UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM
(Mark One)
| | QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For the quarterly period ended:
OR
| | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For the transition period from __________ to __________
Commission File Number:
(Exact name of registrant as specified in its charter)
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| (State or other jurisdiction of incorporation or organization) | (I.R.S. Employer Identification No.) |
(Address of principal executive offices, Zip Code)
(
(Registrant’s telephone number, including area code)
| Title of each class | Trading Symbol(s) | Name of each exchange on which registered |
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Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
| | Accelerated filer ☐ | Non-accelerated filer ☐ | Smaller reporting company |
| Emerging growth company | | | |
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes
Number of shares of Common Stock outstanding as of August 25, 2023:
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Financial Statements (Unaudited) |
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Condensed Consolidated Balance Sheets (Unaudited) |
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Condensed Consolidated Statements of Operations (Unaudited) |
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Condensed Consolidated Statements of Comprehensive Income / (Loss) (Unaudited) |
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Condensed Consolidated Statements of Changes in Shareholders’ Equity (Unaudited) |
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Condensed Consolidated Statements of Cash Flows (Unaudited) |
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Notes to the Unaudited Condensed Consolidated Financial Statements (Unaudited) |
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Management’s Discussion and Analysis of Financial Condition and Results of Operations |
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| Item 3. | Quantitative and Qualitative Disclosures About Market Risk | 23 | |
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| Item 3. | Defaults Upon Senior Securities | 24 | |
| Item 4. | Mine Safety Disclosures | 24 | |
| Item 5. | Other Information | 24 | |
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CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS
This Quarterly Report on Form 10-Q includes “forward-looking” statements within the meaning of the Private Securities Litigation Reform Act of 1995. Forward-looking statements can be identified by the fact that they do not relate strictly to historical or current facts. They often include words such as “believes,” “expects,” “anticipates,” “estimates,” “intends,” “plans,” “seeks,” “continues,” “feels,” “forecasts,” or words of similar meaning, or future or conditional verbs, such as “will,” “should,” “could,” “may,” “aims,” “intends,” or “projects.” Statements may be forward looking even in the absence of these particular words.
Examples of forward-looking statements include, but are not limited to, statements regarding our financial position, business strategy, and other plans and objectives for our future operations, and generation of free cash flow. These forward-looking statements are based on our current expectations and beliefs concerning future developments and their potential effect on us. The forward-looking statements contained herein are largely based on our expectations for the future, which reflect certain estimates and assumptions made by our management. These estimates and assumptions reflect our best judgment based on currently known market conditions, operating trends, and other factors. Although we believe such estimates and assumptions to be reasonable, they are inherently uncertain and involve a number of risks and uncertainties that are beyond our control. As such, management’s assumptions about future events may prove to be inaccurate.
We do not intend to publicly update or revise any forward-looking statements as a result of new information, future events, changes in circumstances, or otherwise. These cautionary statements qualify all forward-looking statements attributable to us, or persons acting on our behalf. Management cautions you that the forward-looking statements contained herein are not guarantees of future performance, and we cannot assure you that such statements will be realized or that the events and circumstances they describe will occur. Factors that could cause actual results to differ materially from those anticipated or implied in the forward-looking statements herein include, but are not limited to, a change in the relationship with any of our key suppliers, including access to premium products, volume discounts, cooperative advertising, markdown allowances, or the ability to cancel orders or return merchandise; our ability to fund our planned capital investments; a recession, volatility in the financial markets, and other global economic factors, including inflation; difficulties in appropriately allocating capital and resources among our strategic opportunities; our ability to realize the expected benefits from acquisitions; business opportunities and expansion; investments; expenses; dividends; share repurchases; cash management; liquidity; cash flow from operations; our ability to access the credit markets at competitive terms; borrowing capacity under our credit facility; repatriation of cash to the United States; supply chain issues; labor shortages and wage pressures; consumer spending levels; the effect of certain governmental assistance programs; expectations regarding increasing global taxes; the effect of increased government regulation, compliance, and changes in law; the effect of the adverse outcome of any material litigation against us or judicial decisions that affect us or our industry generally; the effects of weather; climate change; ESG risks; increased competition; geopolitical events; the financial effect of accounting regulations and critical accounting policies; credit risk relating to the risk of loss as a result of non-performance by our counterparties; and any other factors set forth in the section entitled “Risk Factors” of our most recent Annual Report on Form 10-K.
All written and oral forward-looking statements attributable to us are expressly qualified in their entirety by this cautionary statement. A forward-looking statement is neither a prediction nor a guarantee of future events or circumstances, and those future events or circumstances may not occur. You should not place undue reliance on forward-looking statements, which speak to our views only as of the date of this filing. Additional risks and uncertainties that we do not presently know about or that we currently consider to be insignificant may also affect our business operations and financial performance.
Please refer to “Item 1A. Risk Factors” of our most recent Annual Report on Form 10-K filed with the U.S. Securities and Exchange Commission for a discussion of certain risks relating to our business and any investment in our securities. Given these risks and uncertainties, you should not rely on forward-looking statements as predictions of actual results. Any or all of the forward-looking statements contained in this report, or any other public statement made by us, including by our management, may turn out to be incorrect. We are including this cautionary note to make applicable and take advantage of the safe harbor provisions of the Private Securities Litigation Reform Act of 1995 for forward-looking statements. We expressly disclaim any obligation to update or revise any forward-looking statements, whether as a result of new information, future events, or otherwise.
