Thanks, Lauren. Good morning, everyone, and thank you for joining us. Throughout the year, I have been speaking with you about how our deepening connections with our customers combined with our strategic relationships with our vendor partners had us well positioned to deliver strong results.
And as Lauren described, we did just that in the third quarter.
Our strong top and bottom line performance reflects some of the early benefits of implementing our long-term strategic imperatives, elevating the customer experience, investing for long-term growth, driving productivity and leveraging the power of our people.
Before I speak about our strategic initiatives, let me dive into some of the key drivers of our performance in the quarter. There were a number of areas with outstanding results.
For example, a growing and diverse footwear business, engaging content and storytelling and further progress in our efforts to create physical and digital destinations where our customers can be inspired.
Looking at footwear, we delivered excellent results across men's and kids and posted solid results in women's. We were pleased to see the basketball category return to growth this quarter. A strong Jordan business led by the classic AJ1s in our exclusive Jordan Rivals Pack combined with robust demand for Air Force 1s from Nike and the Adidas Hardcourt fueled the strong gain.
Signature Basketball also had some bright spots with strong performances from Giannis and Kyrie from Nike.
Our Running business again produced solid results, driven by premium lifestyle running models, including Air Max styles from Nike, YEEZY and NMD from Adidas and the Puma RS-X.
Our concept work with our strategic partners continues to deliver new energy to the marketplace.
Some examples from the third quarter include our exclusive evolution of the Swoosh Collection with Nike, which was a leading concept for back-to-school.
The Jordan Rivals Pack celebrated Michael's most notable rivals across a number of colorways. We teamed up with Adidas on the Logo Distortion collection. We brought our customers the Ultra Limited, Patrick Mahomes sneaker through a nomadic experience at Arrowhead Stadium and teamed up with former Kansas City Chiefs great, Dante Hall to surprise a local underserved high school football team with the brand new AM4 Mahomes Cleats and matching travel gear.
In addition, we partnered with Puma and its bold collection and featured its collaboration with the outdoor brand Helly Hansen. The areas with the biggest challenges were the same as last quarter, Apparel and Eastbay.
While the overall Apparel business remains healthy, the results were affected by a fashion shift away from select branded sportswear programs that in prior quarters had helped drive strong results in the category. On top of that, we felt the impact from our strategic move away from the private label business and tough comparisons in the licensed category.
Moving the Eastbay, the reasons for the more challenging performance are similar to last quarter, with softer results across performance footwear and apparel assortments. The current style shift in casual apparel away from windwear and nylon was also a negative.
We are working to improve performance and did see some bright spots, especially in the basketball category.
Looking forward, we have an exciting lineup for this holiday season.
We have the next iteration of the evolution of the Swoosh Collection from Nike. The positive trend in basketball is likely to continue with the new Kyrie 6 launch adding to the early momentum in the Signature business.
In addition, Jordan and Air Force 1s will continue to elevate and drive the culture of basketball. We're partnering with Adidas on the next update of the Logo Distortion collection and have compelling YEEZY drops coming. And there's even more heat on the way, including the new Patches program from Timberland, the Coke's Champion Collab and new models and stories from Puma, Converse and others.
Now looking at our progress in executing on our strategic initiatives, I will start with our efforts to elevate the customer experience.
Let's begin with our Power Stores. On our last call, we told you about our newest community-based Power Store in New York's Washington Heights neighborhood.
While still early days, the results are very promising, driven by our ability to build deeper connections with the community.
We are seeing significant gains across a number of performance and customer sentiment indicators such as traffic, conversion and overall satisfaction to name a few.
Our Home Grown program, featuring local creators has been such a success at Washington Heights that we have begun to amplify it in our other Power Stores across North America. The NikePlus ShoeCase and Unlock Box have added even more connectivity and excitement, offering members access to exclusive products.
We opened two other new Power Stores this quarter bringing our exciting new offense to Melbourne, Australia and Frankfurt, Germany. These stores will serve their communities as places where people can come and be inspired, hang out with their friends, find and meet local influencers and discover exclusive and localized products.
Our new membership program FLX continues to move forward. It has been well received in our test markets, Lady Foot Locker in the U.S. and Foot Locker Netherlands.
While this is the inaugural loyalty program for our European business. In the U.S., FLX is driving stronger enrollment and metrics compared to our old VIP program. Across both regions, we are seeing higher average order value and positive sentiment around the program's benefits.
I am pleased to announce that the program is now live in the UK and France and we still expect to expand the rollout in the U.S. post-holiday and across additional European countries in 2020.
We are also elevating the customer experience through new enhanced brand presentations.
