EX-99.1 2 c48683_ex99-1.htm

EXHIBIT 99.1


N E W S   R E L E A S E

  Contact:     Peter D. Brown
    Senior Vice President,
    Chief Information Officer
    and Investor Relations
   
Foot Locker, Inc.
   
(212) 720-4254

FOOT LOCKER, INC. REPORTS FIRST QUARTER FINANCIAL RESULTS

•       First Quarter Sales Decreased 3.6 Percent
• First Quarter Net Income is $0.11 Per Share
• Second Quarter EPS Expected to be $0.15 to $0.20
• Full Year EPS Guidance of $1.15 to $1.25
• Company Maintains Strong Financial Position

NEW YORK, NY, May 23, 2007 – Foot Locker, Inc. (NYSE: FL), the New York-based specialty athletic retailer, today reported financial results for its first quarter ended May 5, 2007.

Financial Results

Net income for the Company’s first quarter ended May 5, 2007 was $17 million, or $0.11 per share, as compared with $59 million, or $0.38 per share, last year. Last year’s results benefited by $1 million, or $0.01 per share, from a cumulative effect of accounting change related to the Company’s required adoption of SFAS 123(R).

First quarter sales decreased 3.6 percent to $1,316 million, as compared with sales of $1,365 million for the corresponding prior year period. Excluding the effect of foreign currency fluctuations, total sales for the 13-week period decreased 5.3 percent. First quarter comparable-store sales decreased 5.1 percent.

“Our first quarter financial results reflected a weak performance in each of our U.S. businesses partially offset by a solid profit increase at our international operations,” stated Matthew D. Serra, Foot Locker, Inc.’s Chairman and Chief Executive Officer. “Because of the disappointing sales at our U.S. stores, we increased our promotional posture to help clear older goods and reduce inventory levels. As a result, our gross margin in our U.S. store businesses fell significantly short of our plan.”

Mr. Serra continued, “While we are seeing signs of improvement in our U.S. store businesses, we believe it is prudent to more-conservatively plan our business for the balance of 2007. Therefore, for our second fiscal quarter, we currently expect earnings to be in the range of $0.15 to $0.20 per share. This forecast includes higher markdowns than last year to ensure that our inventory is well-positioned for the fall season. We currently expect that our earnings for the full year will be in the range of $1.15 to $1.25 per share.”

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Foot Locker, Inc. 112 West 34th Street, New York, NY 10120

Store Base Update

During the first quarter, the Company opened 61 new stores; remodeled/relocated 65 stores and closed 73 stores. At May 5, 2007, the Company operated 3,930 stores in 20 countries in North America, Europe and Australia. The store openings include 31 new Footquarters stores, the Company’s new value-based footwear chain. In addition, three additional Foot Locker franchised stores were operating in the Middle East.

Financial Position

The Company continued to strengthen its financial position while also redeploying its strong cash flow with a goal of enhancing shareholder value. At the end of the first quarter, the Company’s cash position, net of debt, was $183 million, an $85 million improvement from the same time last year. The Company’s cash and short-term investments totaled $418 million, while its total debt was $235 million. During the first quarter, the Company paid out $19 million in shareholder dividends and repurchased 1.2 million shares of its common stock for $26 million.

The Company is hosting a live conference call at 10:00 a.m. (EDT) on Thursday, May 24, 2007 to discuss these results and provide guidance with regard to its earnings outlook for 2007. This conference call may be accessed live from the Investor Relations section of the Foot Locker, Inc. website at http://www.footlocker-inc.com. The conference call will be available for webcast replay until 5:00 p.m. on Thursday, May 31, 2007.

Disclosure Regarding Forward-Looking Statements

This press release contains forward-looking statements within the meaning of the federal securities laws. All statements, other than statements of historical facts, which address activities, events or developments that the Company expects or anticipates will or may occur in the future, including, but not limited to, such things as future capital expenditures, expansion, strategic plans, dividend payments, stock repurchases, growth of the Company’s business and operations, including future cash flows, revenues and earnings, and other such matters are forward-looking statements. These forward-looking statements are based on many assumptions and factors detailed in the Company’s filings with the Securities and Exchange Commission, including the effects of currency fluctuations, customer demand, fashion trends, competitive market forces, uncertainties related to the effect of competitive products and pricing, customer acceptance of the Company’s merchandise mix and retail locations, the Company’s reliance on a few key vendors for a majority of its merchandise purchases (including a significant portion from one key vendor), unseasonable weather, economic conditions worldwide, any changes in business, political and economic conditions due to the threat of future terrorist activities in the United States or in other parts of the world and related U.S. military action overseas, the ability of the Company to execute its business plans effectively with regard to each of its business units, risks associated with foreign global sourcing, including political instability, changes in import regulations, and disruptions to transportation services and distribution. Any changes in such assumptions or factors could produce significantly different results. The Company undertakes no obligation to update forward-looking statements, whether as a result of new information, future events, or otherwise.

