger guidance towards what’s expected? Yes, maybe,” he said. “Is it going to dramatically change? I don’t think so.”

The chief executives’ comments come as the US government has begun to privately urge some large trading companies to restart activity with Russia if they can do it under the G7’s $60 a barrel cap. Russia’s Urals blend, its main benchmark, is currently trading at $49.95, according to Refinitiv data.

Western officials are increasingly concerned that the sanctions have inadvertently moved the Russian oil trade from better-known companies to lesser-known operators, often using ageing vessels.

“The larger, more experienced companies have removed themselves [and], generally speaking, the newer more skilled shipowners removed themselves,” said Ben Luckock, Trafigura’s co-head of oil trading.

Companies that were “arguably less experienced, certainly less transparent” had filled the gap and were now taking Russian oil on old boats through difficult shipping channels such as the Danish straits, all the way to Asia, he added.

“I hope there isn’t a problem because it is going to very quickly focus people’s minds.”

Torbjörn Törnqvist, chief executive of energy trader Gunvor, said that many of the vessels carrying Russian oil had previously been “heading towards the scrap yard” and cautioned that the quality of the non-western insurance many of the shipments were probably using may not prove effective in the event of an accident.

He said Gunvor would not “exclude” the possibility of trading more Russian oil “but you obviously have to be 100 per cent sure about the compliance questions around this and it’s very complicated”.

Traders at the FT conference said they broadly expected oil prices to rise in the second half of this year, with many predicting the recent sell-off triggered by the issues in the banking sector would only make the oil market more bullish after the summer should drillers lower investment.

Brent crude, the global benchmark, was trading at $74.40 per barrel on Tuesday while West Texas Intermediate, the US equivalent, was at $68.38.

Luckock said he expected oil prices to get into the “high $80s” by the end of the summer while Gunvor co-head of trading, Stephane Degenne, said he expected prices to be in the $90s towards the end of the year.

The most bullish forecast was from hedge fund manager Pierre Andurand, who reiterated his prediction that oil prices would soar as high as $140 a barrel later this year, driven by rising demand in China as its economy reopens.

FT : Xi Jinping backs Vladimir Putin on Ukraine but holds out on Russian gas pip

Xi Jinping backs Vladimir Putin on Ukraine but holds out on Russian gas pipeline
Leaders of China and Russia hold centrepiece talks in Moscow

Xi Jinping has backed Vladimir Putin’s stance on his war in Ukraine but refrained from endorsing his statements about a planned pipeline that would reroute Russia’s gas exports from Europe to Asia.

The Chinese and Russian leaders signed a joint statement on Tuesday after holding centrepiece talks in Moscow in which they extolled Beijing’s “positive role” and “objective, unbiased position” on Putin’s invasion. But their talks did not yield decisive agreements on economic issues key to helping Moscow weather western sanctions.

The lack of substance in Putin’s rhetoric about the talks, which he described as “warm, comradely and constructive”, underscored Russia’s diminishing influence as its reliance on China’s political and economic backing deepens.

Beijing has offered Moscow a crucial economic lifeline during the war by increasing purchases of its energy exports and replacing western goods and components restricted by the sanctions. The Tuesday talks, however, showed that the further deepening of economic ties were still subject to negotiations. Xi will stay in Moscow for a third day on Wednesday.

Putin’s main goal during the Chinese leader’s stay was to get him to agree to his planned Power of Siberia-2 gas pipeline set to supply China via Mongolia. Earlier on Tuesday, Putin spoke about it as if it were a done deal, saying “practically all the parameters of that agreement have been finalised”.

In joint remarks with Xi after the talks, Russia’s president promised to supply China with at least 98bn cubic metres of natural gas by 2023 — a figure attainable only if the new pipeline comes online — and noted Mongolia had already signed off on the deal.


But Xi remained conspicuously silent on the topic. A lengthy joint said only that Russia and China would “make efforts to advance work on studying and agreeing” plans to build the pipeline.

Alexander Novak, Russia’s top energy official, said the Kremlin hoped to sign the Power of Siberia-2 agreement later this year. “The companies have been given orders to work out the details of the project in detail and get to signing it in the shortest possible time. Orders have been given to ensure the conditions are agreed,” he told reporters, according to state newswire Ria Novosti. “We hope it’ll be this year.”

China’s leader was more forthcoming on Ukraine, however. The joint remarks mostly rehashed the Kremlin’s talking points, warning against “the practice by any country or group of countries to seek advantages in the military, political and other areas to the detriment of the legitimate security interests of other countries” — a frequent Russian complaint against Nato — and appeared to accuse western countries of escalating the war.

