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Press release from PR Newswire

Foot Locker, Inc. Reports Second Quarter Results

Thursday, August 19, 2010

Foot Locker, Inc. Reports Second Quarter Results16:45 EDT Thursday, August 19, 2010Earnings of $0.04 Per Share Comparable-Store Sales Increased 2.5 Percent Gross Margin Increased 230 Basis PointsNEW YORK, Aug. 19 /PRNewswire-FirstCall/ -- Foot Locker, Inc. (NYSE: FL), the New York-based specialty athletic retailer, today reported financial results for its second quarter ended July 31, 2010.Second Quarter ResultsNet income for the Company's second quarter ended July 31, 2010 was $6 million, or $0.04 per share, compared with break-even performance last year.  Second quarter sales decreased 0.3 percent, to $1,096 million this year, compared with sales of $1,099 million for the corresponding prior-year period.  Second quarter comparable-store sales increased 2.5 percent.  Excluding the effect of foreign currency fluctuations, total sales for the second quarter increased 1.3 percent."The increase in our second quarter net income was driven primarily by the strong 230 basis point improvement in our gross margin rate.  Our significantly improved inventory position facilitated our ability to drive higher margin sales by being more selective with our promotional activity while at the same time being more responsive to changes in consumer fashion trends," stated Ken C. Hicks, Chairman of the Board and Chief Executive Officer of Foot Locker, Inc. "We are pleased to report our second consecutive quarter of sales and profit growth, versus the comparable periods of last year, as we continue to implement our new strategic plan."Year-to-Date ResultsNet income for the Company's first six months of the year increased 94 percent to $60 million, or $0.38 per share, compared with net income of $31 million, or $0.20 per share, for the corresponding period last year.  Year-to-date sales increased 2.7 percent, to $2,377 million, compared with sales of $2,315 million last year.  Year-to-date comparable-store sales increased 3.7 percent.  Excluding the effect of foreign currency fluctuations, total sales year-to-date increased 2.2 percent.Financial PositionThe Company's merchandise inventory at the end of the second quarter was $1,219 million, or 5.1 percent lower than at the end of the second quarter last year.During the second quarter of 2010, the Company repurchased 875,000 shares of its common stock for $12.0 million under the Company's $250 million share repurchase program.  Year-to-date, the Company has repurchased approximately 1.4 million shares of its common stock for $19.7 million.At July 31, 2010, the Company's cash and short-term investments totaled $519 million while the debt on its balance sheet was $137 million.  The Company's total cash position, net of debt, was $105 million higher than the same time last year.Store Base UpdateDuring the first six months of the year, the Company opened 27 new stores, remodeled/relocated 94 stores and closed 51 stores.  At July 31, 2010, the Company operated 3,476 stores in 21 countries in North America, Europe and Australia.  In addition, 20 franchised stores were operating in the Middle East and South Korea.The Company is hosting a live conference call at 9:00 a.m. (ET) on Friday, August 20, 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, August 27, 2010.Disclosure Regarding Forward-Looking StatementsThis 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), 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.FOOT LOCKER, INC.Condensed Consolidated Statements of Operations(unaudited)Periods ended July 31, 2010 and August 1, 2009(In millions, except per share amounts)Second Quarter2010Second Quarter2009Sales$  1,096$  1,099Cost of sales791819Selling, general and administrative expenses268252Depreciation and amortization2628Interest expense, net23Other income(1)(1)1,0861,101Income (loss) from continuing operations before income taxes 10(2)Income tax expense (benefit)4(1)6(1)Income (loss) from continuing operationsDiscontinued operations, net of taxNet Income---1$      6$      ---Diluted EPS:Income from continuing operations$      0.04$   ---Discontinued operations, net of taxNet Income------$      0.04$   ---Weighted-average diluted shares outstanding156.9155.9Year-To-Date2010Year-To-Date2009Sales$  2,377$  2,315Cost of sales1,6791,679Selling, general and administrative expenses548530Depreciation and amortization5256Interest expense, net55Other income  (1)(2)2,2832,268Income from continuing operations before income taxes 9447Income tax expense 3417Income from continuing operations6030Discontinued operations, net of tax---1Net Income$      60$      31Diluted EPS:Income from continuing operations$   0.38$   0.20Discontinued operations, net of taxNet Income------$   0.38$   0.20Weighted-average diluted shares outstanding157.1155.8FOOT LOCKER, INC.Condensed Consolidated Balance Sheets(unaudited)(In millions)July 31, 2010August 1, 2009AssetsCURRENT ASSETSCash, cash equivalents and short-term investments$        519$        415Merchandise inventories1,2191,284Other current assets1612111,8991,910Property and equipment, net376433Deferred tax assets 351366Other assets287306$     2,913$     3,015Liabilities and Shareholders' EquityCURRENT LIABILITIESAccounts payable $       345$       322Accrued and other liabilities236191581513Long-term debt and obligations under capital leases137138Other liabilities279387SHAREHOLDERS' EQUITY1,9161,977$    2,913$    3,015FOOT LOCKER, INC.Store and Estimated Square Footage(unaudited)(Square footage in thousands)July 31, 2010August 1, 2009January 30, 2010Foot Locker U.S.   Number of stores1,1551,2111,171   Gross square footage4,6584,8984,744   Selling square footage2,7592,9012,812Footaction   Number of stores313327319   Gross square footage1,4421,5221,471   Selling square footage906951926Lady Foot Locker   Number of stores400469415   Gross square footage8831,034915   Selling square footage506592524Kids Foot Locker   Number of stores304304301   Gross square footage728724718   Selling square footage426425422Champs Sports   Number of stores548565552   Gross square footage2,9233,0182,946   Selling square footage1,9402,0051,953CCS   Number of stores1222   Gross square footage3166   Selling square footage2044Foot Locker International   Number of stores744737740   Gross square footage2,1472,1452,155   Selling square footage1,0911,0931,094Total Stores Operated   Number of stores3,4763,6153,500   Gross square footage12,81213,34712,955   Selling square footage7,6487,9717,735Total Franchised Stores   Number of stores201922   Gross square footage788078   Selling square footage505353SOURCE Foot Locker, Inc.For further information: Peter D. Brown, Senior Vice President, Chief Information Officer and Investor Relations, Foot Locker, Inc., +1-212-720-4254