EX-99.1 2 c63411_ex99-1.htm

 

 

 

 

 

EXHIBIT 99.1

(FOOT LOCKER, INC. LOGO)

 

NEWS RELEASE

 

 

 

 

Contact:  

Peter D. Brown

 

 

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

FOOT LOCKER, INC. REPORTS THIRD QUARTER RESULTS

 

 

 

 

•

Earnings of $0.33 Per Share

 

•

Comp-Store Sales Increase 8.1 percent

 

•

Gross Margin Rate Increases 320 basis points

NEW YORK, NY, November 18, 2010 – Foot Locker, Inc. (NYSE: FL), the New York-based specialty athletic retailer, today reported financial results for its third quarter ended October 30, 2010.

 

Third Quarter Results

Net income for the Company’s third quarter ended October 30, 2010 was $52 million, or $0.33 per share. This compares with a net loss of $6 million, or $0.04 per share, in the prior-year period, which included impairment charges of $22 million, after tax, or $0.14 per share. Excluding the impairment charges, net income for the third quarter of 2009 was $16 million, or $0.10 per share.

 

Third quarter sales increased 5.4 percent, to $1,280 million this year, compared with sales of $1,214 million for the corresponding prior-year period. Comparable-store sales increased 8.1 percent in the third quarter. Excluding the effect of foreign currency fluctuations, total sales for the thirteen-week period increased 7.0 percent.

 

“The more than tripling of our third quarter earnings per share versus our adjusted third quarter earnings in 2009 was driven by the combination of strong comparable-store sales growth and gross margin rate expansion,” stated Ken C. Hicks, Foot Locker, Inc.’s Chairman and Chief Executive Officer. “These improving results reflect the hard work of our associates worldwide as the organization continues to implement the initiatives outlined in our new strategic plan. It is encouraging that our increased sales and earnings reflect meaningful improvements in each of our operating divisions in the U.S., as well as in our largest international markets.”

 

Year-to-Date Results

For the first nine months of the year, the Company reported net income of $112 million, or $0.71 per share. This compares with net income of $25 million, or $0.16 per share, in last year’s period, which included impairment charges of $22 million, after tax, or $0.14 per share. Before the impairment charges, net income for the 2009 nine-month period was $47 million, or $0.30 per share.

 

Year-to-date sales increased 3.6 percent to $3,657 million compared with sales of $3,529 million last year. Comparable-store sales increased 5.2 percent. Excluding the effect of foreign currency fluctuations, total sales for the thirty-nine week period increased 3.8 percent.

- MORE -

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


 

Financial Position

The Company’s merchandise inventory at the end of the third quarter was $1,202 million, or 2.1 percent lower than at the end of the third quarter last year.

 

During the third quarter of 2010, the Company repurchased 1,135,000 shares of its common stock for $16.2 million under the Company’s $250 million share repurchase program. Year-to-date, the Company has repurchased 2.5 million shares of its common stock for $35.9 million and paid quarterly dividends to shareholders totaling $70 million. In September 2010, the Company also made a $30 million contribution to its U.S. defined benefit pension plan.

 

At October 30, 2010, the Company’s cash and short-term investments totaled $541 million while the debt on its balance sheet was $137 million. The Company’s total cash position, net of debt, was $104 million higher than the same time last year.

 

Store Base Update

The Company opened 35 new stores, remodeled or relocated 135 stores, and closed 61 stores during the first nine months of this year. At October 30, 2010, the Company operated 3,474 stores in 21 countries in North America, Europe and Australia. In addition, 24 franchised stores are currently operating in the Middle East and South Korea.

 

The Company is hosting a live conference call at 9:00 a.m. (ET) on Friday, November 19, 2010 to discuss these results. 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 Friday, November 26, 2010.

Disclosure Regarding Forward-Looking Statements

This report 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), pandemics and similar major health concerns, unseasonable weather, further deterioration of global financial markets, economic conditions worldwide, further deterioration of business and economic conditions, 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 and strategic plans effectively with regard to each of its business units, and 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.