 

 

 

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FOOT LOCKER, INC.
Condensed Consolidated Statements of Operations
(unaudited)
Periods ended May 5, 2007 and April 29, 2006
(In millions, except per share amounts)

     
First Quarter
 
First Quarter
     
2007
          
2006
   Sales  
       $
   1,316          
          $
   1,365        
               
  Cost of sales   956     946  
  Selling, general and administrative expenses   290     283  
  Depreciation and amortization   43     43  
  Interest expense, net   ---     1  
      1,289     1,273  
  Income before income taxes and cumulative effect of            
  accounting change   27     92  
  Income tax expense   10     34  
  Income before cumulative effect of accounting change   17     58  
  Cumulative effect of accounting change, net of income tax   ---     1  
  Net income
$
17  
$
59  
               
  Diluted EPS:            
  Income before cumulative effect of accounting change
$
0.11  
$
0.37  
  Cumulative effect of accounting change   ---     0.01  
  Net income
$
0.11  
$
0.38  
               
  Weighted-average diluted shares outstanding   156.5     156.7  

 

 

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FOOT LOCKER, INC.
Condensed Consolidated Balance Sheets
(unaudited)
(In millions)

      
May 5,
          
April 29,
     
2007
 
2006
  Assets        
               
  CURRENT ASSETS            
  Cash, cash equivalents and short-term investments
       $
418        
       $
370        
  Merchandise inventories      1,490        1,403  
  Other current assets   265     172  
      2,173     1,945  
               
  Property and equipment, net   659     674  
  Deferred tax assets   118     159  
  Other assets   455     472  
   
$
3,405  
$
3,250  
               
  Liabilities and Shareholders’ Equity            
               
  CURRENT LIABILITIES            
  Accounts payable
$
403  
$
380  
  Accrued and other liabilities   252     226  
      655     606  
               
  Long-term debt and obligations under capital leases   221     272  
  Other liabilities   234     301  
  SHAREHOLDERS’ EQUITY   2,295     2,071  
   
$
3,397  
$
3,250  
               

 

 

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FOOT LOCKER, INC.
Store and Estimated Square Footage
(unaudited)
(Square footage in thousands)

     
May 5,
  April 29,   April 30,
     2007
2006
2005
  Foot Locker U.S.                
               
     Number of stores             1,332                          1,365                          1,403             
     Gross square footage 5,391   5,498   5,705  
     Selling square footage 3,179   3,251   3,337  
               
  Footaction            
     Number of stores 375   365   350  
     Gross square footage 1,748   1,721   1,685  
     Selling square footage 1,076   1,063   1,049  
               
  Lady Foot Locker            
     Number of stores 553   546   555  
     Gross square footage 1,234   1,220   1,242  
     Selling square footage 697   685   696  
               
  Kids Foot Locker            
     Number of stores 332   320   336  
     Gross square footage 800   777   812  
     Selling square footage 479   465   484  
               
  Champs Sports            
     Number of stores 574   555   566  
     Gross square footage 3,127   3,037   3,149  
     Selling square footage 2,134   2,090   2,160  
               
  Footquarters            
     Number of stores 31  
---
  ---  
     Gross square footage 182  
---
  ---  
     Selling square footage 164  
---
  ---  
               
  Foot Locker International            
     Number of stores 733   726   718  
     Gross square footage 2,125   2,081   2,058  
     Selling square footage 1,090   1,083   1,094  
               
  Total Stores Operated            
     Number of stores 3,930   3,877   3,928  
     Gross square footage 14,607   14,334   14,651  
     Selling square footage 8,819   8,637   8,820  
               
  Total Franchised Stores            
     Number of stores
6
  ---   ---  
     Gross square footage
18
  ---   ---  
     Selling square footage
12
  ---   ---  
               

 

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