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NEW YORK, NY, November 16, 2012 – Foot Locker, Inc. (NYSE: FL), the New York-based specialty athletic retailer, today reported financial results for its third quarter ended October 27, 2012. |
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Third Quarter Results |
Net income for the Company’s third quarter ended October 27, 2012 was $106 million, or $0.69 per share, compared with net income last year of $66 million, or $0.43 per share. Third quarter sales increased 9.3 percent, to $1,524 million this year, compared with sales of $1,394 million for the corresponding prior-year period. Third quarter comparable-store sales increased 10.2 percent, which consisted of a 9.4 percent increase in store sales and an 18.3 percent increase in direct-to-customer sales. Excluding the effect of foreign currency fluctuations, total sales for the third quarter increased 11.0 percent. |
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Year-to-Date Results |
Net income for the Company’s first nine months of the year increased 48.7 percent to $293 million, or $1.90 per share, compared with net income of $197 million, or $1.27 per share, for the corresponding period last year. Year-to-date sales increased 8.4 percent, to $4,469 million, compared with sales of $4,121 million last year. Year-to-date comparable-store sales increased 9.9 percent. Excluding the effect of foreign currency fluctuations, total sales year-to-date increased 10.4 percent. |
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“Our team put together another outstanding quarter, delivering a double digit sales gain and controlling expenses to drive our bottom line earnings to new heights,” said Ken C. Hicks, Chairman and Chief Executive Officer. “The ongoing focus of all of our associates on the strategies and initiatives we updated at the beginning of the year continues to enhance the productivity of our key assets. Inventory turns are improving; sales per square foot are increasing; and by investing in our people and giving them the best tools to succeed with the customer, our associates are becoming even more productive, too.” |
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Non-GAAP Adjustment |
Included in the Company’s third quarter and year-to-date results is a tax benefit of $9 million, or $0.06 per share. This benefit is the result of a settlement of a foreign tax audit, resulting in a reduction of tax reserves established in prior periods. On a non-GAAP basis, Foot Locker’s third quarter earnings were $0.63 per share. A reconciliation of GAAP to non-GAAP results for the third quarter of 2012 is provided in the table below. |
Financial Position
At October 27, 2012, the Company’s merchandise inventory was $1,240 million, 3.0 percent higher than at the end of the third quarter last year. The Company’s cash and short-term investments totaled $853 million, while the debt on its balance sheet was $133 million. The Company’s total cash position, net of debt, was $158 million higher than the same time last year.
During the third quarter of 2012, the Company repurchased approximately 841 thousand shares of its common stock for $29.7 million. Year-to-date, the Company has repurchased just under 3 million shares of its common stock for $94.3 million under the Company’s $400 million share repurchase program.
Store Base Update
During the first nine months of the year, the Company opened 70 new stores, remodeled/relocated 159 stores and closed 72 stores. At October 27, 2012, the Company operated 3,367 stores in 23 countries in North America, Europe, Australia, and New Zealand. In addition, 40 franchised stores were operating in the Middle East and South Korea.
The Company is hosting a live conference call at 9:00 a.m. (EST) today, November 16, 2012, to discuss these results and provide comments on the current business environment and trends. This conference call may be accessed live by dialing 888-446-3850 (U.S. and Canada) or 630-691-2739 (International) using the passcode 33645015, or via the Investor Relations section of the Foot Locker, Inc. website athttp://www.footlocker-inc.com. Please log on to the website 15 minutes prior to the call in order to download any necessary software. A replay of the call will be available via webcast from the same Investor Relations section of the Foot Locker, Inc. website athttp://www.footlocker-inc.com through November 30, 2012.
Disclosure Regarding Forward-Looking Statements
This report contains forward-looking statements within the meaning of the federal securities laws. Other than statements of historical facts, all statements which address activities, events, or developments that the Company anticipates will or may occur in the future, including, but not limited to, such things as future capital expenditures, expansion, strategic plans, financial objectives, 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 which are 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 and strategic plans effectively with regard to each of its business units, and risks associated with global product 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 October 27, 2012 and October 29, 2011
(In millions, except per share amounts)
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Quarter
2012 | | Third
Quarter
2011 | | YTD 2012 | | YTD 2011 | |
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Sales | | $ | 1,524 | | $ | 1,394 | | $ | 4,469 | | $ | 4,121 | |
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Cost of sales | | | 1,019 | | | 941 | | | 2,999 | | | 2,805 | |
SG&A | | | 319 | | | 320 | | | 931 | | | 919 | |
Depreciation and amortization | | | 30 | | | 27 | | | 88 | | | 82 | |
Other income | | | — | | | — | | | (1 | ) | | (1 | ) |
Interest expense, net | | | 1 | | | 1 | | | 3 | | | 4 | |
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| | | 1,369 | | | 1,289 | | | 4,020 | | | 3,809 | |
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Income before taxes | | $ | 155 | | $ | 105 | | $ | 449 | | $ | 312 | |
Income tax expense(1) | | | 49 | | | 39 | | | 156 | | | 115 | |
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Net income | | $ | 106 | | $ | 66 | | $ | 293 | | $ | 197 | |
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Diluted EPS | | $ | 0.69 | | $ | 0.43 | | $ | 1.90 | | $ | 1.27 | |
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Weighted-average diluted shares outstanding | | | 153.9 | | | 153.6 | | | 154.0 | | | 154.8 | |
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| | Third Quarter 2012 | | Third Quarter 2011 | | YTD 2012 | | YTD 2011 | |
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Non GAAP Results | | | | | | | | | | | | | |
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Exclude tax benefit(1) | | $ | 9 | | $ | — | | $ | 10 | | $ | — | |
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Non GAAP Net Income | | $ | 97 | | $ | 66 | | $ | 283 | | $ | 197 | |
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Non GAAP Diluted EPS | | $ | 0.63 | | $ | 0.43 | | $ | 1.83 | | $ | 1.27 | |
Footnote to explain adjustments
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| (1) Included in the third quarter of 2012 is a tax benefit of $9 million, or $0.06 per diluted share. This benefit is the result of a settlement of a foreign tax audit, which resulted in a reduction of tax reserves established in prior periods. Also included in the 2012 year-to-date results is a benefit of $1 million, or $0.01 per diluted share, which represented Canadian provincial tax rate changes. |
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FOOT LOCKER, INC.
