EXHIBIT 99.1
FOOT LOCKER, INC
N E W S R E L EA S E
CONTACT: Peter D. Brown
Vice President, Treasurer
and Investor Relations
Foot Locker, Inc.
(212) 720-4254
FOOT LOCKER, INC. REPORTS SECOND QUARTER RESULTS
o Earnings Per Share from Continuing Operations Increased 14 Percent to $0.25
Per Share
o Debt, Net of Cash, Decreased to $24 Million from $87 Million Last
Year
o Company Extends Its Revolving Credit Facility to 2006
o Company Sets Third Quarter Earnings Guidance At $0.31-to-$0.33 Per Share
NEW YORK, NY, August 21, 2003 - Foot Locker, Inc. (NYSE: FL), the New York-based
specialty athletic retailer, today reported financial results for its second
quarter ended August 2, 2003.
Second Quarter Results
Income from continuing operations increased 14 percent to $0.25 per share, or
$37 million, from $0.22 per share, or $33 million last year. For the 13-week
second quarter period, sales increased 3.5 percent to $1,123 million this year
compared with sales of $1,085 million last year. Second quarter comparable-store
sales decreased 4.4 percent.
Year-to-Date Results
Income from continuing operations for the 26-week period ended August 2, 2003,
increased to $0.52 per share, or $76 million, compared with $0.48 per share, or
$71 million last year. Year-to-date sales increased 3.5 percent to $2,251
million, compared with sales of $2,175 million last year. Comparable-store sales
decreased 3.5 percent.
Debt, net of cash, was reduced to $24 million from $87 million last year.
Merchandise inventories remain current, and are both on plan and well positioned
to support third quarter sales expectations.
Matthew D. Serra, Foot Locker, Inc.'s President and Chief Executive Officer
stated, "The Company's sales trend significantly improved in late July and this
has continued into the third week of August. We expect our average price points
to stabilize later in the third quarter as we anniversary against the current
fashion trend of lower-priced classic footwear. Additionally, we expect our
gross margin rate to continue to be favorable to last year due to our somewhat
tempered promotional posture in the United States. Therefore, we currently
expect third quarter earnings of $0.31-to-$0.33 per share, in line with
analysts' estimates."
On July 30, 2003, the Company amended and restated its revolving credit facility
with its existing bank group, achieving a lower pricing structure and increased
covenant flexibility, while extending the maturity date to July 2006. The credit
facility was also increased in size by $10 million, to $200 million.
On August 20, 2003, the Board of Directors declared a quarterly dividend on the
Company's common stock of $0.03 per share. The dividend will be payable October
31, 2003 to shareholders of record on October 17, 2003.
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Foot Locker, Inc. 112 West 34th Street New York NY 10120
During the second quarter, the Company opened 38 stores, remodeled/relocated 118
stores and closed 30 stores. The store openings included the Company's entrance
into the Portugal and New Zealand markets. At August 2, 2003 the Company
operated 3,608 stores in 16 countries in North America, Europe and Australia.
The Company is hosting a live conference call at 10:00 am (EST) on Thursday,
August 21, 2003. 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 pm on Monday, August 25, 2003.
Disclosure Regarding Forward-Looking Statements
This press release contains forward-looking statements, which reflect
management's current views of future events and financial performance. 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, risks associated with foreign global sourcing, including
political instability, changes in import regulations and the presence of severe
acute respiratory syndrome, 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, and the ability of the Company to execute
its business plans effectively with regard to each of its business units,
including its plans for the marquee and launch footwear component of its
business. 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.
