EXHIBIT 99.1
N E W S R E L EA S E
| Contact: | Peter D. Brown | |
| Senior Vice President, | ||
| Chief Information Officer | ||
| and Investor Relations | ||
| Foot Locker, Inc. | ||
| (212)720-4254 |
FOOT LOCKER, INC. REPORTS THIRD QUARTER RESULTS
NEW YORK, NY, November 20, 2008 – Foot Locker, Inc. (NYSE: FL), the New York-based specialty athletic retailer, today reported financial results for its third quarter ended November 1, 2008.
Third Quarter Results
The Company reported net income of $24 million, or $0.16 per share, for the third quarter this year compared with net loss of $33 million, or $0.22 per share, last year.
This year’s results included an impairment charge of $3 million, after tax, or $0.02 per share, pursuant to SFAS No. 115, to write down the value of a short-term investment. Last year’s results included an impairment charge to write down long-lived assets for the Company’s U.S. store operations pursuant to SFAS No. 144 and expenses associated with closing unproductive stores, totaling $66 million, after tax, or $0.43 per share. For comparison purposes, third quarter net income, before the impairment charges and store closing expenses, was $27 million, or $0.18 per share, in 2008 versus $33 million, or $0.21 per share, in 2007.
Third quarter sales decreased 3.5 percent, to $1,309 million this year compared with sales of $1,356 million for the corresponding prior year period. Excluding the effect of foreign currency fluctuations, total sales for the thirteen-week period decreased 3.0 percent. Third quarter comparable-store sales decreased 1.7 percent.
“Our third quarter financial results reflected the extremely challenging retail environment in the U.S. marketplace,” stated Matthew D. Serra, Foot Locker, Inc.’s Chairman and Chief Executive Officer. “The economic slowdown in the United States, particularly during the months of September and October, was offset in part by our ability to improve our sales and earnings in our international businesses. Division profit in our three international businesses, Foot Locker Europe, Foot Locker Canada and Foot Locker Asia Pacific, each increased during the third quarter versus the same period last year.”
Year-to-Date Results
For the first nine months of the year, the Company reported net income of $45 million, or $0.29 per share, compared with net loss of $34 million, or $0.22 per share, last year.
This year’s results included an impairment charge and store closing expenses of $21 million, after-tax, or $0.14 per share. Last year’s results included an impairment charge and store closing expenses, of $66 million, after tax, or $0.43 per share. For comparison purposes, year-to-date net income, before the impairment charges and store closing expenses, was $66 million, or $0.43 per share in 2008 versus $32 million, or $0.21 per share last year.
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Foot Locker, Inc.112 West 34th Street, New York, NY 10120
Year-to-date sales decreased 0.9 percent to $3,920 million compared with sales of $3,955 million last year. Excluding the effect of foreign currency fluctuations, total sales for the thirty-nine week period decreased 2.8 percent. Comparable-store sales decreased 1.7 percent.
Financial Position
At the end of the third quarter, the Company’s cash and short-term investments totaled $400 million. The Company’s total cash position, net of debt, at the end of the third quarter was $272 million, an increase of $174 million versus the same time last year. After the close of the third quarter, the Company completed the cash purchase of CCS for $103 million. Merchandise inventory at the end of the third quarter was $214 million, or 14.5 percent less than the comparable period of last year.
Store Base Update
The Company opened 58 new stores, remodeled or relocated 194 stores, and closed 129 stores during the first nine months of this year. At November 1, 2008, the Company operated 3,714 stores in 21 countries in North America, Europe and Australia. In addition, 16 franchised stores are currently operating in the Middle East and South Korea.
Updated Earnings Guidance
The Company expects its net income for fiscal 2008, excluding impairment charges, to be in a range of $0.50 to $0.63 per share. This estimate is a decrease from its previous guidance of $0.70 to $0.85 reflecting the Company’s actual results for its third fiscal quarter and a more guarded outlook for its fourth fiscal quarter.
