NEW YORK, Aug. 20 /PRNewswire-FirstCall/ -- Foot Locker, Inc. (NYSE: FL), the New York-based specialty athletic retailer, today reported financial results for its second quarter ended August 1, 2009.

Second Quarter Results

The Company reported a break-even earnings performance for the second quarter ended August 1, 2009 compared with net income of $18 million, or $0.11 per share, last year. Second quarter sales decreased 15.6 percent, to $1,099 million this year compared with sales of $1,302 million for the corresponding prior year period. Excluding the effect of foreign currency fluctuations, total sales for the second quarter decreased 11.8 percent. Comparable-store sales decreased 12.1 percent.

"The impact of lower than anticipated sales in our U.S. businesses on our second quarter earnings were mitigated by the aggressive actions we took to control expenses and inventories," stated Matthew D. Serra, Foot Locker, Inc.'s Chairman of the Board. "We successfully offset some of the impact of our sales shortfall by reducing our selling, general and administrative expenses, negotiating favorable occupancy costs and benefiting from lower depreciation expense. Additionally, we benefited during the quarter from our improved inventory position, as our total markdown activity was favorable to last year."

Year-to-Date Results

Net income for the Company's first six months of the year was $31 million, or $0.20 per share, compared with net income of $21 million, or $0.13 per share, for the corresponding period last year. Last year's results included store closing expenses and a non-cash impairment charge totaling $18 million, after tax, or $0.12 per share. For comparison purposes, year-to-date net income in 2008, before the store closing expenses and impairment charge, was $39 million, or $0.25 per share.

Year-to-date sales decreased 11.3 percent, to $2,315 million compared with sales of $2,611 million last year. Excluding the effect of foreign currency fluctuations, total sales year-to-date decreased 7.0 percent. Comparable-store sales decreased 7.3 percent.

Financial Position

At August 1, 2009, the Company's cash and short-term investments totaled $415 million while the debt on its balance sheet was $138 million. The Company's cash position, net of debt, was $29 million lower than the same time last year, reflecting the cash purchase of CCS for $106 million during the third quarter of last year.

The Company's merchandise inventory at the end of the second quarter was 8.4 percent lower than at the end of the second quarter last year. On a constant currency basis, merchandise inventory was 6.1 percent below last year.

Store Base Update

During the first six months of the year, the Company opened 26 new stores, remodeled/relocated 89 stores and closed 52 stores. At August 1, 2009, the Company operated 3,615 stores in 21 countries in North America, Europe and Australia. In addition, 19 franchised stores were operating in the Middle East and South Korea.

Mr. Serra continued, "While our financial results for the second quarter were affected by the macro external environment, we emerged from the period with a strong cash balance and improved merchandise inventory position. Until we see enduring signs of a pick-up in overall consumer spending, we plan to continue to control the key controllables of our business, with an objective of reducing our operating expenses and optimizing inventory management. Additionally, a strong commitment to maintaining our strong financial position and generating positive cash flow will remain a high priority."

The Company is hosting a live conference call at 9:00 a.m. (ET) on Friday, August 21, 2009 to discuss these results. 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 Friday, August 28, 2009.

Disclosure Regarding Forward-Looking Statements

This press release contains forward-looking statements within the meaning of the federal securities laws. All statements, other than statements of historical facts, which address activities, events or developments that the Company expects or 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 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 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 August 1, 2009 and August 2, 2008
                      (In millions, except per share amounts)

                                                 Second            Second
                                                 Quarter           Quarter
                                                  2009              2008
                                                 -------           -------

    Sales                                        $1,099            $1,302

    Cost of sales                                   819               941
    Selling, general and administrative expenses    252               299
    Depreciation and amortization                    28                33
    Store closing costs                             ---                 1

    Interest expense, net                             3                 2
    Other (income)                                   (1)               (2)
                                                  1,101             1,274

    Income (loss) from continuing operations
     before income taxes                            (2)                28
    Income tax expense (benefit)                    (1)                10
    Income (loss) from continuing operations        (1)                18
    Discontinued operations, net of tax               1               ---
    Net Income                                     $---               $18


    Diluted EPS:
    Income from continuing operations              $---             $0.11
    Discontinued operations, net of tax
    Net Income                                      ---               ---
                                                   $---             $0.11

