The Globe and Mail

Go to the Globe and Mail homepage

Jump to main navigationJump to main content

Globe Investor

News Sources

Take control of your investments with the latest investing news and analysis

Press release from PR Newswire

Foot Locker, Inc. Reports Second Quarter Results

Friday, August 17, 2012

Foot Locker, Inc. Reports Second Quarter Results07:00 EDT Friday, August 17, 2012-- Net Income of $0.39 Per Share, Up 63 Percent Compared to Last Year -- Comparable-Store Sales Increased 9.8 Percent -- Gross Margin Increased 90 Basis PointsNEW YORK, Aug. 17, 2012 /PRNewswire/ -- Foot Locker, Inc. (NYSE: FL), the New York-based specialty athletic retailer, today reported financial results for its second quarter ended July 28, 2012. Second Quarter ResultsNet income for the Company's second quarter ended July 28, 2012 was $59 million, or $0.39 per share, compared with net income of $37 million, or $0.24 per share, last year.  Second quarter sales increased 7.2 percent, to $1,367 million this year, compared with sales of $1,275 million for the corresponding prior-year period.  Second quarter comparable-store sales increased 9.8 percent.  Excluding the effect of foreign currency fluctuations, total sales for the second quarter increased 10.6 percent. Year-to-Date ResultsNet income for the Company's first six months of the year increased 43 percent to $187 million, or $1.21 per share, compared with net income of $131 million, or $0.84 per share, for the corresponding period last year.  Year-to-date sales increased 8.0 percent, to $2,945 million, compared with sales of $2,727 million last year. Year-to-date comparable-store sales increased 9.8 percent. Excluding the effect of foreign currency fluctuations, total sales year-to-date increased 10.1 percent. "I'm very proud of the entire Foot Locker, Inc. team," said Ken C. Hicks, Chairman and Chief Executive Officer. "We have achieved consistently strong financial and operational results since we began implementing our long-term plan over two years ago.  This consistency was also evident with the good profitability we achieved this quarter across our divisions, from the North American stores, to Europe, and to our direct-to-customer business."Financial PositionThe Company's merchandise inventory at the end of the second quarter was $1,231 million, 3 percent lower than at the end of the second quarter last year.  On a per store basis using constant currencies, inventory grew approximately 1 percent.During the second quarter of 2012, the Company repurchased approximately 1.2 million shares of its common stock for $37.5 million.  Year-to-date, the Company has repurchased approximately 2.1 million shares of its common stock for $64.6 million under the Company's $400 million share repurchase program.At July 28, 2012, the Company's cash and short-term investments totaled $820 million, while the debt on its balance sheet was $133 million.  The Company's total cash position, net of debt, was $142 million higher than the same time last year.Non-GAAP AdjustmentIncluded in the Company's second quarter results is a tax benefit of just over $1 million, or 1 cent per share, to reflect the repeal of the last two stages of a Canadian provincial tax rate change.  When the tax rate change was originally announced in the fourth quarter of 2009, the Company recorded a tax charge of approximately $4 million, which was excluded in calculating non-GAAP results in that year.  Excluding the second quarter benefit of 1 cent per share, non-GAAP earnings per share is $0.38.  A reconciliation of GAAP to non-GAAP results for the second quarter of 2012 will be provided in our Form 10-Q filing.Store Base UpdateDuring the first six months of the year, the Company opened 47 new stores, remodeled/relocated 109 stores and closed 62 stores.  At July 28, 2012, the Company operated 3,354 stores in 23 countries in North America, Europe, Australia, and New Zealand.  In addition, 37 franchised stores were operating in the Middle East and South Korea.  The Company is hosting a live conference call at 9:00 a.m. (EDT) today, August 17, 2012 to discuss these results and provide comments on the current business environment and trends.  This conference call may be accessed live by dialing 888-446-3850 (U.S. and Canada) or 630-691-2739 (International) using the passcode 33054945, or via the Investor Relations section of the Foot Locker, Inc. website at  Please log on to the website 15 minutes prior to the call in order to download any necessary software.  A replay of the call will be available via webcast from the same Investor Relations section of the Foot Locker, Inc. website at through August 31, 2012.  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, financial objectives, 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 global product 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 28, 2012 and July 30, 2011 (In millions, except per share amounts) Second Quarter2012Second Quarter2011Sales$ 1,367$ 1,275Cost of sales939887Selling, general and administrative expenses306301Depreciation and amortization2928Interest expense, net11Other income(1)---1,2741,217Income before income taxes 9358Income tax expense3421Net Income$  59$  37Diluted EPS:Net Income$   0.39$   0.24 Weighted-average diluted shares outstanding153.9155.2Year-To-Date2012Year-To-Date2011Sales$  2,945$  2,727Cost of sales1,9801,864Selling, general and administrative expenses612599Depreciation and amortization5855Interest expense, net  23Other income(1)(1)2,6512,520Income before income taxes 294207Income tax expense 10776Net Income$ 187$ 131 Diluted EPS:Net Income$   1.21$   0.84Weighted-average diluted shares outstanding154.1155.4  FOOT LOCKER, INC.Condensed Consolidated Balance Sheets(unaudited)(In millions) July 28, 2012July 30, 2011AssetsCURRENT ASSETSCash, cash equivalents and short-term investments$    820$    681Merchandise inventories1,2311,269Other current assets1991892,2502,139Property and equipment, net447408Deferred tax assets 284298Other assets253274$ 3,234$ 3,119Liabilities and Shareholders' EquityCURRENT LIABILITIESAccounts payable $    391$   365Accrued and other liabilities278255669620Long-term debt and obligations under capital leases133136Other liabilities253248SHAREHOLDERS' EQUITY2,1792,115$ 3,234$  3,119 FOOT LOCKER, INC.Store and Estimated Square Footage(unaudited)(Square footage in thousands) July 28, 2012July 30, 2011July  31, 2010Foot Locker U.S.   Number of stores1,0921,1361,155   Gross square footage4,3804,5724,658   Selling square footage2,5632,7022,759Footaction   Number of stores287304313   Gross square footage1,3291,4001,442   Selling square footage832878906Lady Foot Locker   Number of stores320353400   Gross square footage714785883   Selling square footage412454506Kids Foot Locker   Number of stores291291304   Gross square footage696697728   Selling square footage406406426Champs Sports   Number of stores506536548   Gross square footage2,7162,8612,923   Selling square footage1,7871,8991,940CCS   Number of stores221612   Gross square footage514031   Selling square footage342620 Foot Locker International   Number of stores836771744   Gross square footage2,4882,2362,147   Selling square footage1,2741,1401,091Total Stores Operated   Number of stores3,3543,4073,476   Gross square footage12,37412,59112,812   Selling square footage7,3087,5057,648Total Franchised Stores   Number of stores372520   Gross square footage888278   Selling square footage605550 SOURCE Foot Locker, Inc.For further information: John A. Maurer, Vice President, Treasurer and Investor Relations, Foot Locker, Inc., +1-212-720-4092