NEW YORK, Nov. 18, 2010 /PRNewswire-FirstCall/ -- Foot Locker, Inc. , 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.
FOOT LOCKER, INC. Condensed Consolidated Statements of Operations (unaudited) Periods ended October 30, 2010 and October 31, 2009 (In millions, except per share amounts) Third Third Quarter Quarter ------- ------- 2010 2009 ---- ---- Sales $1,280 $1,214 Cost of sales 892 885 Selling, general and administrative expenses 287 274 Depreciation and amortization 27 29 Impairment charges --- 36 Interest expense, net 2 3 Other (income) (1) --- --- --- 1,207 1,227 ----- ----- Income (loss) before income taxes 73 (13) Income tax expense (benefit) (1) 21 (7) --- --- Net income (loss) $52 $(6) === === Diluted EPS: ------------ Net income (loss) $0.33 $(0.04) ===== ====== Weighted-average diluted shares outstanding 156.2 156.4 ------------------------------------------- ----- ----- Year-To-Date Year-To-Date ------------ ------------ 2010 2009 ---- ---- Sales $3,657 $3,529 Cost of sales 2,571 2,564 Selling, general and administrative expenses 835 804 Depreciation and amortization 79 85 Impairment charge --- 36 Interest expense, net 7 8 Other (income) (2) (2) 3,490 3,495 ----- ----- 167 34 Income from continuing operations before income taxes Income tax expense (1) 55 10 --- --- Income from continuing operations 112 24 Discontinued operations, net of tax --- 1 --- --- Net income $112 $25 ==== === Diluted EPS: ------------ Income from continuing operations $0.71 $0.16 Discontinued operations, net of tax --- --- --- --- Net income $0.71 $0.16 ===== ===== Weighted-average diluted shares outstanding 156.8 156.1 ------------------------------------------- ----- -----
(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.
Reconciliation of Net Income from a GAAP-reported basis to a non- GAAP basis (unaudited) Periods ended October 30, 2010 and October 31, 2009 (In millions, except per share amounts) Third Quarter Third Quarter ------- ------------- 2010 2009 ---- ---- Net income (loss): $52 $(6) ------------------ GAAP basis Additions, after tax: --------------------- Impairment charge (1) --- 22 Non-GAAP adjusted basis $52 $16 === === Net income (loss) per share: $0.33 $(0.04) ---------------------------- GAAP basis Additions, after tax: --------------------- Impairment charge (1) --- 0.14 Non-GAAP adjusted basis $0.33 $0.10 ----------------------- ----- ----- Year-To-Date Year-To-Date ------------ ------------ 2010 2009 ---- ---- Net income: $112 $25 ----------- GAAP basis Additions, after tax: --------------------- Impairment charge (1) --- 22 Non-GAAP adjusted basis $112 $47 ==== === Net income per share: $0.71 $0.16 --------------------- GAAP basis Additions, after tax: --------------------- Impairment charge (1) --- 0.14 Non-GAAP adjusted basis $0.71 $0.30 ----------------------- ----- ----- (1) 2009 amount includes the write-down of long lived assets. FOOT LOCKER, INC. Condensed Consolidated Balance Sheets (unaudited) (In millions) October 30, October 31, ----------- ----------- 2010 2009 ---- ---- Assets CURRENT ASSETS Cash, cash equivalents and short-term investments $541 $438 Merchandise inventories 1,202 1,228 Other current assets 162 216 1,905 1,882 Property and equipment, net 387 400 Deferred tax assets 324 376 Other assets 296 305 --- --- $2,912 $2,963 ====== ====== Liabilities and Shareholders' Equity CURRENT LIABILITIES Accounts payable $286 $276 Accrued and other liabilities 263 202 549 478 Long-term debt and obligations under capital leases 137 138 Other liabilities 248 365 SHAREHOLDERS' EQUITY 1,978 1,982 ----- ----- $2,912 $2,963 ====== ====== FOOT LOCKER, INC. Stores and Estimated Square Footage (unaudited) (Square footage in thousands) October 30, October 31, November 1, ----------- ----------- ----------- 2010 2009 2008 ---- ---- ---- Foot Locker U.S. Number of stores 1,152 1,198 1,240 Gross square footage 4,633 4,860 5,055 Selling square footage 2,744 2,878 3,014 Footaction Number of stores 312 323 341 Gross square footage 1,439 1,498 1,589 Selling square footage 904 940 985 Lady Foot Locker Number of stores 399 466 507 Gross square footage 882 1,028 1,123 Selling square footage 506 588 640 Kids Foot Locker Number of stores 302 304 314 Gross square footage 724 725 759 Selling square footage 421 426 448 Champs Sports Number of stores 547 564 575 Gross square footage 2,919 3,016 3,107 Selling square footage 1,938 2,002 2,088 CCS Number of stores 12 2 --- Gross square footage 31 6 --- Selling square footage 20 4 --- Foot Locker International Number of stores 750 744 737 Gross square footage 2,168 2,161 2,150 Selling square footage 1,099 1,098 1,099 Total Stores Operated Number of stores 3,474 3,601 3,714 Gross square footage 12,796 13,294 13,783 Selling square footage 7,632 7,936 8,274 Total Franchised Stores Number of stores 24 20 16 Gross square footage 87 74 63 Selling square footage 57 50 42 ---------------------- --- --- ---
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/