The Company is hosting a live conference call at 9:00 a.m. (ET) on Friday, November 21, 2008 to discuss these results. This conference call may be accessed live from the Investor Relations section of the Foot Locker, Inc. website athttp://www.footlocker-inc.com. The conference call will be available for webcast replay until 5:00 p.m. on Friday, November 28, 2008.
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), unseasonable weather, further deterioration of global financial markets, economic conditions worldwide, 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, 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.
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FOOT LOCKER, INC.
Condensed Consolidated Statements of Operations
(unaudited)
Periods ended November 1, 2008 and November 3, 2007
(In millions, except per share amounts)
| Third Quarter | Third Quarter | ||||||
| 2008 | 2007 | ||||||
| Sales | $ | 1,309 | $ | 1,356 | |||
| Cost of sales | 954 | 975 | |||||
| Selling, general and administrative expenses | 287 | 289 | |||||
| Depreciation and amortization | 32 | 45 | |||||
| Impairment charge & store closing program costs | 3 | 105 | |||||
| Interest expense, net | 1 | — | |||||
| Other expense (income) | (5 | ) | — | ||||
| 1,272 | 1,414 | ||||||
| Income (loss) from continuing operations before income taxes | 37 | (58 | ) | ||||
| Income tax expense (benefit) | 13 | (24 | ) | ||||
| Income (loss) from continuing operations | 24 | (34 | ) | ||||
| Discontinued operations, net of tax | — | 1 | |||||
| Net income (loss) | $ | 24 | $ | (33 | ) | ||
| Diluted EPS: | |||||||
| Income (loss) from continuing operations | $ | 0.16 | $ | (0.22 | ) | ||
| Discontinued operations, net of tax | — | — | |||||
| Net income (loss) | $ | 0.16 | $ | (0.22 | ) | ||
| Weighted-average diluted shares outstanding | 155.6 | 153.6 | |||||
| Year-To-Date | Year-To-Date | ||||||
| 2008 | 2007 | ||||||
| Sales | $ | 3,920 | $ | 3,955 | |||
| Cost of sales | 2,838 | 2,912 | |||||
| Selling, general and administrative expenses | 885 | 865 | |||||
| Depreciation and amortization | 97 | 132 | |||||
| Impairment charge & store closing program costs | 23 | 105 | |||||
| Interest expense, net | 4 | — | |||||
| Other expense (income) | (7 | ) | 1 | ||||
| 3,840 | 4,015 | ||||||
| Income (loss) before income taxes and cumulative effect of | |||||||
| accounting change | 80 | (60 | ) | ||||
| Income tax expense (benefit) | 35 | (25 | ) | ||||
| Income (loss) from continuing operations | 45 | (35 | ) | ||||
| Discontinued operations, net of tax | — | 1 | |||||
| Net income (loss) | $ | 45 | $ | (34 | ) | ||
| Diluted EPS: | |||||||
| Income (loss) from continuing operations | $ | 0.29 | $ | (0.22 | ) | ||
| Discontinued operations, net of tax | — | — | |||||
| Net income (loss) | $ | 0.29 | $ | (0.22 | ) | ||
| Weighted-average diluted shares outstanding | 155.3 | 154.1 | |||||
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Reconciliation of Net Income from a GAAP-reported basis to a non-GAAP basis
(unaudited)
Periods ended November 1, 2008 and November 3, 2007
(In millions, except per share amounts)
| Third Quarter | Third Quarter | |||||
| 2008 | 2007 | |||||
| Net income – GAAP basis | $ | 24 | $ | (33 | ) | |
| Additions (After-Tax): | ||||||
| Impairment charge | 3 | 64 | ||||
| Store closing program costs | — | 2 | ||||
| Net income – non-GAAP basis | $ | 27 | $ | 33 | ||
| Net income per share – GAAP basis | $ | 0.16 | $ | (0.22 | ) | |
| Additions (After-Tax): | ||||||
| Impairment charge | 0.02 | 0.42 | ||||
| Store closing program costs | — | 0.01 | ||||
| Net income per share – non-GAAP basis | $ | 0.18 | $ | 0.21 | ||
| Year-To-Date | Year-To-Date | |||||
| 2008 | 2007 | |||||
| Net income – GAAP basis | $ | 45 | $ | (34 | ) | |
| Additions (After-Tax): | ||||||
| Impairment charge | 18 | 64 | ||||
| Store closing program costs | 3 | 2 | ||||
| Net income – non-GAAP basis | $ | 66 | $ | 32 | ||
| Net income per share – GAAP basis | $ | 0.29 | $ | (0.22 | ) | |
| Additions (After-Tax): | ||||||
| Impairment charge | 0.12 | 0.42 | ||||
| Store closing program costs | 0.02 | 0.01 | ||||
| Net income per share – non-GAAP basis | $ | 0.43 | $ | 0.21 | ||
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FOOT LOCKER, INC.
