Foot Locker, Inc. Reports Third Quarter Results

NEW YORK, Nov. 18, 2010 /PRNewswire-FirstCall/ -- Foot Locker, Inc. (NYSE: FL), the New York-based specialty athletic retailer, today reported financial results for its third quarter ended October 30, 2010.

Third Quarter Results

Net income for the Company's third quarter ended October 30, 2010 was $52 million, or $0.33 per share. This compares with a net loss of $6 million, or $0.04 per share, in the prior-year period, which included impairment charges of $22 million, after tax, or $0.14 per share.  Excluding the impairment charges, net income for the third quarter of 2009 was $16 million, or $0.10 per share.  

Third quarter sales increased 5.4 percent, to $1,280 million this year, compared with sales of $1,214 million for the corresponding prior-year period. Comparable-store sales increased 8.1 percent in the third quarter.  Excluding the effect of foreign currency fluctuations, total sales for the thirteen-week period increased 7.0 percent.

"The more than tripling of our third quarter earnings per share versus our adjusted third quarter earnings in 2009 was driven by the combination of strong comparable-store sales growth and gross margin rate expansion," stated Ken C. Hicks, Foot Locker, Inc.'s Chairman and Chief Executive Officer.  "These improving results reflect the hard work of our associates worldwide as the organization continues to implement the initiatives outlined in our new strategic plan.  It is encouraging that our increased sales and earnings reflect meaningful improvements in each of our operating divisions in the U.S., as well as in our largest international markets."

Year-to-Date Results

For the first nine months of the year, the Company reported net income of $112 million, or $0.71 per share. This compares with net income of $25 million, or $0.16 per share, in last year's period, which included impairment charges of $22 million, after tax, or $0.14 per share.  Before the impairment charges, net income for the 2009 nine-month period was $47 million, or $0.30 per share.  

Year-to-date sales increased 3.6 percent to $3,657 million compared with sales of $3,529 million last year.  Comparable-store sales increased 5.2 percent.  Excluding the effect of foreign currency fluctuations, total sales for the thirty-nine week period increased 3.8 percent.  

Financial Position

The Company's merchandise inventory at the end of the third quarter was $1,202 million, or 2.1 percent lower than at the end of the third quarter last year.

During the third quarter of 2010, the Company repurchased 1,135,000 shares of its common stock for $16.2 million under the Company's $250 million share repurchase program.  Year-to-date, the Company has repurchased 2.5 million shares of its common stock for $35.9 million and paid quarterly dividends to shareholders totaling $70 million.  In September 2010, the Company also made a $30 million contribution to its U.S. defined benefit pension plan.

At October 30, 2010, the Company's cash and short-term investments totaled $541 million while the debt on its balance sheet was $137 million.  The Company's total cash position, net of debt, was $104 million higher than the same time last year.

Store Base Update

The Company opened 35 new stores, remodeled or relocated 135 stores, and closed 61 stores during the first nine months of this year.  At October 30, 2010, the Company operated 3,474 stores in 21 countries in North America, Europe and Australia.  In addition, 24 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 19, 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, November 26, 2010.

Disclosure Regarding Forward-Looking Statements

This report 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.

(1)  Third quarter and year-to-date results include benefits for income tax audit adjustments of $7 million, or $0.04 per share, in 2010 and $1 million, or $0.01 per share, in 2009.

(1)  2009 amount includes the write-down of long lived assets.  

SOURCE Foot Locker, Inc.