Putin, who has repeatedly mused about using nuclear weapons against the west if it continues to help thwart Russia’s faltering invasion, warned UK supplies to Kyiv of armour-piercing rounds which contain depleted uranium could escalate the conflict.

“Russia will be forced to react accordingly, taking into account that the collective west has begun using weapons with a nuclear component,” Putin said, without specifying what Russia’s response would be.

In a further show of support for Putin, who last week became the subject of an international arrest warrant for alleged war crimes in Ukraine, Xi said he invited him to come to China “at a convenient time” this year. Putin’s foreign policy adviser Yuri Ushakov said Russia’s leader could make the trip this year.

Ushakov said Putin and Xi’s meeting was enough to strike fear into the hearts of Russia’s adversaries. “They are very nervous, you can tell, and with good reason,” he said, according to Interfax. “Two great powers and neighbours are solving the most important issues of world politics and bilateral relations [ . . .] it’s entirely natural.”

The US has said China’s peace plan would legitimise Russia’s territorial conquests in Ukraine while giving Moscow time to replenish its armed forces for a fresh offensive.

“The world should not be fooled by any tactical move by Russia — supported by China or any other country — to freeze the war on its own terms,” US secretary of state Antony Blinken said on Monday.

Ukraine is also sceptical of the plan, but has refrained from criticising China ahead of an expected call between Xi and president Volodymyr Zelenskyy following his three-day visit to Moscow.

Contrasting with Xi’s visit to Moscow was the unexpected trip by Japan’s prime minister Fumio Kishida to Kyiv and Bucha, the site of alleged Russian war crimes where he expressed “great anger at the atrocity” committed there.

FT : Maserati/IPO: business model needs tuning for listings race

Maserati/IPO: business model needs tuning for listings race
The Italian group may find it difficult to go head to head with super sports car brands, but it is charting a different route


Can you hear a faint roar in the distance? It might be the sound of Maserati heading to the public markets. The Italian luxury sports car maker is still miles from that destination. But it is already a separate business within carmaker Stellantis.

With Porsche up almost 40 per cent since its float last year and Ferrari’s valuation thundering ahead, the market is starting to do a spot of window shopping. 

Maserati is midway through a strategic U-turn. It is seeking to focus on profits rather than sales. It has spruced up its range, adding the MC20 model with a £200,000 price tag.

Revenues are growing again after a few tricky years, up 15 per cent in 2022 to €2.3bn. Ebit margins have also recovered, to 8.7 per cent in 2022. It is targeting 15 per cent by 2024 and 20 per cent longer term. No listing is likely before then.

Today, Maserati is miles behind Porsche and Ferrari. The average selling price of its cars is under €100,000, according to Bernstein analysis — not that different from pricier Mercedes or BMW cars. Ferraris can cost €500,000 or more. Porsche — whose models run a wide gamut — has higher volumes to lend a helping hand.

Maserati may find it difficult to go head to head with super sports car brands. But it is charting a different route. Maserati has pledged to bring out an electric version of all its models by 2025, and to go entirely electric by 2030. That is a canny move. It should help Maserati attract a different type of customer, not least among eco-conscious tech entrepreneurs. 

How much might Maserati be worth? On today’s paltry margin, it would not deserve much of a premium to the likes of BMW, whose enterprise value is around one times last year’s sales. But the group does have room to raise profitability as it focuses on pricier models. If one — generously — applied Porsche’s valuation of 2.6 times last year’s sales, that would raise its enterprise value to €6bn.

Of course, the market would need to see continued evidence of a well-executed turnround before it gave the carmaker anything like that sort of accolade. Stellantis is right to keep Maserati in the garage until its engines are firing on all cylinders again.

FT : Nestlé says less than half of its mainstream food and drinks are considered

Nestlé says less than half of its mainstream food and drinks are considered ‘healthy’
World’s biggest food company discloses nutritional value of its portfolio for the first time

Nestlé has acknowledged that the nutritional value of less than half its portfolio of mainstream food and drinks can be considered “healthy” using a commonly accepted definition, despite pressure on packaged foodmakers to make their products more nutritious.

The annual report of the world’s largest food company showed 54 per cent of its food and beverages by revenue — excluding products such as pet food, baby food, vitamins and specialised medical nutrition — were rated lower than 3.5 under the widely used health star rating (HSR) system.

