NEW YORK, Nov. 19 /PRNewswire-FirstCall/ -- Foot Locker, Inc. , 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
Foot Locker, Inc.
CONTACT: Peter D. Brown, Senior Vice President, Chief Information
Officer and Investor Relations, Foot Locker, Inc., +1-212-720-4254
Web Site: http://www.footlocker-inc.com/
