Segment Information

9 Months Ended

Nov. 02, 2019

Segment Information [Abstract]

Segment Information

3. Segment Information

The Company has integrated all available shopping channels including stores, websites, apps, social channels, and catalogs. Store sales are primarily fulfilled from the store’s inventory but may also be shipped from any of our distribution centers or from a different store location if an item is not available at the original store. Direct-to-customer orders are primarily shipped to our customers through our distribution centers but may also be shipped from any store or a combination of our distribution centers and stores depending on the availability of particular items.

Our operating segments are identified according to how our business activities are managed and evaluated by our chief operating decision maker, our CEO. During 2018, the Company expanded into Asia and launched our digital channels across Singapore, Hong Kong, and Malaysia. During the first quarter of 2019, the Company changed its organizational and internal reporting structure in order to support an accelerated growth strategy for the region. We opened an Asian headquarters in Singapore and realigned our organization into three distinct geographic regions: Europe, Middle East and Africa (“EMEA”), Asia Pacific, and North America.

In light of these changes, the Company re-evaluated its operating segments in the first quarter of 2019. The Company has determined that it has three operating segments, North America, EMEA, and Asia Pacific. Our North America operating segment includes the results of the following banners operating in the U.S. and Canada: Foot Locker, Kids Foot Locker, Lady Foot Locker, Champs Sports, and Footaction, including each of their related e-commerce businesses, as well as our Eastbay business that includes internet, catalog, and team sales. Our EMEA operating segment includes the results of the following banners operating in Europe: Foot Locker, Runners Point, Sidestep, and Kids Foot Locker, including each of their related e-commerce businesses. Our Asia Pacific operating segment includes the results of Foot Locker and Kids Foot Locker and the related e-commerce businesses operating in Australia, New Zealand, and Asia. We have further aggregated these operating segments into one reportable segment based upon their shared customer base and similar economic characteristics.

The Company evaluates performance based on several factors, of which the primary financial measure is the banner’s financial results referred to as division profit. Division profit reflects income before income taxes, litigation and other charges, corporate expense, non-operating income, and net interest income.

The following table summarizes our results:

	Thirteen weeks ended				Thirty-nine weeks ended
	November 2,		November 3,		November 2,		November 3,
	2019		2018		2019		2018
	($ in millions)
Sales	$	1,932	$	1,860	$	5,784	$	5,667
Operating Results
Division profit		184		165		549		543
Less: Litigation and other charges (1)		1		2		16		17
Less: Corporate expense (2)		19		19		60		46
Income from operations		164		144		473		480
Interest income, net		3		2		9		5
Other income		4		—		8		5
Income before income taxes	$	171	$	146	$	490	$	490

(1) The Company recorded pre-tax charges of $1 million and $2 million for the thirteen weeks ended November 2, 2019 and November 3, 2018, respectively, related to a pension litigation matter and related plan reformation. For the thirty-nine weeks ended November 2, 2019, the Company recorded pre-tax charges of $16 million reflecting $3 million of professional fees in connection with the plan reformation and $13 million of lease termination costs related to the closure of certain of its SIX:02 locations. For the thirty-nine weeks ended November 3, 2018, the Company recorded pre-tax charges of $17 million related to the pension matter reflecting adjustments to the value of the judgment and interest that continued to accrue, as required by the provisions of the plan reformation.

(2) Corporate expense consists of unallocated selling, general and administrative expenses as well as depreciation and amortization related to the Company’s corporate headquarters, centrally managed departments, unallocated insurance and benefit programs, certain foreign exchange transaction gains and losses, and other items.