Foods with a lower score are not considered to be “generally healthy”, according to the not-for-profit Access to Nutrition Initiative. HSR takes into account the level of saturated fats, sugar and salt within individual products, as well as “positive nutrients” such as fibre, fruit and vegetables.

Nestlé, whose products include Smarties chocolates, Nesquik milkshake and Nescafé coffee, released the figures following pressure from some shareholders and campaigners for the industry to be more transparent about the nutritional value of its products.

The Switzerland-based group said it was “setting a standard for transparency” and was the first in the sector “to report on the nutritional value of its entire global portfolio”.

Holly Gabriel, a campaigner at responsible investment charity ShareAction, welcomed the disclosure but said it “worryingly shows the company is still far too reliant on the sale of less healthy food and drink products”.

Packaged food groups are under scrutiny over the extent to which they are responsible for a global obesity problem. In an attempt to improve diets, some governments have introduced taxes on high-sugar products and implemented restrictions on advertising and sales promotions.

Nestlé chief executive Mark Schneider told analysts on an earnings call last month that the group had made “already a lot of progress” in reducing sodium, sugar and saturated fats.

The foodmaker said it had recently reduced sodium in products including Mahler Seafood Creamy Soup, introduced more zero-sugar variants of Coffee Mate and launched more plant-based foods, including Garden Gourmet Schnitzel.

But industry executives have argued there are limits to how much they can push healthier products, especially as inflation has squeezed consumer spending and pushed up the industry’s costs.

“It’s clear that while the work goes on, there are limits,” Schneider said. “Enjoyment-related categories [such as confectionery] will not be turned into health-related categories.”

In its annual report, Nestlé broke down its net sales into four categories: 17 per cent came from products with an HSR score of less than 1.5, 18 per cent from those scoring between 1.5 and 3.5, and 30 per cent with a rating of at least 3.5. The remaining 35 per cent came from petcare and other products for which HSR is not applicable.

The data was compiled by the company and audited by the third party Bureau Veritas. Nestlé disclosed the figures for the first time on Tuesday, although the Financial Times reported about two years ago on an internal company presentation that also showed a high proportion of its portfolio scored lower than 3.5 on the scale.

Mark Wijne, research director at the Access to Nutrition Initiative, also said the disclosure was “very welcome” but showed companies such as Nestlé could and should do more to innovate and promote healthier alternatives.

Nestlé added that it had “come a long way and now want to go further. We have committed to setting a global target for the healthier part of our portfolio later this year.”

HSR was originally developed by authorities in Australia and is now also used by investors and policymakers globally.

>>> US Gapping up

Gapping up
In reaction to earnings/guidance:

  • ONON +13.8%, CSIQ +8.2%

Other news:

  • SELB +23.4% (reports Phase 3 DISSOLVE Program of SEL-212 in chronic refractory gout meets primary endpoint)
  • HLIT +8.6% (partners with Charter Communications)
  • GRIN +4.2% (appoints new CEO and CFO)
  • NNDM +3.1% (shareholders approve Murchinson's proposals)
  • BB +3% (announces new patent sale transaction with leading patent monetization company for up to $900 million)
  • NTLA +3% (announces FDA regenerative medicine advanced therapy designation granted to NTLA-2002)
  • BBIO +2.7% (Shares Preliminary Findings on Novel Bioassay Measuring Glycosylated Alpha-dystroglycan)
  • SLRC +2.4% (notes that bank issues will not impact operations)
  • CNI +2.3% (Canadian Nat'l Rail and Unifor reach tentative agreements)
  • TSLA +1.9% (assigned Baa3 rating)
  • SNY +1.9% (Sanofi and Regeneron Pharmaceuticals (REGN) receives EC approval for Dupixent)
  • CDAY +1.8% (selected by Orica for HR and payroll)
  • FUSN +1.3% (first patient in Phase 1 FPI-2059 study dosed)
  • AFCG +1.2% (appoints new CFO)

Analyst comments:

  • FLT +3.9% (upgraded to Outperform from Mkt Perform at Raymond James)
  • HOG +3.8% (upgraded to Overweight from Equal-Weight at Morgan Stanley)
  • WIX +3.3% (upgraded to Overweight from Neutral at Piper Sandler)
  • META +2.8% (upgraded to Overweight from Equal-Weight at Morgan Stanley)
  • EMR +1.6% (upgraded to Overweight from Equal-Weight at Morgan Stanley)

