Foot Locker, Inc. Reports 2015 Fourth Quarter and Full Year Results

- GAAP Fourth Quarter Net Income of $1.14 Per Share, a 13 Percent Increase

- Non-GAAP Earnings Per Share of $1.16 --- 16 Percent Above Last Year

- Comparable-Store Sales Increased 7.9 Percent in Fourth Quarter

- Annual Sales and Profit Highest Ever as Athletic Company

- Sixth Consecutive Year With Double-Digit Earnings Per Share Increase

Feb 26, 2016, 06:45 ET from Foot Locker, Inc.

NEW YORK, Feb. 26, 2016 /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 30, 2016.

Fourth Quarter Results
The Company reported net income of $158 million for the 13 weeks ended January 30, 2016.  This equates to earnings of $1.14 per share, an increase of 13 percent over earnings per share of $1.01 for the 13-week period ended January 31, 2015. 

Fourth quarter comparable-store sales increased 7.9 percent. Total fourth quarter sales increased 5.0 percent, to $2,007 million this year, compared with sales of $1,911 million in 2014.  Excluding the effect of foreign currency fluctuations, total sales for the fourth quarter increased 8.8 percent.

"In 2015, we continued to deliver outstanding financial performance across channels, geographies, banners, and product categories," said Richard Johnson, President and Chief Executive Officer.  "We began the year by introducing a revised strategic framework and priorities, as well as elevated long-term financial objectives.  I could not be more proud of the progress the team has made developing leadership positions in so many areas of our business.

"Building on those leadership positions, we believe we can continue to elevate our financial performance in 2016 by generating a mid-single digit comparable sales gain and another double digit percentage increase in earnings per share."

Non-GAAP Adjustments
During the fourth quarter of 2015 the Company recorded a pre-tax charge of $5 million to reflect the impairment of certain Runners Point Group assets.  During the same quarter a year ago, the Company realized a gain from the sale of a property and a loss from the writedown of a trade name.  On a non-GAAP basis excluding these one-time items, the Company earned $1.16 per share, a 16 percent increase over the comparable 13-week non-GAAP earnings per share of $1.00 in 2014.  A reconciliation of GAAP to non-GAAP results is included in the tables below.

Fiscal Year Results
For fiscal year 2015, the Company reported net income of $541 million, or $3.84 per share, compared to net income of $520 million, or $3.56 per share, in 2014.  On a non-GAAP basis, earnings were $4.29 per share in 2015, an increase of 20 percent over the $3.58 per share earned on a comparable basis in 2014.  In 2015 the Company generated its sixth consecutive double-digit percentage increase in annual earnings per share and its fifth consecutive year of record earnings as Foot Locker, Inc.

Total sales increased 3.6 percent in 2015 to $7,412 million, the highest level of sales ever recorded by the Company as Foot Locker, Inc., compared with sales of $7,151 million in 2014.  Comparable-store sales increased 8.5 percent in 2015.

"We recorded many all-time best performances for our Company in 2015, including reaching an adjusted Earnings Before Interest and Taxes rate of 12.8 percent," stated Lauren Peters, Executive Vice President and Chief Financial Officer.  "We remain focused on productivity, boosting our Return On Invested Capital to 15.8 percent and our sales per gross square foot to $504."

Financial Position
The Company's merchandise inventory at January 30, 2016 was $1,285 million, which was $35 million, or 2.8 percent, higher than at the end of last year.

At year-end 2015, the Company's cash and cash equivalents totaled $1,021 million, while the debt on its balance sheet was $130 million.  During the fourth quarter of 2015, the Company repurchased 1.64 million shares of its common stock for $103 million.  For the full year, the Company repurchased approximately 6.7 million shares for $419 million.

"As announced last week, our strong financial position also enabled the Board to authorize another double-digit percentage increase in our quarterly dividend, to 27.5 cents per share, and approve a $297 million capital expenditure program for 2016," added Ms. Peters.

Store Base Update
The Company opened 111 new stores, remodeled or relocated 209 stores, and closed 151 stores during fiscal 2015.  As of January 30, 2016, the Company operated 3,383 stores in 23 countries in North America, Europe, Australia, and New Zealand.  In addition, 48 franchised Foot Locker stores were operating in the Middle East and South Korea, as well as 16 franchised Runners Point stores in Germany.

The Company is hosting a live conference call at 9:00 a.m. (EST) today to discuss these results and provide its initial outlook for 2016, comment on the status of its current initiatives, and discuss trends in its business and the athletic industry.  This conference call may be accessed live by dialing 1-800-909-4145 (U.S. and Canada) or +44 203-300-0086 (International), or via the Investor Relations section of the Foot Locker, Inc. website at http://www.footlocker-inc.com.  Please log on to the website 15 minutes prior to the call in order to download any necessary software.  An archived replay of the conference call can be accessed approximately one hour following the end of the call at 1-800-633-8284 with the passcode 21805411 (U.S. and Canada) or +1 402-977-9140 with passcode 21805411 (International) through March 11, 2016.  A replay of the call will also be available via webcast from the same Investor Relations section of the Foot Locker, Inc. website at http://www.footlocker-inc.com.

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, 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), cybersecurity breaches, pandemics and similar major health concerns, unseasonable weather, deterioration of global financial markets, economic conditions worldwide, 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.

