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EXHIBIT 99
NEWS RELEASE
CONTACT: Juris Pagrabs
Vice President, Investor Relations
Venator Group, Inc.
(212) 553-7017
VENATOR GROUP REPORTS FOURTH QUARTER EARNINGS FROM
CONTINUING OPERATIONS OF $0.21 PER SHARE
- COMPANY OBTAINS BANK COMMITMENTS FOR AMENDED CREDIT FACILITY -
NEW YORK, New York, March 10, 1999 - Venator Group, Inc. (NYSE: Z), the largest
athletic footwear and apparel retailer in the world, today reported income from
continuing operations of $29 million, or $0.21 per share, for the 13-weeks ended
January 30, 1999, which includes a $44 million, or $0.32 per share, after-tax
gain from the sale of its corporate headquarters building. This compares to
restated income from continuing operations of $106 million, or $0.78 per share,
for the 14-week period a year ago. For the 52-week period, income from
continuing operations was $3 million, or $0.02 per share, compared to income of
$213 million, or $1.57 per share, for the restated 53-week period a year ago.
The reported results from continuing operations, including the building gain,
are within the range of current analysts' expectations, which is $0.20 to $0.25
per share. Results of both the Company's International (Canada and German)
General Merchandise business and its Specialty Footwear operations have been
excluded from continuing operations for all periods reported.
Net income for the quarter was $37 million, or $0.27 per share, and includes $8
million, or $0.06 per share, for discontinued operations that comprise revisions
to estimates given favorable results to date in liquidating inventories and the
disposition of certain domestic general merchandise properties. This compares to
restated net income of $115 million, or $0.85 per share, for the 14-week period
a year ago. Net loss for the 52-week period was $136 million, or $1.00 per
share, and includes an after-tax charge of $139 million, or $1.02 per share, for
discontinued operations relating primarily to the closing of the Company's
Specialty Footwear operations and the sale of its German General Merchandise
business. This compares to a net loss last year, a 53-week period, of $10
million, or $0.07 per share, which includes an after-tax charge of $223 million,
or $1.64 per share, for discontinued operations relating primarily to its
domestic General Merchandise business.
Sales for the 13-week quarter declined 5.8% to $1,332 million from $1,414
million in the 14-week period a year-earlier, reflecting increased sales from
308 net new stores offset by a comparable-store sales decline of 4.6% during the
period. Sales for the 52 weeks declined 1.2% to $4,555 million from $4,612
million in the 53-week period a year earlier, reflecting sales from 308 net new
stores offset by a comparable-store sales decline of 5.5% for the period.
Adjusting for the effect of foreign currency fluctuations and sales from
disposed operations, sales decreased 3.7% for the quarter and increased 0.2% for
the 52 weeks as compared to the prior year.
"We are disappointed in the Company's 1998 financial results, which were
impacted by difficult industry trends as well as internal issues, such as
delayed new store openings," stated Roger Farah, Venator Group's chairman and
chief executive officer. "As we move into 1999, we plan to more narrowly focus
our management attention on the core athletic business, which recently has shown
encouraging sales
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trends, particularly in the running and trail categories. Additionally, our
non-athletic specialty stores, such as Afterthoughts and San Francisco Music
Box, continue to show significant improvement compared to a year ago, reflecting
the continued progress of our corporate-wide rebuilding initiatives."
Gross margin for the quarter, as a percentage of sales, declined to 24.2% from
32.1% in the year-earlier period primarily reflecting, as previously announced,
aggressive inventory markdown activity to position inventories properly for the
upcoming year in order to enhance the Company's competitiveness. Merchandise
inventories per square foot at year end are in line with previously announced
expectations, reflecting approximately a 10% decrease compared to the same
period a year ago.
Selling, general and administrative expenses for the quarter increased $75
million to $339 million from $264 million in the year-earlier period, primarily
reflecting a $28 million charge for the impairment of long-lived assets and
increased costs associated with having 308 net additional stores year-over-year
as a result of the Company's aggressive new store opening program.
The tax benefit for the quarter and full year compared to the prior year expense
primarily reflects the impact of utilizing available foreign tax credits as a
result of the sale of various businesses and assets, offset by the impact of
non-deductible items.
During 1998, the Company discontinued its Specialty Footwear operations,
including 467 Kinney Shoe stores and 103 Footquarters stores, and sold its 357
store German General Merchandise operations. The Company is in the process of
converting approximately 90 of these former specialty footwear locations to
other athletic formats, such as Foot Locker, Lady Foot Locker, Kids Foot Locker
and Foot Locker outlet stores.
Additionally, during 1998 the Company sold the Garden Centers, a chain of
nursery stores, and disposed of Randy River apparel stores in the United States.
Since 1994, the Company has sold or disposed of 27 formats, or 3,229 stores, and
has closed an additional 923 stores relating to its on-going retail formats.
With respect to the amendment of the Company's current revolving credit
agreement, the Company said the process with the Company's lender banks is
proceeding according to the original schedule. On March 9, 1999, the Company
obtained written commitments for an amended $400 million revolving credit
facility from the Bank Group, and expects to have this revolving credit facility
finalized by March 19, the date on which certain covenant waivers expire on the
existing facility.
"Despite a very challenging year, with the sale of our German General
Merchandise business, we completed the last major component of our repositioning
strategy that began in 1995, designed to strategically focus the Company on its
most productive specialty retailing operations," continued Mr. Farah. "The
Company ended the year in sound financial condition with $2.9 billion in assets,
short-term debt, net of cash, of $57 million, and $1.0 billion in shareholders'
equity. Our financial position coupled with the amended credit facility provides
Venator Group with a solid base for profitable growth for its core athletic
business and enhanced financial flexibility."