>>> US Research Calls

Research Calls

  • Upgrades:
    • Assurant (AIZ) upgraded to Outperform from Mkt Perform at Keefe Bruyette; tgt $52
    • Emerson (EMR) upgraded to Overweight from Equal-Weight at Morgan Stanley; tgt raised to $96
    • FleetCor (FLT) upgraded to Outperform from Mkt Perform at Raymond James; tgt $254
    • Foot Locker (FL) upgraded to Buy from Neutral at Citigroup; tgt raised to $50
    • Foot Locker (FL) upgraded to Outperform from In-line at Evercore ISI; tgt $60
    • Harley-Davidson (HOG) upgraded to Overweight from Equal-Weight at Morgan Stanley; tgt $50
    • Imperial Oil (IMO) upgraded to Sector Outperform from Sector Perform at Scotiabank
    • J. Sainsbury plc (JSAIY) upgraded to Outperform from Neutral at Exane BNP Paribas
    • Meta Platforms (META) upgraded to Overweight from Equal-Weight at Morgan Stanley; tgt raised to $250
    • New York Community (NYCB) upgraded to Buy from Neutral at DA Davidson; tgt $11.50
    • Proximus (BGAOY) upgraded to Neutral from Sell at UBS
    • Range Resources (RRC) upgraded to Buy from Hold at Tudor, Pickering, Holt & Co.; tgt $33
    • TotalEnergies SE (TTE) upgraded to Overweight from Equal-Weight at Morgan Stanley
    • Vornado Rlty Trust (VNO) upgraded to Neutral from Underweight at Piper Sandler; tgt lowered to $16
    • Wix.com (WIX) upgraded to Overweight from Neutral at Piper Sandler; tgt raised to $120
  • Downgrades:
    • Agree Realty (ADC) downgraded to Mkt Perform from Mkt Outperform at JMP Securities
    • Armstrong World Industries (AWI) downgraded to Hold from Buy at Deutsche Bank; tgt lowered to $77
    • GoDaddy (GDDY) downgraded to Neutral from Overweight at Piper Sandler; tgt lowered to $88
    • Profound Medical (PROF) downgraded to Hold from Buy at Jefferies; tgt raised to $10
    • Suncor Energy (SU) downgraded to Sector Perform from Sector Outperform at Scotiabank
    • Sutro Biopharma (STRO) downgraded to Equal Weight from Overweight at Wells Fargo; tgt lowered to $8
    • Svenska Handelsbanken (SVNLY) downgraded to Equal Weight from Overweight at Barclays
  • Others:
    • Allogene (ALLO) initiated with a Mkt Perform at Bernstein; tgt $6
    • Alnylam Pharma (ALNY) initiated with an Outperform at Bernstein; tgt $243
    • Alphabet A (GOOGL) resumed with a Buy at Stifel; tgt $130
    • Arrowhead (ARWR) initiated with a Mkt Perform at Bernstein; tgt $27
    • Beam Therapeutics (BEAM) initiated with a Mkt Perform at Bernstein; tgt $37
    • BioMarin Pharmaceutical (BMRN) initiated with an Underperform at Bernstein; tgt $81
    • Boston Properties (BXP) resumed with a Neutral at Goldman; tgt $56
    • Brixmor Property (BRX) resumed with a Neutral at Goldman; tgt $22
    • Carnival (CCL) named Catalyst Call Buy short-term investment idea at Deutsche Bank
    • CRISPR Therapeutics (CRSP) initiated with a Mkt Perform at Bernstein; tgt $44
    • Chart Industries (GTLS) initiated with an Outperform at Evercore ISI; tgt $217
    • CONMED (CNMD) initiated with an Equal Weight at Wells Fargo; tgt $96
    • First Industrial Realty (FR) resumed with a Sell at Goldman; tgt $48
    • Hudson Pacific Properties (HPP) resumed with a Sell at Goldman; tgt $5.50
    • Intellia Therapeutics (NTLA) initiated with an Outperform at Bernstein; tgt $54
    • Ionis Pharma (IONS) initiated with an Underperform at Bernstein; tgt $31
    • Kilroy Realty (KRC) resumed with a Buy at Goldman; tgt $41
    • Kimco Realty (KIM) resumed with a Buy at Goldman; tgt $25
    • Macerich (MAC) resumed with a Sell at Goldman; tgt $8.50
    • Phillips Edison & Company (PECO) resumed with a Buy at Goldman; tgt $38
    • Prologis (PLD) resumed with a Buy at Goldman; tgt $147
    • Rain Oncology (RAIN) initiated with an Outperform at SVB Securities; tgt $11
    • Simon Properties (SPG) resumed with a Buy at Goldman; tgt $150
    • SL Green Realty (SLG) resumed with a Sell at Goldman; tgt $18
    • Tanger Factory (SKT) resumed with a Buy at Goldman; tgt $22
    • Vertex Pharma (VRTX) initiated with an Outperform at Bernstein; tgt $344
    • Ventyx Biosciences (VTYX) initiated with an Overweight at Wells Fargo; tgt $77
    • Vornado Rlty Trust (VNO) resumed with a Sell at Goldman; tgt $12
    • Zymeworks (ZYME) assumed with an Overweight at Wells Fargo; tgt $12

