Foot Locker, Inc. Reports 2010 Fourth Quarter Results

NEW 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 Results

The 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 Results

For 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 Position

The 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 Update

The 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 Statements

This 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.

SOURCE Foot Locker, Inc.