Consolidated Statements of Operations
(unaudited)
Periods ended August 2, 2003 and August 3, 2002
(In millions, except per share amounts)
- ------------------------------------------------------------------ --------------------- -- ----------------------
Second Quarter Second Quarter
2003 2002
--------------------- ----------------------
Sales $ 1,123 $ 1,085
Cost of sales 792 773
Selling, general and administrative expenses 233 220
Depreciation and amortization 38 38
Restructuring charge (income) (1) 1 (1)
Interest expense, net 4 7
Other income (2) -- (3)
--------------------- ----------------------
1,068 1,034
--------------------- ----------------------
Income from continuing operations before income taxes 55 51
Income tax expense 18 18
--------------------- ----------------------
Income from continuing operations 37 33
Loss on disposal of discontinued operations, net of tax (1) (2)
--------------------- ----------------------
Net income $ 36 $ 31
===================== ======================
Diluted EPS:
Income from continuing operations $ 0.25 $ 0.22
Loss on disposal of discontinued operations, net of tax (0.01) (0.01)
--------------------- ----------------------
Net income $ 0.24 $ 0.21
===================== ======================
Weighted-average diluted shares outstanding 152.1 151.0
--------------------- ----------------------
Year-To-Date Year-To-Date
2003 2002
--------------------- ----------------------
Sales $ 2,251 $ 2,175
Cost of sales 1,575 1,543
Selling, general and administrative expenses 474 440
Depreciation and amortization 75 74
Restructuring charge (income) (1) 1 (1)
Interest expense, net 9 14
Other income (2) -- (3)
--------------------- ----------------------
2,134 2,067
--------------------- ----------------------
Income from continuing operations before income taxes 117 108
Income tax expense 41 37
--------------------- ----------------------
Income from continuing operations 76 71
Loss on disposal of discontinued operations, net of tax (1) (20)
Cumulative effect of accounting changes, net of tax (3) (1) --
===================== ======================
Net income $ 74 $ 51
===================== ======================
Diluted EPS:
Income from continuing operations $ 0.52 $ 0.48
Loss on disposal of discontinued operations, net of tax (0.01) (0.13)
Cumulative effect of accounting changes, net of tax (3) -- --
--------------------- ----------------------
Net income $ 0.51 $ 0.35
===================== ======================
Weighted-average diluted shares outstanding 151.7 150.9
- ------------------------------------------------------------------ --------------------- -- ----------------------
(1) Represents revisions in estimates to restructuring reserves for disposed
businesses.
(2) Amount in 2002 reflects real estate transactions.
(3) Related to adoption of SFAS No. 143 "Accounting for Asset Retirement
Obligations."
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FOOT LOCKER, INC.
Condensed Consolidated Balance Sheets
(unaudited)
(In millions)
------------------------------------------------------------------------------------------------
August 2, August 3,
2003 2002
--------------- ----------------
Assets
CURRENT ASSETS
Cash and cash equivalents $ 332 $ 307
Merchandise inventories 948 887
Assets of discontinued operations 2 3
Other current assets 98 110
--------------- ----------------
1,380 1,307
Property and equipment, net 621 626
Deferred tax assets 236 247
Other assets 332 283
--------------- ----------------
$ 2,569 $2,463
=============== ================
Liabilities and Shareholders' Equity
CURRENT LIABILITIES
Accounts payable $ 339 $ 389
Accrued liabilities 259 203
Current liabilities and reserves for restructuring,
discontinued operations and businesses held for sale 23 28
Current portion of long-term debt and
obligations under capital leases -- 31
--------------- ----------------
621 651
Long-term debt and obligations under capital
leases 348 (1) 363
Other liabilities 408 (1) 372
SHAREHOLDERS' EQUITY 1,192 1,077
--------------- ----------------
$ 2,569 $ 2,463
=============== ================
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(1) Long-term debt and obligations under capital leases in 2003
were reduced by $8 million representing the fair value of interest
rate swaps related to the Company's 8 1/2% debentures due in 2022.
The Company's debt, net of cash calculation excludes the fair value
of these interest rate swaps which are reflected in other
liabilities.
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FOOT LOCKER, INC.
Store and Estimated Square Footage - Continuing Operations
(unaudited)
(Square footage in thousands)
----------------------------------- ---------------------- ---------------------- ---------------------
August 2, August 3, February 1,
2003 2002 2003
---------------------- ---------------------- ---------------------
Foot Locker U.S.
Number of stores 1,457 1,477 1,477
Gross square footage 5,959 6,008 6,043
Selling square footage 3,465 3,451 3,497
Lady Foot Locker
Number of stores 597 614 606
Gross square footage 1,331 1,380 1,362
Selling square footage 738 789 781
Kids Foot Locker
Number of stores 361 384 377
Gross square footage 875 922 912
Selling square footage 521 550 547
Champs Sports
Number of stores 587 577 582
Gross square footage 3,265 3,252 3,262
Selling square footage 2,273 2,281 2,292
Foot Locker International
Number of stores 606 548 583
Gross square footage 1,714 1,540 1,639
Selling square footage 949 871 920
Total Athletic Group
Number of stores 3,608 3,600 3,625
Gross square footage 13,144 13,102 13,218
Selling square footage 7,946 7,942 8,037
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