>>> U S Gapping down

Gapping down
In reaction to earnings/guidance:

  • HUYA -6.9%, TME -1.5%

Other news:

  • ALT -39.6% (results from week 24 interim analysis of pemvidutide momentum phase 2 obesity trial and 12-week phase 1b type 2 diabetes safety trial)
  • AG -15.2% (suspending mining at Jerritt Canyon)
  • SI -6% (delaying 10-K filing)
  • FSM -2.5% (reports updated Mineral Reserves and Mineral Resources)
  • FMC -2.3% (to introduce long-range growth plan)
  • CTRE -1.5% (increases quarterly dividend)
  • PBT -1.5% (announces March cash distribution)
  • KRTX -1.4% (commences $400 mln public offering)

Analyst comments:

  • GDDY -1.4% (downgraded to Neutral from Overweight at Piper Sandler)

WWD : Inside Foot Locker’s Plan to Reach $9.5 Billion in Sales by 2026

Inside Foot Locker’s Plan to Reach $9.5 Billion in Sales by 2026
The footwear retailer also beat fourth-quarter expectations.

Foot Locker and chief executive officer Mary Dillon rolled out a multipronged strategy Monday to help the retailer increase market share and grow sales to $9.5 billion by 2026.

Dubbed its “Lace-Up” plan, the new strategy will aim to grow Foot Locker’s business to more than $9.5 billion in annual revenue by 2026 by diversifying its brand portfolio, relaunching the Foot Locker brand with new store formats focused on an off-mall presence, maximizing its loyalty program and investing in technology to enhance the customer journey.

Dillon also said the business is back on track with Nike, an important brand in the retailer’s overall mix.

“My team and I have spent a great deal of time with Nike revitalizing our partnership, developing a shared vision of the future marketplace,” said Dillon, who called out that she was donning a pair of Nike Air Max 97s during the presentation. She added that Foot Locker and Nike are focusing on key strategic areas such as basketball, kids and sneaker culture, and are sharing data and insights to plan their strategies together.

“The fruits of our renewed commitment to one another will begin to show up in holiday this year as we build increasing momentum to 2024 and the 50th anniversary of Foot Locker,” she said.

Foot Locker chief merchandising officer Chris Santaella added that the partnership is focused on creating a strategy that is “complementary to the Nike direct-to-consumer strategy.”

As the standout brand in the retailer’s portfolio, Nike will make up between 55 percent and 60 percent of Foot Locker’s total sales mix by 2026, Santaella said. Nike made up 70 percent of sales in 2021 and 75 percent of sales in 2020.

The news marks a rapid turn of events in the relationship. Last year, Foot Locker said the amount of Nike product in stores would be significantly less as Nike accelerated its shift toward d-to-c sales. This move initially caused the retailer to post a bleak outlook for 2022, though Foot Locker said it managed to churn out better-than-expected results for the third quarter, the first period in which the diminishment of Nike product was meant to be felt in stores. Nike sales were also higher than expected in the fourth quarter.

Prior to the reversal, analysts were hopeful that under Dillon’s stewardship, the Nike-Foot Locker partnership could be restored to some of its former glory.

“Since Dillon came aboard last August, the tone of the Nike-Foot Locker relationship seems to have become warmer, and it’s possible that they strike a positive tone on the business with Nike,” wrote Wedbush analyst Tom Nikic in a note to investors last week.

In addition to a renewed focus on basketball product, Santaella said Foot Locker and Nike will work in tandem to “develop the next generation of sneaker enthusiasts” by aligning on product for Kids Foot Locker. He also noted that Nike and Foot Locker will continue to partner on celebrating key sneaker moments. This year, both companies will partner to celebrate the 25th anniversary of the Tuned Air franchise. And in 2024, the two will partner on a product concept to celebrate Foot Locker’s 50-year anniversary, which will also celebrate the retailer’s partnership with Nike.

