UNITED STATES
SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

 

 

FORM 8-K

 

CURRENT REPORT

Pursuant to Section 13 or 15(d) of the

Securities Exchange Act of 1934

 

Date of report (Date of earliest event reported): May 22, 2015

 

Foot Locker, Inc.

(Exact Name of Registrant as Specified in Charter)

 

New York	1-10299	13-3513936
(State or Other Jurisdiction of Incorporation)	(Commission File Number)	(IRS Employer Identification No.)

 

112 West 34th Street, New York, New York	10120
(Address of Principal Executive Offices)	(Zip Code)

 

Registrant’s telephone number, including area code:  (212) 720-3700

 

 

(Former Name or Former Address, if Changed Since Last Report)

 

 

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):

 

o	Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
o	Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
o	Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
o	Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

Item 2.02.

Results of Operations and Financial Condition.

 

On May 22, 2015, Foot Locker, Inc. (the “Company”) issued a press release announcing its financial and operating results for the first quarter of 2015. A copy of the press release is furnished as Exhibit 99.1 to this Current Report on Form 8-K. The release includes a non-GAAP net income result for the prior year’s first quarter that excludes a $1 million charge related to trade name impairment and a $1 million charge related to the integration of Runners Point Group. The Company believes this non-GAAP financial result provides useful information to investors because it allows for a more direct comparison of the Company’s performance for the first quarter of 2015 to the Company’s performance in the comparable prior-year period. The non-GAAP financial result is provided in addition to, and not as an alternative to, the Company’s reported results prepared in accordance with GAAP. A reconciliation to GAAP is provided in the Condensed Consolidated Statements of Operations.

 

In accordance with General Instruction B.2. of Form 8-K, the information in this Current Report on Form 8-K, including Exhibit 99.1, shall not be deemed to be “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), or otherwise subject to the liabilities of that section, and shall not be deemed incorporated by reference into any filing under the Securities Act of 1933, as amended, or the Exchange Act, except as expressly set forth by specific reference in such filing.

 

Item 9.01.

Financial Statements and Exhibits.

 

(d)		Exhibits.
Exhibit No.		Description
99.1		Press Release, dated May 22, 2015, issued by Foot Locker, Inc.

SIGNATURE

 

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

 

	FOOT LOCKER, INC.
Date: May 22, 2015	By:	/s/ Lauren B. Peters
		Name:  Lauren B. Peters Title:    Executive Vice President and Chief Financial Officer

Exhibit 99.1

 

 

N E W S  R E L E A S E

 

 

 

FOOT LOCKER, INC. REPORTS 2015 FIRST QUARTER RESULTS

 

·      Net Income of $1.29 Per Share, a Record Quarterly Result

·      Earnings Per Share Increased 17 Percent

·      Comparable-Store Sales Increased 7.8 Percent

 

NEW YORK, NY, May 22, 2015 – Foot Locker, Inc. (NYSE: FL), the New York-based specialty athletic retailer, today reported financial results for its first quarter ended May 2, 2015.

 

First Quarter Results

Net income for the Company’s first quarter ended May 2, 2015 was $184 million, or $1.29 per share, compared with net income of $162 million, or $1.10 per share, last year, a 17 percent increase. First quarter comparable-store sales increased 7.8 percent. Total first quarter sales increased 2.6 percent, to $1,916 million this year, compared with sales of $1,868 million for the corresponding prior-year period. Excluding the effect of foreign currency fluctuations, total sales for the first quarter increased 7.9 percent.

 

“We have hit the ground running in 2015, producing the most profitable quarter in our history,” said Richard Johnson, President and Chief Executive Officer. “We are focused on executing the updated strategic priorities that we described in our investor meeting in March, and the results in the first quarter demonstrate that we remain on the right track, with strong performances across our channels, geographies, banners, and categories. Our core business improved and we made progress on each of our growth pillars, a team accomplishment of which we are all very proud.”

 

The Company’s gross margin rate improved to 35.0 percent of sales from 34.6 percent a year ago, while the selling, general, and administrative expense rate improved to 18.0 percent of sales from 19.0 percent.

 

“The team at Foot Locker continued to execute efficiently during the quarter, both operationally and financially,” said Lauren Peters, Executive Vice President and Chief Financial Officer. “Driven by solid performance on the top line that flowed effectively to the bottom line, we delivered results which surpassed our guidance at the start of the year. We remain intent on improving the productivity of all of our assets as we strive to attain our recently elevated long-term goals.”

 

Financial Position

At May 2, 2015, the Company’s merchandise inventories were $1,234 million, 2.7 percent lower than at the end of the first quarter last year. Using constant currencies, inventory increased 2.4 percent.

