- Kohl’s veteran Michael Baughn, 42, will become finance chief for Foot Locker, the sneaker retailer announced Friday in a filing with the Securities and Exchange Commission, taking the seat effective June 12.
- Interim CFO Robert Higginbotham will continue to serve as the company’s SVP, investor relations and financial planning & analysis, according to the company filing. He will cease to serve as interim on June 11, having taken the seat at the beginning of March after the departure of the brand’s previous CFO, Andrew Page, CFO Dive previously reported.
- Baughn will take on the company’s financial leadership as it struggles to shake off slumping sales, with disappointing first quarter earnings leading the retailer to lower its 2023 sales and earnings guidance. Foot Locker now expects 2023 sales to be down between 6.5% to 8%, according to their updated guidance released Friday during their first quarter earnings call, compared to prior guidance which indicated a decrease of 3.5% to 5.5%.
Before joining the New York-based sneaker retailer, Baughn served in a variety of roles during his 15-year tenure at Kohl’s, most recently as their EVP of finance and treasurer.
He will receive a base salary of $650,000, with a target equity incentive opportunity set to 200% of that base, according to the company filing, with an annual cash incentive opportunity at 85% of his base salary. He will also receive a $600,000 cash signing bonus, $300,000 of which is payable within 90 days after his start date.
The CFO swap occurs as Foot Locker settles in under new executive management, with Mary Dillon taking on the CEO role in September after previous CEO Richard Johnson left for retirement.
Baughn is poised to take financial leadership as Foot Locker looks to push forward a new strategic plan that will help it boost its financial performance, according to its earnings results released Friday.
Total sales decreased by 11.4% year-over-year to $1.93 billion for the quarter ending April 29, compared to $2.1 billion in the first quarter of 2022, the company said, with ongoing macroeconomic headwinds driving comparable sales down by 9.1% in the quarter.
The decrease came as the sneaker company increased markdowns in a bid to attract budget-conscious customers, with inflation pressuring consumers and leading them to shift their spending away from products and toward services, Higginbotham said Friday. Foot Locker’s gross margin declined by 400 basis points annually due to higher markdowns compared to “historically low levels in the prior year and occupancy deleverage, as well as a increase in theft-related shrink,” per the company’s earnings results.
Dillon referred to this year as the company’s “reset year,” with Foot Locker launching its new “Lace Up” strategy plan a few months ago in an effort to bring the company back to sustainable growth.
“By simplifying our business and investing in our core assets and capabilities, we'll be able to better harness that brand equity and drive sustainable long-term growth” through its new strategy, she said Friday during the company’s earnings call. She noted that 2023 was always going to be a reset year for the company, but that stronger economic headwinds are leading Foot Locker to expect a sharper decrease in sales and earnings.
Foot Locker is far from the only retailer seeing sales shrink in the face of persistent inflation and growing consumer reticence. Baughn’s former employer Kohl’s has made numerous swaps in its executive leadership team over the past year thanks to substandard financial performance, CFO Dive previously reported.
Net sales dipped 7.1% for its fiscal 2022 compared to the prior year, according to Kohl’s full year earnings results released in March, for a total of $17.2 billion. In its proxy statement, Kohl’s noted it “did not achieve our fiscal 2022 financial goals and our NEOs did not receive any annual incentive payments.”
However, Kohl’s CFO Jill Timm received a boost in base salary as well as a stock incentive “in consideration for her continued employment,” according to an April 21 SEC filing. During the company’s shareholder meeting on May 10, an advisory vote to approve the compensation of its named executive officers received more than 93% of the casted votes, according to the retailer.
Kohl’s is set to report its 2023 first quarter earnings results on May 24.