While Nike will remain a key brand partner for Foot Locker, Santaella and Dillon noted the retailer plans to lean into other brands such as Adidas, Puma, New Balance, Crocs, Hoka, On and Under Armour.

“There are more consumers seeking more brands to support their desire to wear sneakers on more occasions,” Santaella said.

In the fourth quarter, total sales decreased by 0.3 percent, beating the company’s expectations from the third quarter, which had sales down between 8 percent and 10 percent. Net income decreased to $19 million. Non-GAAP net income decreased to $92 million. Non-GAAP EPS decreased to $0.97 per share, ahead of analysts’ expectations of $0.51. Comparable-store sales increased 4.2 percent.

For fiscal years 2024 through 2026, Foot Locker expects total sales growth of between 5 percent and 6 percent, comparable sales growth of between 3 percent and 4 percent and adjusted EPS growth in the low- to mid-20s.

The retailer also outlined its guidance for the full fiscal year of 2023, and expects sales to be down between 3.5 percent and 5.5 percent. Comparable sales are expected to be down between 3.5 percent and 5.5 percent. Non-GAAP EPS is expected to be in the range of $3.35 and $3.65.

“We are entering 2023 with a focus on resetting the business — simplifying our operations and investing in our core banners and capabilities to position the company for growth in 2024 and beyond,” Dillon said in a statement.

Here’s a closer look at the four key pillars of the new strategy:

Expanding sneaker culture
Foot Locker wants to tap into different classes of sneaker consumers — from sneaker mavens to deal seekers — to grow its market share. To do this, Foot Locker plans to capitalize on key sneaker moments and anniversaries while offering consumers a broad selection of brands and styles. Exclusive launches and collaborations will also fuel demand.

Part of this pillar involves reigniting a strong brand partnership with Nike, which will remain Foot Locker’s largest brand by sales.

In addition to a renewed focus on basketball product, Foot Locker and Nike will align on product for Kids Foot Locker and partner on celebrating key sneaker moments, such as the 25th anniversary of the Tuned Air franchise this year and Foot Locker’s 50th anniversary in 2024.

Foot Locker also plans to lean into other brands such as Adidas, Puma, New Balance, Crocs, Hoka, On and Under Armour.

Beefing up the portfolio
The second pillar focuses on optimizing Foot Locker’s fleet and unique store banners. This involves closing underperforming stores, opening new formats in off-mall locations and positioning the Foot Locker brand as a community builder. Overall, Foot Locker plans to close about 400 locations to focus on higher performing doors.

At Kids Foot Locker, the goal is to “develop the next generation of sneaker enthusiasts” by leveraging the chain’s high-heat assortment of kids merchandise, Santaella said.

At Champs, Foot Locker will focus on serving an active and wellness-focused consumer. WSS will continue to serve the Latine market and capture more demand in that growing demographic. In Japan, the company’s Atmos banner will serve as a ground for innovation while being rooted in Japanese culture.

The Asia business is also getting an overhaul: Foot Locker said it would close all stores and e-commerce operations in Hong Kong and Macau and convert business to to a license model in Singapore and Malaysia. In Indonesia, leading lifestyle retailer MAP Active will take over Foot Locker operations in Singapore and Malaysia and grow the company’s presence in new markets as well.

Growing relationship with customers
Foot Locker wants to connect to consumers through a variety of channels, including in stores, digitally, on social media and via events. A key part of this relationship will come from a renewed focus on the FLX loyalty program, which Foot Locker said will win over more members via its integration into the sales journey.

In the long-term, Foot Locker is aiming to have loyalty sales account for 70 percent of total sales, up from 25 percent currently. The company also plans to integrate paths to join FLX and Nike’s loyalty programs as well, further cementing the relationship between the two entities.

Omnichannel growth
Along with its in-store experience revamp, Foot Locker also sees an opportunity to grow the percentage of its digital sales. By 2026, Foot Locker aims to have digital sales penetration be about 25 percent of sales, or about $2.5 billion.

At the same time, the company wants to blend both digital and physical channels into one seamless omnichannel experience. To do this, Foot Locker plans to relaunch its app in 2024 and also plans to optimize certain omnichannel capabilities, such as being able to see a store’s inventory availability in real-time and offering a variety of fulfillment options for online orders.