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Press release from PR Newswire

Foot Locker, Inc. Reports 2010 Fourth Quarter Results

Wednesday, March 02, 2011

Foot Locker, Inc. Reports 2010 Fourth Quarter Results16:45 EST Wednesday, March 02, 2011-- Net Income of $0.36 Per Share -- Non-GAAP Net Income Per Share Increases 63 Percent to $0.39 -- Comp-Store Sales Increase 7.3 percent -- Gross Margin Rate Increases 320 basis pointsNEW YORK, March 2, 2011 /PRNewswire/ -- Foot Locker, Inc. (NYSE: FL), the New York-based specialty athletic retailer, today reported financial results for its fourth quarter and full year ended January 29, 2011.Fourth Quarter Financial ResultsThe Company reported net income of $57 million, or $0.36 per share, for the fourth quarter of 2010.  These results included an after-tax charge of $4 million ($0.03 per share) for the write-down of assets, net of the partial recovery of a short-term investment that was written down in 2008.  In the year-ago period, the Company reported net income of $23 million, or $0.14 per share, which included after-tax charges of $16 million ($0.10 per share) related to inventory write-downs, corporate restructuring costs and an income tax adjustment.Excluding the net charges in both years, fourth quarter non-GAAP net income was $61 million, or $0.39 per share, in 2010 versus $39 million, or $0.24 per share, in 2009.  This represents a 63 percent increase in the adjusted net income per share amounts.Fourth quarter comparable-store sales increased 7.3 percent.  Total fourth quarter sales increased 5.1 percent to $1,392 million this year, compared with sales of $1,325 million for the corresponding prior-year period.  Excluding the effect of foreign currency fluctuations, total sales for the thirteen-week period increased 6.5 percent."The significant increase in our fourth quarter net income resulted from strong comparable-store sales growth and gross margin rate expansion, as well as effective expense management," stated Ken C. Hicks, Chairman of the Board and Chief Executive Officer of Foot Locker, Inc.  "We are very encouraged with the ongoing improvement in our operating performance, as the initial steps we are taking in executing our new strategic plan have led to positive strides toward achieving our long-term financial objectives.  Heading into 2011, we will remain focused on the further implementation of our strategic initiatives, which we believe will lead to continued profitable growth of our business."Fiscal Year Financial ResultsFor the fiscal year, the Company reported net income of $169 million, or $1.07 per share.  These results included the fourth quarter net charges of $4 million ($0.03 per share).  Last year, the Company reported net income of $48 million, or $0.30 per share, including an inventory write-down, corporate restructuring charges, the write-down of long-lived assets, and an income tax adjustment that totaled $38 million, after-tax, or $0.24 per share.  Excluding the net charges in both years, full year non-GAAP net income was $173 million, or $1.10 per share, in 2010 versus $86 million, or $0.54 per share, in 2009.  Comparable-store sales increased 5.8 percent in 2010, and total sales increased 4.0 percent to $5,049 million, compared with sales of $4,854 million last year. Excluding the effect of foreign currency fluctuations, total sales for the full year increased 4.6 percent. Financial PositionThe Company's merchandise inventory at year end was $1,059 million, which was $22 million, or 2.1 percent, higher than at the end of last year.  The Company currently believes that its inventory is positioned well for 2011.During the fourth quarter of 2010, the Company repurchased 705,000 shares of its common stock for $13.7 million under the Company's $250 million share repurchase program.  For the fiscal year, the Company repurchased 3.2 million shares of common stock for $49.6 million and paid quarterly dividends to shareholders totaling $93 million.  As announced last month, the Company increased its quarterly dividend by 10 percent, beginning with its first quarter 2011 dividend payment.At year end 2010, the Company's cash and short-term investments totaled $696 million, while the debt on its balance sheet was $137 million.  The Company's total cash position, net of debt, was $108 million higher than at the same time last year.Store Base UpdateThe Company opened 43 stores, remodeled or relocated 171 stores, and closed 117 stores during fiscal 2010.  At January 29, 2011, the Company operated 3,426 stores in 21 countries in North America, Europe, and Australia.  In addition, 26 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 Thursday, March 3, 2011, to discuss these results and provide some comments on the current business environment.  