Condensed Consolidated Balance Sheets
(unaudited)
(In millions)
| November 1, | November 3, | ||||
| 2008 | 2007 | ||||
| Assets | |||||
| CURRENT ASSETS | |||||
| Cash, cash equivalents and short-term investments | $ | 400 | $ | 332 | |
| Merchandise inventories | 1,262 | 1,476 | |||
| Other current assets | 240 | 307 | |||
| 1,902 | 2,115 | ||||
| Property and equipment, net | 505 | 547 | |||
| Deferred tax assets | 236 | 183 | |||
| Other assets | 392 | 452 | |||
| $ | 3,035 | $ | 3,297 | ||
| Liabilities and Shareholders’ Equity | |||||
| CURRENT LIABILITIES | |||||
| Accounts payable | $ | 271 | $ | 307 | |
| Accrued and other liabilities | 240 | 277 | |||
| Current portion of long-term debt and obligations | |||||
| under capital leases | — | 14 | |||
| 511 | 598 | ||||
| Long-term debt and obligations under capital leases | 128 | 220 | |||
| Other liabilities | 233 | 256 | |||
| SHAREHOLDERS’ EQUITY | 2,163 | 2,223 | |||
| $ | 3,035 | $ | 3,297 | ||
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FOOT LOCKER, INC.
Stores and Estimated Square Footage
(unaudited)
(Square footage in thousands)
| November 1, | November 3, | February 2, | |||
| 2008 | 2007 | 2008 | |||
| Foot Locker U.S. | |||||
| Number of stores | 1,240 | 1,335 | 1,275 | ||
| Gross square footage | 5,055 | 5,458 | 5,252 | ||
| Selling square footage | 3,014 | 3,268 | 3,134 | ||
| Footaction | |||||
| Number of stores | 341 | 368 | 356 | ||
| Gross square footage | 1,589 | 1,714 | 1,662 | ||
| Selling square footage | 985 | 1,055 | 1,026 | ||
| Lady Foot Locker | |||||
| Number of stores | 507 | 543 | 526 | ||
| Gross square footage | 1,123 | 1,210 | 1,177 | ||
| Selling square footage | 640 | 687 | 668 | ||
| Kids Foot Locker | |||||
| Number of stores | 314 | 333 | 321 | ||
| Gross square footage | 759 | 807 | 782 | ||
| Selling square footage | 448 | 479 | 464 | ||
| Champs Sports | |||||
| Number of stores | 575 | 584 | 576 | ||
| Gross square footage | 3,107 | 3,173 | 3,130 | ||
| Selling square footage | 2,088 | 2,154 | 2,125 | ||
| Foot Locker International | |||||
| Number of stores | 737 | 733 | 731 | ||
| Gross square footage | 2,150 | 2,119 | 2,117 | ||
| Selling square footage | 1,099 | 1,091 | 1,087 | ||
| Total Stores Operated | |||||
| Number of stores | 3,714 | 3,896 | 3,785 | ||
| Gross square footage | 13,783 | 14,481 | 14,120 | ||
| Selling square footage | 8,274 | 8,734 | 8,504 | ||
| Total Franchised Stores | |||||
| Number of stores | 16 | 10 | 10 | ||
| Gross square footage | 63 | 33 | 33 | ||
| Selling square footage | 42 | 22 | 22 | ||
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