For additional discussion on risks and uncertainties that may affect forward-looking statements, see "Risk Factors" disclosed in the 2014 Annual Report on Form 10-K. 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 30, 2016 and January 31, 2015

(In millions, except per share amounts)




Fourth

Quarter

 2015


Fourth
Quarter
2014



Full Year

 2015


Full Year

2014



Sales


$

2,007


$

1,911



$

7,412


$

7,151



















Cost of sales



1,332



1,282




4,907



4,777



SG&A



387



375




1,415



1,426



Depreciation and amortization



39



33




148



139



Litigation and impairment charges



5



1




105



4



Interest expense, net



1



2




4



5



Other income



(2)



(6)




(4)



(9)






1,762



1,687




6,575



6,342



















Income before taxes


$

245


$

224



$

837


$

809



Income tax expense



87



78




296



289



Net income


$

158


$

146



$

541


$

520



















Diluted EPS


$

1.14


$

1.01



$

3.84


$

3.56



















Weighted-average diluted shares
outstanding



 

138.9



 

144.3




 

140.8



 

146.0





















Reconciliation of GAAP to
Non-GAAP results


Fourth

Quarter

2015


Fourth
Quarter
2014



Full Year

 2015


 Full Year

2014





After



After




After



After






 Tax

 EPS


 Tax

EPS



 Tax

 EPS


 Tax

 EPS



















GAAP net income


$ 158

$ 1.14


$ 146

$ 1.01



$ 541

$ 3.84


$ 520

$ 3.56



















After-tax adjustments:
















Litigation expense (1)


-

-


-

-



61

0.43


-

-



Impairment and other charges (2) (3)


4

0.02


1

-



4

0.02


5

0.03



Gain on property sale


-

-


(3)

(0.01)



-

-


(3)

(0.01)



















Non-GAAP results


$ 162

$ 1.16


$  144

$ 1.00



$ 606

$ 4.29


$ 522

$   3.58



















 

Footnote to explain adjustments



(1)

The Company's reasonable estimate of the litigation expense is a range between $100 million and $200 million, with no amount within that range more probable than any other amount.  Therefore, in accordance with U.S. GAAP, the Company recorded a $100 million pre-tax charge in the third quarter.  In light of the uncertainties in this matter, there is no assurance that the ultimate resolution will not differ from the amount currently accrued by the Company.

(2)

The fourth quarter of 2015 includes the impairment of certain Runners Point Group assets. The fourth quarter of 2014 includes the write-down of a trade name.

(3)

The full year 2014 includes $2 million of integration costs associated with the Runners Point Group, as well as the impairment of trade names in Ireland, Germany, and the U.S.

 

 

FOOT LOCKER, INC.

Condensed Consolidated Balance Sheets

(unaudited)

(In millions)



January 30,

        2016


January 31,

2015

Assets








CURRENT ASSETS




Cash and cash equivalents

$      1,021


$        967

Merchandise inventories

1,285


1,250

Other current assets

303


239


2,609


2,456





Property and equipment, net

662


620

Deferred tax assets

234


221

Other assets

274


280


$     3,779


$     3,577





Liabilities and Shareholders' Equity








CURRENT LIABILITIES




Accounts payable

$       279


$       301

Accrued and other liabilities

424


393

Current portion of capital lease obligations

1


2


704


696





Long-term debt and obligations under capital leases

129


132

Other liabilities

393


253

SHAREHOLDERS' EQUITY

2,553


2,496


$    3,779


$    3,577


 

 

FOOT LOCKER, INC.

Store and Square Footage

(unaudited)


Store activity is as follows:



January 31,

2015

Opened

Closed

January 30,

2016

Relocations/

Remodels

Foot Locker US

1,015

8

52

971

54

Foot Locker Europe

603

16

13

606

34

Foot Locker Canada

126

1

2

125

8

Foot Locker Asia Pacific                      

91

4

1

94

6

Lady Foot Locker

198

-

42

156

-

SIX:02

15

15

-

30

-

Kids Foot Locker

357

27

10

374

44

Footaction

272

13

17

268

20

Champs Sports

547

10

7

550

41

Runners Point

116

10

5

121

2

Sidestep

83

7

2

88

-

Total

3,423

111

151

3,383

209







 

 

Selling and gross square footage are as follows:



January 31, 2015


January 30, 2016

(in thousands)

Selling

Gross


Selling

Gross

Foot Locker US

2,494

4,298


2,451

4,234

Foot Locker Europe

846

1,839


863

1,884

Foot Locker Canada

270

422


279

435

Foot Locker Asia Pacific                      

125

204


128

210

Lady Foot Locker

268

449


208

352

SIX:02

31

52


62

101

Kids Foot Locker

529

912


602

1,029

Footaction

789

1,258


800

1,303

Champs Sports

1,913

2,927


1,947

2,972

Runners Point

143

244


158

259

Sidestep

75

129


82

139

Total

7,483

12,734


7,580

12,918







 

Contact: 

John A. Maurer


Vice President, 


Treasurer and Investor Relations


Foot Locker, Inc.


(212) 720-4092

 

SOURCE Foot Locker, Inc.



RELATED LINKS

http://www.footlocker-inc.com