Foot Locker Europe has begun rolling out, Nike and Jordan consumer experiences in a group of key stores. The presentations feature enhanced walls and fixtures to deliver elevated storytelling that connected today's customers with the heritage of the classic Nike and Jordan offerings and the brand's latest innovations in our stores.
The results so far have been very encouraging, with increased customer awareness and interaction, leading to improved conversion.
We are also expanding the development and rollout of enhanced women's spaces across select European and U.S. markets, where she experience is a space and product curated for her, a place to explore and be inspired. We'll also connect with her through improved digital experiences and social engagement.
By the end of this year, we expect to have around 20 elevated women's spaces across Europe, 25 in the U.S. at Foot Locker, Champs Sports and Footaction, with plans to scale to build-out next year.
At Foot Locker Australia, we are now accepting Afterpay both in-store and online, creating a more convenient shopping experience by opening our channels to those customers seeking to buy now and pay later, and this is only the beginning.
Given the positive customer response, we are considering similar payment options in our other markets.
Moving on to our second strategic priority, investing in long-term growth.
The third quarter featured the exciting launch of our in-house incubator Greenhouse. We created Greenhouse to develop new ideas and partnerships that are relevant to youth culture today and in the future.
The Greenhouse app highlights one product story at a time.
This quarter it introduced customers to five great stories with some terrific new partners like emerging designers, Nicole McLaughlin, Christina Paik and a collaboration between Atmos, Adidas and popular media and music conglomerate 88rising at ComplexCon.
We've made a six strategic minority investment in an early-stage company, led by CEO, Aaron Levant, NTWRK is a unique platform. It brings the best brands and cultural icons together on live videos and provides our customers with the connection to shop exclusive products while they watch. It acts as a storyteller, demand creator and product validator.
We believe we can leverage our relationship with NTWRK, to introduce product, generate excitement and drive commercial success in our ecosystem. One way we plan on partnering with NTWRK is through Greenhouse.
While they operate separately, many of the Greenhouse products will be sold on NTWRK through our out-of-the-Greenhouse video franchise. By leveraging both platforms we can extend the reach of Greenhouse and validate the potential of new ideas.
Turning to Asia.
We continue to move forward in this important region.
During the quarter, we opened up our fifth store in Singapore and our third store in Hong Kong as well as bringing online a third-party distribution center in Singapore. With this new supply chain capability up and running, we can source product directly from our vendors into the region. This provides a more efficient and cost effective way to distribute product to our stores and fulfill sales from our digital channels.
That brings us to driving productivity, our third strategic imperative.
In addition to continued attention to and success in inventory management, logistics and expense management initiatives, our digital and analytics investments provide us with tools to make our business even more productive.
We've built a framework around maximizing customer lifecycle management that utilizes machine learning to harness our data in order to make us more relevant for our customers, whether that's how they engage with us or complete their purchase.
For example, applying machine learning capabilities has allowed us to make the keyword search functionality on the Foot Locker U.S. and Champs Sports websites more relevant, which helps drives conversion.
Another area is personalization, where a cross-functional team from marketing, data and finance is developing and testing a platform to create and implement data-led campaigns across our channels. Initial results from these efforts show that personalization, even as simple as directing customers to their preferred store or offering them the latest release from their favorite brand or model, allows us to deliver an improved more relevant customer experience and to employ a more efficient marketing spend while driving topline results.
That brings us to our fourth imperative, leveraging the power of our people.
This quarter we launched Lace Up, our new associate learning and communications platform. This new interactive training system provides us the ability to engage, educate and empower our associates. It can be accessed via mobile or on a workstation and is customized to each associates learning path.
Every shift associates can clock in, Lace Up and hit the sales floor within just a few minute. This leaves them with more time to engage with our customers and exceed their expectations.
Before we continue, I want to take a moment to express my sincere gratitude to each and every associated at Foot Locker Incorporated. It is through their dedication and hard work that we were able to achieve the results we did this quarter and continue to make progress on our journey to inspire and empower youth culture.
We are ready to get the holiday season going. Yesterday, we launched our 8th Annual Week of Greatness with a number of terrific product releases and the start of our No Matter What digital campaign. The excitement will be felt across the U.S. and internationally and will continue throughout all of next week and extending into the new year.
We are optimistic about the progress we are making as a company.
Our financial position remains strong and we are poised to continue advancing towards our long-term financial objectives, as we continue to build value for our shareholders.
Lastly, I want to wish all of you a happy Thanksgiving, Week of Greatness, and a happy healthy holiday season.
Operator, please open up the call for questions.