Condensed Consolidated Balance Sheets
(unaudited)
(In millions)
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| | October 27,
2012 | | October 29,
2011 | |
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Assets | | | | | | | |
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CURRENT ASSETS | | | | | | | |
Cash, cash equivalents and short-term investments | | $ | 853 | | $ | 698 | |
Merchandise inventories | | | 1,240 | | | 1,204 | |
Other current assets | | | 202 | | | 157 | |
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| | | 2,295 | | | 2,059 | |
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Property and equipment, net | | | 462 | | | 421 | |
Deferred tax assets | | | 285 | | | 295 | |
Other assets | | | 257 | | | 270 | |
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| | $ | 3,299 | | $ | 3,045 | |
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Liabilities and Shareholders’ Equity | | | | | | | |
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CURRENT LIABILITIES | | | | | | | |
Accounts payable | | $ | 327 | | $ | 284 | |
Accrued and other liabilities | | | 298 | | | 284 | |
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| | | 625 | | | 568 | |
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Long-term debt and obligations under capital leases | | | 133 | | | 136 | |
Other liabilities | | | 252 | | | 248 | |
SHAREHOLDERS’ EQUITY | | | 2,289 | | | 2,093 | |
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| | $ | 3,299 | | $ | 3,045 | |
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FOOT LOCKER, INC.
Store and Estimated Square Footage
(unaudited)
(Square footage in thousands)
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| | October 27,
2012 | | October 29,
2011 | | October 30,
2010 | |
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Foot Locker U.S. | | | | | | | | | | |
Number of stores | | 1,090 | | | 1,129 | | | 1,152 | | |
Gross square footage | | 4,378 | | | 4,549 | | | 4,633 | | |
Selling square footage | | 2,558 | | | 2,689 | | | 2,744 | | |
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Footaction | | | | | | | | | | |
Number of stores | | 287 | | | 299 | | | 312 | | |
Gross square footage | | 1,329 | | | 1,380 | | | 1,439 | | |
Selling square footage | | 832 | | | 864 | | | 904 | | |
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Lady Foot Locker | | | | | | | | | | |
Number of stores | | 319 | | | 347 | | | 399 | | |
Gross square footage | | 711 | | | 773 | | | 882 | | |
Selling square footage | | 411 | | | 447 | | | 506 | | |
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Kids Foot Locker | | | | | | | | | | |
Number of stores | | 295 | | | 292 | | | 302 | | |
Gross square footage | | 709 | | | 699 | | | 724 | | |
Selling square footage | | 412 | | | 407 | | | 421 | | |
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Champs Sports | | | | | | | | | | |
Number of stores | | 540 | | | 537 | | | 547 | | |
Gross square footage | | 2,870 | | | 2,857 | | | 2,919 | | |
Selling square footage | | 1,882 | | | 1,872 | | | 1,938 | | |
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CCS | | | | | | | | | | |
Number of stores | | 22 | | | 22 | | | 12 | | |
Gross square footage | | 51 | | | 54 | | | 31 | | |
Selling square footage | | 34 | | | 36 | | | 20 | | |
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Foot Locker International | | | | | | | | | | |
Number of stores | | 814 | | | 776 | | | 750 | | |
Gross square footage | | 2,372 | | | 2,262 | | | 2,168 | | |
Selling square footage | | 1,197 | | | 1,145 | | | 1,099 | | |
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Total Stores Operated | | | | | | | | | | |
Number of stores | | 3,367 | | | 3,402 | | | 3,474 | | |
Gross square footage | | 12,420 | | | 12,574 | | | 12,796 | | |
Selling square footage | | 7,326 | | | 7,460 | | | 7,632 | | |
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Total Franchised Stores | | | | | | | | | | |
Number of stores | | 40 | | | 32 | | | 24 | | |
Gross square footage | | 91 | | | 81 | | | 87 | | |
Selling square footage | | 62 | | | 56 | | | 57 | | |
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