During the past three years, the Company has invested approximately $1 billion
in capital expenditures ($550 million in 1998), to support its domestic and
international new store and remodeling program, which represents over 2,300
stores in seven different formats. Capital expenditures for 1999 are expected to
total $175 million and include approximately $100 million for 350 new and
remodeled stores and $75 million for information systems, infrastructure and
logistics. During 1998, the Company opened 651 stores, completed 459 remodels or
relocations and closed 343 stores. On a continuing operating basis, Venator
Group ended 1998 with 6,002 stores compared to 5,694 stores at the end of 1997.
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Venator Group is a diversified global retailer that operates retail stores in 14
countries in North America, Europe, Australia and Asia. Through its athletic
group of specialty retail stores, including Foot Locker, Lady Foot Locker, Kids
Foot Locker, Champs Sports and Colorado, as well as its direct marketer Eastbay,
the Company is the leading provider of athletic footwear and apparel. Venator
Group's Internet web sites include www.eastbay.com, www.footlocker.com,
www.ladyfootlocker.com, www.kidsfootlocker.com, and www.champssports.com. Other
specialty retail chains include the Northern Group of apparel stores,
Afterthoughts jewelry stores and San Francisco Music Box.
DISCLOSURE REGARDING FORWARD-LOOKING STATEMENTS
THIS PRESS RELEASE CONTAINS FORWARD-LOOKING STATEMENTS THAT REFLECT MANAGEMENT'S
CURRENT VIEWS OF FUTURE EVENTS AND FINANCIAL PERFORMANCE. THESE FORWARD-LOOKING
STATEMENTS ARE BASED ON MANY ASSUMPTIONS AND FACTORS INCLUDING THE EFFECTS OF
CURRENCY FLUCTUATIONS, CONSUMER PREFERENCES AND ECONOMIC CONDITIONS WORLDWIDE.
ANY CHANGES IN SUCH ASSUMPTIONS OR FACTORS COULD PRODUCE SIGNIFICANTLY DIFFERENT
RESULTS.
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VENATOR GROUP, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
(In millions, except per share amounts)
13/14 Weeks Ended 52/53 Weeks Ended
---------------------- ----------------------
(unaudited) January 30, January 31, January 30, January 31,
1999 1998 1999 1998
------- ------- ------- -------
Sales $ 1,332 $ 1,414 $ 4,555 $ 4,612
Costs and expenses:
Cost of sales 1,009 960 3,333 3,127
Selling, general
and administrative expenses 339 264 1,166 1,008
Depreciation and amortization 44 32 152 122
Interest expense, net 9 10 44 35
Other income (82) (13) (101) (13)
------- ------- ------- -------
1,319 1,253 4,594 4,279
------- ------- ------- -------
Income (loss) from continuing
operations before income taxes 13 161 (39) 333
Income tax expense (benefit) (16) 55 (42) 120
------- ------- ------- -------
Income from continuing operations 29 106 3 213
Income (loss) from discontinued operations,
net of tax expense (benefit) of $0, $13, ($14)
and ($13), respectively -- 9 (26) (28)
Income (loss) on disposal of discontinued
operations, net of tax expense (benefit) of
$5, $0, $57 and ($115), respectively 8 -- (113) (195)
------- ------- ------- -------
Net income (loss) $ 37 $ 115 $ (136) $ (10)
======= ======= ======= =======
Diluted Earnings Per Share:
Income from continuing operations $ 0.21 $ 0.78 $ 0.02 $ 1.57
Income (loss) from discontinued
operations 0.06 0.07 (1.02) (1.64)
------- ------- ------- -------
Net income (loss) $ 0.27 $ 0.85 $ (1.00) $ (0.07)
======= ======= ======= =======
Weighted-average common shares
outstanding assuming dilution 135.6 135.8 135.9 135.8
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VENATOR GROUP, INC.
SUPPLEMENTAL INFORMATION
(In millions)
13/14 Weeks Ended 52/53 Weeks Ended
---------------------- ----------------------
(unaudited) January 30, January 31, January 30, January 31,
1999 1998 1999 1998
------- ------- ------- -------
SALES BY SEGMENT
Athletic Group $ 1,023 $ 1,061 $ 3,753 $ 3,746
Northern Group 159 185 415 455
All Other 150 151 383 380
------- ------- ------- -------
1,332 1,397 4,551 4,581
------- ------- ------- -------
Disposed operations -- 17 4 31
------- ------- ------- -------
$ 1,332 $ 1,414 $ 4,555 $ 4,612
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OPERATING RESULTS BY SEGMENT
Athletic Group (54) 114 12 376
Northern Group -- 32 (26) 40
All Other 24 26 10 3
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(30) 172 (4) 419
Disposed operations -- 1 17 (1)
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$ (30) $ 173 $ 13 $ 418
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VENATOR GROUP, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(In millions)
(unaudited) January 30, 1999 January 31, 1998
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ASSETS
CURRENT ASSETS
Cash and cash equivalents $ 193 $ 81
Merchandise inventories 837 754
Net assets of discontinued operations 97 604
Other current assets 148 135
------ ------
1,275 1,574
Property and equipment, net 974 625
Deferred taxes 358 336
Other assets 269 263
------ ------
$2,876 $2,798
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LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES
Short-term debt $ 250 $ --
Accounts payable and accrued liabilities 541 518
Current portion of reserve for
discontinued operations 167 72
Current portion of long-term debt and
obligations under capital leases 6 19
------ ------
964 609
Long-term debt and
obligations under capital leases 511 508
Other liabilities 363 410
SHAREHOLDERS' EQUITY 1,038 1,271
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$2,876 $2,798
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