- MORE -

FOOT LOCKER, INC.
Condensed Consolidated Statements of Operations
(unaudited)
Periods ended October 30, 2010 and October 31, 2009
(In millions, except per share amounts)

 

 

 

 

 

 

 

 

 

 

Third Quarter
2010

 

Third Quarter
2009

 

 

 

 

 

Sales

 

$

1,280

 

$

1,214

 

 

 

 

 

 

 

 

 

Cost of sales

 

 

892

 

 

885

 

Selling, general and administrative expenses

 

 

287

 

 

274

 

Depreciation and amortization

 

 

27

 

 

29

 

Impairment charges

 

 

—

 

 

36

 

Interest expense, net

 

 

2

 

 

3

 

Other (income)

 

 

(1

)

 

—

 

 

 

 

 

 

 

 

1,207

 

 

1,227

 

 

 

 

 

Income (loss) before income taxes

 

 

73

 

 

(13

)

Income tax expense (benefit) (1)

 

 

21

 

 

(7

)

 

 

 

 

Net income (loss)

 

$

52

 

$

(6

)

 

 

 

 

 

 

 

 

 

 

 

 

Diluted EPS:

 

 

 

 

 

 

 

 

 

 

 

Net income (loss)

 

$

0.33

 

$

(0.04

)

 

 

 

 

 

 

 

 

 

 

 

 

Weighted-average diluted shares outstanding

 

 

156.2

 

 

156.4

 

 

 

 

 

 

 

 

 

 

 

Year-To-Date
2010

 

Year-To-Date
2009

 

 

 

 

 

Sales

 

$

3,657

 

$

3,529

 

 

 

 

 

 

 

 

 

Cost of sales

 

 

2,571

 

 

2,564

 

Selling, general and administrative expenses

 

 

835

 

 

804

 

Depreciation and amortization

 

 

79

 

 

85

 

Impairment charge

 

 

—

 

 

36

 

Interest expense, net

 

 

7

 

 

8

 

Other (income)

 

 

(2

)

 

(2

)

 

 

 

 

 

 

 

3,490

 

 

3,495

 

 

 

 

 

 

 

 

 

 

 

 

 

Income from continuing operations before income taxes

 

 

167

 

 

34

 

Income tax expense (1)

 

 

55

 

 

10

 

 

 

 

 

Income from continuing operations

 

 

112

 

 

24

 

Discontinued operations, net of tax

 

 

—

 

 

1

 

 

 

 

 

Net income

 

$

112

 

$

25

 

 

 

 

 

 

 

 

 

 

 

 

 

Diluted EPS:

 

 

 

 

 

 

 

 

 

 

 

Income from continuing operations

 

$

0.71

 

$

0.16

 

Discontinued operations, net of tax

 

 

—

 

 

—

 

 

 

 

 

Net income

 

$

0.71

 

$

0.16

 

 

 

 

 

 

 

 

 

 

 

 

 

Weighted-average diluted shares outstanding

 

 

156.8

 

 

156.1

 

 

 

(1)

Third quarter and year-to-date results include benefits for income tax audit adjustments of $7 million, or $0.04 per share, in 2010 and $1 million, or $0.01 per share, in 2009.

- MORE -

Reconciliation of Net Income from a GAAP-reported basis to a non-GAAP basis
(unaudited)
Periods ended October 30, 2010 and October 31, 2009
(In millions, except per share amounts)

 

 

 

 

 

 

 

 

 

 

Third Quarter
2010

 

Third Quarter
2009

 

 

 

 

 

Net income (loss):

 

 

 

 

 

 

 

GAAP basis

 

$

52

 

$

(6

)

Additions, after tax:

 

 

 

 

 

 

 

Impairment charge (1)

 

 

—

 

 

22

 

 

 

 

 

 

 

 

 

 

 

 

 

Non-GAAP adjusted basis

 

$

52

 

$

16

 

 

 

 

 

 

 

 

 

 

 

 

 

Net income (loss) per share:

 

 

 

 

 

 

 

GAAP basis

 

$

0.33

 

$

(0.04

)

Additions, after tax:

 

 

 

 

 

 

 

Impairment charge (1)

 

 

—

 

 

0.14

 

 

 

 

 

 

 

 

 

Non-GAAP adjusted basis

 

$

0.33

 

$

0.10

 

 

 

 

 

 

 

 

 

 

 

Year-To-Date
2010

 

Year-To-Date
2009

 

 

 

 

 

Net income:

 

 

 

 

 

 

 

GAAP basis

 

$

112

 

$

25

 

Additions, after tax:

 

 

 

 

 

 

 

Impairment charge (1)

 

 

—

 

 

22

 

 

 

 

 

Non-GAAP adjusted basis

 

$

112

 

$

47

 

 

 

 

 

 

 

 

 

 

 

 

 

Net income per share:

 

 

 

 

 

 

 

GAAP basis

 

$

0.71

 

$

0.16

 

Additions, after tax:

 

 

 

 

 

 

 

Impairment charge (1)

 

 

—

 

 

0.14

 

 

 

 

 

 

 

 

 

Non-GAAP adjusted basis

 

$

0.71

 

$

0.30

 

 

 

(1)

2009 amount includes the write-down of long lived assets.

