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Foot Locker, Inc. Reports Third Quarter Results
NEW YORK, Nov. 19 /PRNewswire-FirstCall/ -- Foot Locker, Inc. (NYSE: FL), the New York-based specialty athletic retailer, today reported financial results for its third quarter ended October 31, 2009.
Third Quarter Results
The Company reported a net loss of $6 million, or $0.04 per share, for the third quarter this year, after including $22 million, after tax, or $0.14 per share, of non-cash impairment charges to write down long-lived assets of the Company's U.S. operations. Excluding the impairment charges, third quarter net income was $16 million, or $0.10 per share, in 2009.
In the year-ago period, net income was $24 million, or $0.16 per share, including an impairment charge of $3 million, after tax, or $0.02 per share, to write down the value of a short-term investment. Before the impairment charge, net income was $27 million, or $0.18 per share, in the 2008 third quarter period.
Third quarter sales decreased 7.3 percent, to $1,214 million this year compared with sales of $1,309 million for the corresponding prior-year period. Excluding the effect of foreign currency fluctuations, total sales for the thirteen-week period decreased 7.6 percent. Third quarter comparable-store sales decreased 8.2 percent.
"Our success in reducing expenses and tightly managing inventory helped to offset lower than anticipated sales in our U.S. operations," stated Ken C. Hicks, Foot Locker, Inc.'s President and Chief Executive Officer. "The financial results at our international operations were far more encouraging, particularly as we experienced a favorable sales trend improvement in Europe as we progressed through the quarter and continuing sales gains in the Asia/Pacific region. We are also pleased with our strong internally-generated cash flow and quarter-end financial position."
Year-to-Date Results
For the first nine months of the year, the Company reported net income of $25 million, or $0.16 per share, including impairment charges of $22 million, after-tax, or $0.14 per share. Excluding the impairment charges, year-to-date net income was $47 million, or $0.30 per share. This compares with net income of $45 million, or $0.29 per share, in last year's period, which included impairment charges and store closing expenses of $21 million, after tax, or $0.14 per share. Before the impairment charges, net income was $66 million, or $0.43 per share, in the 2008 nine-month period.
Year-to-date sales decreased 10.0 percent to $3,529 million compared with sales of $3,920 million last year. Excluding the effect of foreign currency fluctuations, total sales for the thirty-nine week period decreased 7.2 percent. Comparable-store sales decreased 7.6 percent.
Financial Position
During the past 12 months, the Company generated $134 million of positive cash flow, after capital expenditures and shareholder dividends. The Company utilized $106 million of this cash to acquire CCS in November 2008 and $28 million is reflected on its third quarter balance sheet as an increase in its total cash position, net of debt versus the same period last year. At the end of the third quarter, the Company's cash and short-term investments totaled $438 million. Merchandise inventory at the end of the third quarter was $1,228 million, or 2.7 percent less than the comparable period of last year.
Store Base Update
The Company opened 33 new stores, remodeled or relocated 130 stores, and closed 73 stores during the first nine months of this year. At October 31, 2009, the Company operated 3,601 stores in 21 countries in North America, Europe and Australia. In addition, 20 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 Friday, November 20, 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, November 27, 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 October 31, 2009 and November 1, 2008
(In millions, except per share amounts)
Third Quarter Third Quarter
2009 2008
Sales $1,214 $1,309
Cost of sales 885 954
Selling, general and administrative
expenses 274 287
Depreciation and amortization
Impairment charges 29 32
36 3
Interest expense, net 3 1
Other (income) --- (5)
------- -------
1,227 1,272
------- -------
Income (loss) before income taxes (13) 37
