Foot Locker, Inc. Reports Second Quarter Results -- 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 Points

NEW 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 Results
Net 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 Results
Net 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 Position
The 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 Adjustment
Included 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 Update
During 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 http://www.footlocker-inc.com.  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 http://www.footlocker-inc.com through August 31, 2012. 

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), 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 Quarter

2012


Second Quarter

2011

Sales

$ 1,367


$ 1,275





Cost of sales

939


887

Selling, general and administrative expenses

306


301

Depreciation and amortization

29


28

Interest expense, net

1


1

Other income

(1)


---


1,274


1,217

Income before income taxes

93


58

Income tax expense

34


21

Net Income

$  59


$  37





Diluted EPS:




Net Income

$   0.39


$   0.24

 

Weighted-average diluted shares outstanding




153.9

155.2










Year-To-Date

2012


Year-To-Date

2011

Sales

$  2,945


$  2,727





Cost of sales

1,980


1,864

Selling, general and administrative expenses

612


599

Depreciation and amortization

58


55

Interest expense, net 

2


3

Other income

(1)


(1)


2,651


2,520

Income before income taxes

294


207

Income tax expense

107


76

Net Income

$ 187


$ 131

 

Diluted EPS:




Net Income

$   1.21


$   0.84





Weighted-average diluted shares outstanding

154.1


155.4

 

 

FOOT LOCKER, INC.
Condensed Consolidated Balance Sheets
(unaudited)
(In millions)

 


July 28,

2012


July 30,

2011

Assets








CURRENT ASSETS




Cash, cash equivalents and short-term investments

$    820


$    681

Merchandise inventories

1,231


1,269

Other current assets

199


189


2,250


2,139





Property and equipment, net

447


408

Deferred tax assets

284


298

Other assets

253


274


$ 3,234


$ 3,119





Liabilities and Shareholders' Equity








CURRENT LIABILITIES




Accounts payable

$    391


$   365

Accrued and other liabilities

278


255


669


620





Long-term debt and obligations under capital leases

133


136

Other liabilities

253


248

SHAREHOLDERS' EQUITY

2,179


2,115


$ 3,234


$  3,119


 

FOOT LOCKER, INC.

Store and Estimated Square Footage

(unaudited)

(Square footage in thousands)

 


July 28,

2012

July 30,

2011

July  31,

 2010

Foot Locker U.S.




   Number of stores

1,092

1,136

1,155

   Gross square footage

4,380

4,572

4,658

   Selling square footage

2,563

2,702

2,759





Footaction




   Number of stores

287

304

313

   Gross square footage

1,329

1,400

1,442

   Selling square footage

832

878

906





Lady Foot Locker




   Number of stores

320

353

400

   Gross square footage

714

785

883

   Selling square footage

412

454

506





Kids Foot Locker




   Number of stores

291

291

304

   Gross square footage

696

697

728

   Selling square footage

406

406

426





Champs Sports




   Number of stores

506

536

548

   Gross square footage

2,716

2,861

2,923

   Selling square footage

1,787

1,899

1,940





CCS




   Number of stores

22

16

12

   Gross square footage

51

40

31

   Selling square footage

34

26

20

 

Foot Locker International




   Number of stores

836

771

744

   Gross square footage

2,488

2,236

2,147

   Selling square footage

1,274

1,140

1,091





Total Stores Operated




   Number of stores

3,354

3,407

3,476

   Gross square footage

12,374

12,591

12,812

   Selling square footage

7,308

7,505

7,648





Total Franchised Stores




   Number of stores

37

25

20

   Gross square footage

88

82

78

   Selling square footage

60

55

50

 

SOURCE Foot Locker, Inc.



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http://www.footlocker-inc.com

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