 

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Foot Locker, Inc. 112 West 34^th Street, New York, NY 10120

The Company’s cash totaled $986 million, while the debt on its balance sheet was $133 million. The Company spent approximately $129 million to repurchase 2.3 million shares during the quarter and paid its quarterly stock dividend of $0.25, spending $35 million.

 

Store Base Update

During the first quarter, the Company opened 37 new stores, remodeled or relocated 55 stores, and closed 41 stores. As of May 2, 2015, the Company operated 3,419 stores in 23 countries in North America, Europe, Australia, and New Zealand. In addition, 55 franchised Foot Locker stores were operating in the Middle East and South Korea, as well as 27 franchised Runners Point and Sidestep stores in Germany and Switzerland.

 

The Company is hosting a live conference call at 9:00 a.m. (EDT) today, May 22, 2015, to review these results, provide comments on the status of its current initiatives, and discuss trends in its business and the athletic industry. This conference call may be accessed live by dialing 888-771-4371 (U.S. and Canada) or 847-585-4405 (International) using the passcode 39678293, or via the Investor Relations section of the Foot Locker, Inc. website at http://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 at http://www.footlocker-inc.com through June 5, 2015.

 

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, deterioration of global financial markets, economic conditions worldwide, 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.

 

For additional discussion on risks and uncertainties that may affect forward-looking statements, see “Risk Factors” disclosed in the 2014 Annual Report on Form 10-K. 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 May 2, 2015 and May 3, 2014

(In millions, except per share amounts)

 

		First Quarter
		2015				2014
Sales		$	1,916			$	1,868
Cost of sales			1,246				1,222
SG&A			345				355
Depreciation & amortization			35				36
Impairment charge(1)			—				1
Interest expense, net			1				1
Other income			(1	)			(1	)
			1,626				1,614
Income before taxes		$	290			$	254
Income tax expense			106				92
Net income		$	184			$	162
Diluted EPS		$	1.29			$	1.10
Weighted-average diluted shares outstanding			142.1				147.6

 

Reconciliation of GAAP to Non-GAAP results		First Quarter
						2014
						After tax				EPS
GAAP net income results						$	162			$	1.10
Add back:
Trade name impairment(1)							1				0.01
RPG integration costs (2)							1				—
Non-GAAP results						$	164			$	1.11

 

Footnote to explain adjustments in 2014

 

(1) Write-down of trade name in Ireland acquired in 2004.

(2) Costs associated with the integration of Runners Point Group.

 

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FOOT LOCKER, INC.

Condensed Consolidated Balance Sheets

(unaudited)

(In millions)

 

	May 2, 2015					May 3, 2014
Assets
CURRENT ASSETS
Cash, cash equivalents and short-term investments		$	986				$	1,007
Merchandise inventories			1,234					1,268
Other current assets			259					243
			2,479					2,518
Property and equipment, net			639					598
Deferred tax assets			226					245
Other assets			287					308
		$	3,631				$	3,669
Liabilities and Shareholders’ Equity
CURRENT LIABILITIES
Accounts payable		$	303				$	354
Accrued and other liabilities			387					355
Current portion of capital lease obligations			2					3
			692					712
Long-term debt and obligations under capital leases			131					135
Other liabilities			253					229
SHAREHOLDERS’ EQUITY			2,555					2,593
		$	3,631				$	3,669

 

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FOOT LOCKER, INC.

Store and Square Footage

(unaudited)

 

Store activity is as follows:

 

		January 31, 2015				Opened				Closed				May 2, 2015				Relocations /Remodels
Foot Locker US			1,015				1				10				1,006				19
Foot Locker Europe			603				3				4				602				6
Foot Locker Canada			126				1				1				126				4
Foot Locker Asia Pacific			91				1				—				92				1
Lady Foot Locker/SIX:02			213				4				11				206				—
Kids Foot Locker			357				13				6				364				14
Footaction			272				5				5				272				5
Champs Sports			547				5				3				549				5
Runners Point			116				2				—				118				1
Sidestep			83				2				1				84				—
Total			3,423				37				41				3,419				55

 

Selling and gross square footage are as follows:

 

		January 31, 2015								May 2, 2015
(in thousands)		Selling				Gross				Selling				Gross
Foot Locker US			2,494				4,298				2,490				4,299
Foot Locker Europe			846				1,839				844				1,844
Foot Locker Canada			270				422				274				426
Foot Locker Asia Pacific			125				204				126				205
Lady Foot Locker/SIX:02			299				501				293				491
Kids Foot Locker			529				912				552				949
Footaction			789				1,258				794				1,266
Champs Sports			1,913				2,927				1,922				2,941
Runners Point			143				244				144				247
Sidestep			75				129				76				130
Total			7,483				12,734				7,515				12,798

 

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