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, March 10, 2011.Disclosure Regarding Forward-Looking StatementsThis report contains forward-looking statements within the meaning of the federal securities laws. Other than statements of historical facts, all statements which address activities, events, or developments that the Company 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 which are 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 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 January 29, 2011 and January 30, 2010(In millions, except per share amounts)Fourth Quarter 2010Fourth Quarter 2009GAAPAdjustmentsNon-GAAP, As AdjustedGAAPAdjustmentsNon-GAAP, As AdjustedSales$  1,392$       -$  1,392$  1,325$       -$  1,325Cost of sales (1)962-962958(14)944Selling, general and administrative expenses 303-303295-295Depreciation and amortization27-2727-27Impairment / other charges (2)10(10)-5(5)-Other (income) (3)(2)2-(1)-(1)Interest expense, net2-22-21,302(8)1,2941,286(19)1,267Income from continuing operations       before income taxes90898391958Income tax expense (4)3343716319Income from continuing operations57461231639Discontinued operations, net of tax------Net income$       57$        4$       61$       23$       16$       39Diluted EPS:Income from continuing operations$    0.36$    0.03$    0.39$    0.14$    0.10$    0.24Discontinued operations, net of tax------Net income$    0.36$    0.03$    0.39$    0.14$    0.10$    0.24Weighted-average diluted shares outstanding156.2-156.2156.9-156.9Footnotes to explain adjustments(1)  2009 amount relates to an inventory write-down to meet the Company's new aging standard.(2)  2010 amount reflects the write-down of CCS intangible assets.       2009 amount reflects costs of organizational changes related to its Lady Foot Locker business and corporate staff.(3)  2010 amount reflects the partial recovery of a short-term investment that was written down in 2008.(4)  2010 and 2009 amounts reflect the income tax effect of the pre-tax adjustments highlighted in footnotes above.       2009 amount includes the effect of a change in Canadian income tax rates on the Company's deferred tax benefits.FOOT LOCKER, INC.Condensed Consolidated Statements of Operations(unaudited)Periods ended January 29, 2011 and January 30, 2010(In millions, except per share amounts)Year-To-Date 2010Year-To-Date 2009GAAPAdjustmentsNon-GAAP, As AdjustedGAAPAdjustmentsNon-GAAP, As AdjustedSales$  5,049$       -$  5,049$  4,854$       -$  4,854Cost of sales (1)3,533-3,5333,522(14)3,508Selling, general and administrative expenses 1,138-1,1381,099-1,099Depreciation and amortization106-106112-112Impairment / other charges (2)10(10)-41(41)-Other (income) (3)(4)2(2)(3)-(3)Interest expense, net9-910-104,792(8)4,7844,781(55)4,726Income from continuing operations   before income taxes25782657355128Income tax expense (4)88492261743Income from continuing operations1694173473885Discontinued operations, net of tax---1-1Net income$     169$        4$     173$       48$       38$       86Diluted EPS:Income from continuing operations$    1.07$    0.03$    1.10$    0.30$    0.24$    0.54Discontinued operations, net of tax------Net income$    1.07$    0.03$    1.10$    0.30$    0.24$    0.54Weighted-average diluted shares outstanding156.7-156.7156.3-156.3Footnotes to explain adjustments(1)  2009 amount relates to an inventory write-down to meet the Company's new aging standard.(2)  2010 amount reflects the write-down of CCS intangible assets.       2009 amount reflects costs of organizational changes related to its Lady Foot Locker business and corporate staff and       charges to write-down long-lived assets of the Company's U.S. store operations.(3)  2010 amount reflects the partial recovery of a short-term investment that was written down in 2008.(4)  2010 and 2009 amounts reflect the income tax effect of the pre-tax adjustments highlighted in footnotes above.       2009 amount includes the effect of a change in Canadian income tax rates on the Company's deferred tax benefits.FOOT LOCKER, INC.Condensed Consolidated Balance Sheets(unaudited)(In millions)January 29,January 30,20112010AssetsCURRENT ASSETSCash, cash equivalents and short-term investments$        696$        589Merchandise inventories1,0591,037Other current assets1791461,9341,772Property and equipment, net386387Deferred tax assets 296362Other assets280295$      2,896$      2,816Liabilities and Shareholders? EquityCURRENT LIABILITIESAccounts payable $        223$        215Accrued and other liabilities266218489433Long-term debt and obligations under capital leases137138Other liabilities245297SHAREHOLDERS? EQUITY2,0251,948$      2,896$      2,816FOOT LOCKER, INC.Stores and Estimated Square Footage(unaudited)(Square footage in thousands)January 29,January 30,January 31,201120102009Foot Locker U.S.   Number of stores1,1441,1711,218   Gross square footage4,6004,7444,953   Selling square footage2,7262,8122,946Footaction   Number of stores307319335   Gross square footage1,4131,4711,568   Selling square footage888926974Lady Foot Locker   Number of stores378415486   Gross square footage8389151,077   Selling square footage482524615Kids Foot Locker   Number of stores294301305   Gross square footage706718734   Selling square footage411422434Champs Sports   Number of stores540552565   Gross square footage2,8802,9463,034   Selling square footage1,9101,9532,032CCS   Number of stores122-   Gross square footage316-   Selling square footage204-Foot Locker International   Number of stores751740732   Gross square footage2,1672,1552,135   Selling square footage1,1011,0941,091Total Stores Operated   Number of stores3,4263,5003,641   Gross square footage12,63512,95513,501   Selling square footage7,5387,7358,092Total Franchised Stores   Number of stores262217   Gross square footage847862   Selling square footage555342SOURCE 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