Foot Locker, Inc. Reports Second Quarter Results

NEW YORK, Aug. 19 /PRNewswire-FirstCall/ -- Foot Locker, Inc. (NYSE: FL), the New York-based specialty athletic retailer, today reported financial results for its second quarter ended July 31, 2010.

Second Quarter Results

Net income for the Company's second quarter ended July 31, 2010 was $6 million, or $0.04 per share, compared with break-even performance last year.  Second quarter sales decreased 0.3 percent, to $1,096 million this year, compared with sales of $1,099 million for the corresponding prior-year period.  Second quarter comparable-store sales increased 2.5 percent.  Excluding the effect of foreign currency fluctuations, total sales for the second quarter increased 1.3 percent.

"The increase in our second quarter net income was driven primarily by the strong 230 basis point improvement in our gross margin rate.  Our significantly improved inventory position facilitated our ability to drive higher margin sales by being more selective with our promotional activity while at the same time being more responsive to changes in consumer fashion trends," stated Ken C. Hicks, Chairman of the Board and Chief Executive Officer of Foot Locker, Inc. "We are pleased to report our second consecutive quarter of sales and profit growth, versus the comparable periods of last year, as we continue to implement our new strategic plan."

Year-to-Date Results

Net income for the Company's first six months of the year increased 94 percent to $60 million, or $0.38 per share, compared with net income of $31 million, or $0.20 per share, for the corresponding period last year.  Year-to-date sales increased 2.7 percent, to $2,377 million, compared with sales of $2,315 million last year.  Year-to-date comparable-store sales increased 3.7 percent.  Excluding the effect of foreign currency fluctuations, total sales year-to-date increased 2.2 percent.

Financial Position

The Company's merchandise inventory at the end of the second quarter was $1,219 million, or 5.1 percent lower than at the end of the second quarter last year.

During the second quarter of 2010, the Company repurchased 875,000 shares of its common stock for $12.0 million under the Company's $250 million share repurchase program.  Year-to-date, the Company has repurchased approximately 1.4 million shares of its common stock for $19.7 million.

At July 31, 2010, the Company's cash and short-term investments totaled $519 million while the debt on its balance sheet was $137 million.  The Company's total cash position, net of debt, was $105 million higher than the same time last year.

Store Base Update

During the first six months of the year, the Company opened 27 new stores, remodeled/relocated 94 stores and closed 51 stores.  At July 31, 2010, the Company operated 3,476 stores in 21 countries in North America, Europe and Australia.  In addition, 20 franchised stores were operating in the Middle East and South Korea.

The Company is hosting a live conference call at 9:00 a.m. (ET) on Friday, August 20, 2010 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 27, 2010.

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 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.