    Weighted-average diluted shares outstanding   155.9             155.4


                                              Year-To-Date      Year-To-Date
                                                  2009              2008
                                              ------------      ------------

    Sales                                        $2,315            $2,611

    Cost of sales                                 1,679             1,884
    Selling, general and administrative expenses    530               598
    Depreciation and amortization                    56                65
    Impairment charge                               ---                15
    Store closing costs                             ---                 5
    Interest expense, net                             5                 3
    Other (income)                                   (2)               (2)
                                                  2,268             2,568

    Income from continuing operations
     before income taxes                             47                43
    Income tax expense                               17                22
    Income from continuing operations                30                21
    Discontinued operations, net of tax               1               ---
    Net Income                                      $31               $21

    Diluted EPS:
    Income from continuing operations             $0.20             $0.13
    Discontinued operations, net of tax             ---               ---
    Net Income                                    $0.20             $0.13
    Weighted-average diluted shares outstanding   155.8             155.2



            Reconciliation of Net Income from a GAAP-reported basis to a
                                  non-GAAP basis
                                    (unaudited)
                       (In millions, except per share amounts)

                                              Year-To-Date      Year-To-Date
                                                  2009              2008
                                              ------------      ------------
    Net income:
    GAAP basis                                      $31               $21
    Additions, after tax:
       Impairment charge (1)                        ---                15
       Store closing program costs (2)              ---                 3

    Non-GAAP adjusted basis                         $31               $39

    Net income per share:
    GAAP basis                                    $0.20             $0.13
    Additions, after tax:
       Impairment charge                            ---              0.10
       Store closing program costs                  ---              0.02

    Non-GAAP adjusted basis                       $0.20             $0.25

    (1) 2008 amount reflects the write down of the value of a note
        receivable from the purchaser of the Company's former Northern
        Group Operation in Canada.

    (2) 2008 amount reflects the costs of closing underproductive stores.



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

                                                    August 1,   August 2,
                                                      2009        2008
                                                    ---------   ---------
    Assets

    CURRENT ASSETS
    Cash, cash equivalents and short-term
     investments                                        $415       $431
    Merchandise inventories                            1,284      1,401
    Other current assets                                 211        248
                                                       1,910      2,080

    Property and equipment, net                          433        529
    Deferred tax assets                                  366        243
    Other assets                                         306        413
                                                      $3,015     $3,265

    Liabilities and Shareholders' Equity

    CURRENT LIABILITIES
    Accounts payable                                    $322       $363
    Accrued and other liabilities                        191        266
                                                         513        629

    Long-term debt and obligations under capital
     leases                                              138        125
    Other liabilities                                    387        252
    SHAREHOLDERS' EQUITY                               1,977      2,259
                                                      $3,015     $3,265



                                 FOOT LOCKER, INC.
                         Store and Estimated Square Footage
                                    (unaudited)
                           (Square footage in thousands)

                                     August 1,      August 2,     January 31,
                                       2009           2008           2009
                                     ---------      ---------     -----------
    Foot Locker U.S.
       Number of stores                1,211          1,245          1,218
       Gross square footage            4,898          5,074          4,953
       Selling square footage          2,901          3,030          2,946

    Footaction
       Number of stores                  327            343            335
       Gross square footage            1,522          1,600          1,568
       Selling square footage            951            993            974

    Lady Foot Locker
       Number of stores                  469            518            486
       Gross square footage            1,034          1,148          1,077
       Selling square footage            592            654            615

    Kids Foot Locker
       Number of stores                  304            312            305
       Gross square footage              724            756            734
       Selling square footage            425            448            434

    Champs Sports
       Number of stores                  565            573            565
       Gross square footage            3,018          3,096          3,034
       Selling square footage          2,005          2,081          2,032

    CCS
       Number of stores                    2            ---            ---
       Gross square footage                6            ---            ---
       Selling square footage              4            ---            ---

    Foot Locker
     International
       Number of stores                  737            737            732
       Gross square footage            2,145          2,147          2,135
       Selling square footage          1,093          1,097          1,091

    Total Stores Operated
       Number of stores                3,615          3,728          3,641
       Gross square footage           13,347         13,821         13,501
       Selling square footage          7,971          8,303          8,092

    Total Franchised
     Stores
       Number of stores                   19             14             17
       Gross square footage               80             54             62
       Selling square footage             53             36             42

SOURCE Foot Locker, Inc.

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