- MORE -

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

 

 

 

 

 

 

 

 

 

 

October 30,
2010

 

October 31,
2009

 

 

 

 

 

Assets

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

CURRENT ASSETS

 

 

 

 

 

 

 

Cash, cash equivalents and short-term investments

 

$

541

 

$

438

 

Merchandise inventories

 

 

1,202

 

 

1,228

 

Other current assets

 

 

162

 

 

216

 

 

 

 

 

 

 

 

1,905

 

 

1,882

 

 

 

 

 

 

 

 

 

Property and equipment, net

 

 

387

 

 

400

 

Deferred tax assets

 

 

324

 

 

376

 

Other assets

 

 

296

 

 

305

 

 

 

 

 

 

 

$

2,912

 

$

2,963

 

 

 

 

 

 

 

 

 

 

 

 

 

Liabilities and Shareholders’ Equity

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

CURRENT LIABILITIES

 

 

 

 

 

 

 

Accounts payable

 

$

286

 

$

276

 

Accrued and other liabilities

 

 

263

 

 

202

 

 

 

 

 

 

 

 

549

 

 

478

 

 

 

 

 

 

 

 

 

Long-term debt and obligations under capital leases

 

 

137

 

 

138

 

Other liabilities

 

 

248

 

 

365

 

SHAREHOLDERS’ EQUITY

 

 

1,978

 

 

1,982

 

 

 

 

 

 

 

$

2,912

 

$

2,963

 

 

 

 

 

- MORE -

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

 

 

 

 

 

 

 

 

 

 

 

 

 

October 30,
2010

 

October 31,
2009

 

November 1,
2008

 

 

 

 

 

 

Foot Locker U.S.

 

 

 

 

 

 

 

 

 

 

Number of stores

 

 

1,152

 

 

1,198

 

 

1,240

 

Gross square footage

 

 

4,633

 

 

4,860

 

 

5,055

 

Selling square footage

 

 

2,744

 

 

2,878

 

 

3,014

 

 

 

 

 

 

 

 

 

 

 

 

Footaction

 

 

 

 

 

 

 

 

 

 

Number of stores

 

 

312

 

 

323

 

 

341

 

Gross square footage

 

 

1,439

 

 

1,498

 

 

1,589

 

Selling square footage

 

 

904

 

 

940

 

 

985

 

 

 

 

 

 

 

 

 

 

 

 

Lady Foot Locker

 

 

 

 

 

 

 

 

 

 

Number of stores

 

 

399

 

 

466

 

 

507

 

Gross square footage

 

 

882

 

 

1,028

 

 

1,123

 

Selling square footage

 

 

506

 

 

588

 

 

640

 

 

 

 

 

 

 

 

 

 

 

 

Kids Foot Locker

 

 

 

 

 

 

 

 

 

 

Number of stores

 

 

302

 

 

304

 

 

314

 

Gross square footage

 

 

724

 

 

725

 

 

759

 

Selling square footage

 

 

421

 

 

426

 

 

448

 

 

 

 

 

 

 

 

 

 

 

 

Champs Sports

 

 

 

 

 

 

 

 

 

 

Number of stores

 

 

547

 

 

564

 

 

575

 

Gross square footage

 

 

2,919

 

 

3,016

 

 

3,107

 

Selling square footage

 

 

1,938

 

 

2,002

 

 

2,088

 

 

 

 

 

 

 

 

 

 

 

 

CCS

 

 

 

 

 

 

 

 

 

 

Number of stores

 

 

12

 

 

2

 

 

—

 

Gross square footage

 

 

31

 

 

6

 

 

—

 

Selling square footage

 

 

20

 

 

4

 

 

—

 

 

 

 

 

 

 

 

 

 

 

 

Foot Locker International

 

 

 

 

 

 

 

 

 

 

Number of stores

 

 

750

 

 

744

 

 

737

 

Gross square footage

 

 

2,168

 

 

2,161

 

 

2,150

 

Selling square footage

 

 

1,099

 

 

1,098

 

 

1,099

 

 

 

 

 

 

 

 

 

 

 

 

Total Stores Operated

 

 

 

 

 

 

 

 

 

 

Number of stores

 

 

3,474

 

 

3,601

 

 

3,714

 

Gross square footage

 

 

12,796

 

 

13,294

 

 

13,783

 

Selling square footage

 

 

7,632

 

 

7,936

 

 

8,274

 

 

 

 

 

 

 

 

 

 

 

 

Total Franchised Stores

 

 

 

 

 

 

 

 

 

 

Number of stores

 

 

24

 

 

20

 

 

16

 

Gross square footage

 

 

87

 

 

74

 

 

63

 

Selling square footage

 

 

57

 

 

50

 

 

42

 

-XXX-