Income tax expense (benefit) (7) 13
------- -------
Net income (loss) $(6) $24
======= =======
Diluted EPS:
Net income (loss) $(0.04) $0.16
======= =======
Weighted-average diluted shares
outstanding 156.4 155.6
Year-To-Date Year-To-Date
2009 2008
Sales $3,529 $3,920
Cost of sales 2,564 2,838
Selling, general and administrative
expenses 804 885
Depreciation and amortization
Impairment charge & store closing program 85 97
costs 36 23
Interest expense, net 8 4
Other (income) (2) (7)
------- -------
3,495 3,840
------- -------
Income from continuing operations
before income taxes 34 80
Income tax expense 10 35
------- -------
Income from continuing operations 1 45
Discontinued operations, net of tax 24 ---
------- -------
Net income $25 $45
======= =======
Diluted EPS:
------- -------
Income from continuing operations $0.16 $0.29
Discontinued operations, net of tax --- ---
------- -------
Net income $0.16 $0.29
======= =======
Weighted-average diluted shares
outstanding 156.1 155.3
Reconciliation of Net Income from a GAAP-reported basis to a
non-GAAP basis
(unaudited)
Periods ended October 31, 2009 and November 1, 2008
(In millions, except per share amounts)
Third Quarter Third Quarter
2009 2008
Net income (loss):
GAAP basis $(6) $24
Additions, after tax:
Impairment charge (1), (2) 22 3
------- -------
Non-GAAP adjusted basis $16 $27
======= =======
Net income (loss) per share:
GAAP basis $(0.04) $0.16
Additions, after tax:
Impairment charge 0.14 0.02
Non-GAAP adjusted basis $0.10 $0.18
Year-To-Date Year-To-Date
2009 2008
Net income:
GAAP basis $25 $45
Additions, after tax:
Impairment charge (1), (2), (3) 22 18
Store closing program costs (4) --- 3
------- -------
Non-GAAP adjusted basis $47 $66
======= =======
Net income per share:
GAAP basis $0.16 $0.29
Additions, after tax:
Impairment charge 0.14 0.12
Store closing program costs --- 0.02
Non-GAAP adjusted basis $0.30 $0.43
(1) 2009 amount includes the write down of long lived assets.
(2) 2008 amount reflects the write down of the value of a short-term
money market security.
(3) 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.
(4) 2008 amount reflects the costs of closing underproductive stores
FOOT LOCKER, INC.
Condensed Consolidated Balance Sheets
(unaudited)
(In millions)
October 31, November 1,
2009 2008
Assets
CURRENT ASSETS
Cash, cash equivalents and short-term
investments $438 $400
Merchandise inventories 1,228 1,262
Other current assets 216 238
------- -------
1,882 1,900
Property and equipment, net 400 505
Deferred tax assets 376 232
Other assets 305 392
------- -------
$2,963 $3,029
======= =======
Liabilities and Shareholders' Equity
CURRENT LIABILITIES
Accounts payable $276 $271
Accrued and other liabilities 202 240
------- -------
478 511
Long-term debt and obligations under
capital leases 138 128
Other liabilities 365 228
SHAREHOLDERS' EQUITY 1,982 2,162
------- -------
$2,963 $3,029
======= =======
FOOT LOCKER, INC.
Stores and Estimated Square Footage
(unaudited)
(Square footage in thousands)
October 31, November 1, November 3,
2009 2008 2007
Foot Locker U.S.
Number of stores 1,198 1,240 1,335
Gross square footage 4,860 5,055 5,458
Selling square footage 2,878 3,014 3,268
Footaction
Number of stores 323 341 368
Gross square footage 1,498 1,589 1,714
Selling square footage 940 985 1,055
Lady Foot Locker
Number of stores 466 507 543
Gross square footage 1,028 1,123 1,210
Selling square footage 588 640 687
Kids Foot Locker
Number of stores 304 314 333
Gross square footage 725 759 807
Selling square footage 426 448 479
Champs Sports
Number of stores 564 575 584
Gross square footage 3,016 3,107 3,173
Selling square footage 2,002 2,088 2,154
CCS
Number of stores 2 --- ---
Gross square footage 6 --- ---
Selling square footage 4 --- ---
Foot Locker International
Number of stores 744 737 733
Gross square footage 2,161 2,150 2,119
Selling square footage 1,098 1,099 1,091
Total Stores Operated
Number of stores 3,601 3,714 3,896
Gross square footage 13,294 13,783 14,481
Selling square footage 7,936 8,274 8,734
Total Franchised Stores
Number of stores 20 16 10
Gross square footage 74 63 33
Selling square footage 50 42 22
SOURCE Foot Locker, Inc.
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http://www.footlocker-inc.com
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