PART I - FINANCIAL INFORMATION
Item 1. Financial Statements
CONDENSED CONSOLIDATED BALANCE SHEETS
(Unaudited)
| | July 29, | July 30, | January 28, | |||||||||
| ($ in millions, except share amounts) | 2023 | 2022 | 2023* | |||||||||
| ASSETS | ||||||||||||
| | | | | |||||||||
| Current assets: | ||||||||||||
| Cash and cash equivalents | $ | $ | $ | |||||||||
| Merchandise inventories | ||||||||||||
| Other current assets | ||||||||||||
| | ||||||||||||
| Property and equipment, net | ||||||||||||
| Operating lease right-of-use assets | ||||||||||||
| Deferred taxes | ||||||||||||
| Goodwill | ||||||||||||
| Other intangible assets, net | ||||||||||||
| Minority investments | ||||||||||||
| Other assets | ||||||||||||
| | $ | $ | $ | |||||||||
| | | | | |||||||||
| LIABILITIES AND SHAREHOLDERS’ EQUITY | ||||||||||||
| | | | | |||||||||
| Current liabilities: | | |||||||||||
| Accounts payable | $ | $ | $ | |||||||||
| Accrued and other liabilities | ||||||||||||
| Current portion of debt and obligations under finance leases | ||||||||||||
| Current portion of lease obligations | ||||||||||||
| | ||||||||||||
| Long-term debt and obligations under finance leases | ||||||||||||
| Long-term lease obligations | ||||||||||||
| Other liabilities | ||||||||||||
| Total liabilities | ||||||||||||
| Commitments and contingencies | | | | |||||||||
| Shareholders’ equity: | | | | |||||||||
| Common stock and paid-in capital: ; ; and shares issued, respectively | ||||||||||||
| Retained earnings | ||||||||||||
| Accumulated other comprehensive loss | ( | ) | ( | ) | ( | ) | ||||||
| Less: Treasury stock at cost: ; ; and shares, respectively | ( | ) | ( | ) | ||||||||
| Noncontrolling interest | ||||||||||||
| Total shareholders' equity | ||||||||||||
| | $ | $ | $ | |||||||||
| * |
The balance sheet at January 28, 2023 has been derived from the previously reported audited consolidated financial statements at that date, but does not include all of the information and footnotes required by U.S. generally accepted accounting principles for complete financial statements. For further information, refer to the consolidated financial statements and footnotes thereto included in Foot Locker, Inc.’s Annual Report on Form 10-K for the year ended January 28, 2023 |
See Accompanying Notes to the Unaudited Condensed Consolidated Financial Statements.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
| | Thirteen weeks ended | Twenty-six weeks ended | ||||||||||||||
| | July 29, | July 30, | July 29, | July 30, | ||||||||||||
| ($ in millions, except per share amounts) | 2023 | 2022 | 2023 | 2022 | ||||||||||||
| Sales | $ | $ | $ | $ | ||||||||||||
| Licensing revenue | ||||||||||||||||
| Total revenue | ||||||||||||||||
| | | | | | ||||||||||||
| Cost of sales | ||||||||||||||||
| Selling, general and administrative expenses | ||||||||||||||||
| Depreciation and amortization | ||||||||||||||||
| Impairment and other | ||||||||||||||||
| Income from operations | ||||||||||||||||
| | | | | | ||||||||||||
| Interest expense, net | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||
| Other income / (expense), net | ( | ) | ( | ) | ||||||||||||
| Income / (loss) before income taxes | ( | ) | ||||||||||||||
| Income tax expense | ||||||||||||||||
| Net income / (loss) | ( | ) | ||||||||||||||
| Net loss attributable to noncontrolling interests | ||||||||||||||||
| Net income / (loss) attributable to Foot Locker, Inc. | $ | ( | ) | $ | $ | $ | ||||||||||
| | | | | | ||||||||||||
| Basic earnings / (loss) per share | $ | ( | ) | $ | $ | $ | ||||||||||
| Weighted-average shares outstanding | ||||||||||||||||
| | | | | | ||||||||||||
| Diluted earnings / (loss) per share | $ | ( | ) | $ | $ | $ | ||||||||||
| Weighted-average shares outstanding, assuming dilution | ||||||||||||||||
See Accompanying Notes to the Unaudited Condensed Consolidated Financial Statements.
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME / (LOSS)
(Unaudited)
| | Thirteen weeks ended | Twenty-six weeks ended | ||||||||||||||
| | July 29, | July 30, | July 29, | July 30, | ||||||||||||
| ($ in millions) | 2023 | 2022 | 2023 | 2022 | ||||||||||||
| Net income / (loss) attributable to Foot Locker, Inc. | $ | ( | ) | $ | $ | $ | ||||||||||
| Other comprehensive income / (loss), net of income tax | ||||||||||||||||
| | | | | | ||||||||||||
| Foreign currency translation adjustment: | ||||||||||||||||
| Translation adjustment arising during the period, net of income tax benefit of $, $, $, and $, respectively | ( | ) | ( | ) | ( | ) | ||||||||||
| | | | ||||||||||||||
| Hedges contracts: | ||||||||||||||||
| Change in fair value of derivatives, net of income tax benefit of $, $, $, and $, respectively | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||
| | | | ||||||||||||||
| Pension and postretirement adjustments: | | |||||||||||||||
| Amortization of net actuarial gain/loss and prior service cost included in net periodic benefit costs, net of income tax expense of $, $, $, and $, respectively | ||||||||||||||||
| Comprehensive income / (loss) | $ | ( | ) | $ | $ | $ | ||||||||||
See Accompanying Notes to the Unaudited Condensed Consolidated Financial Statements.
CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS’ EQUITY
(Unaudited)
| | Additional Paid-In | | | | Accumulated | | | |||||||||||||||||||||||||
| | Capital & | | | | Other | | Total | |||||||||||||||||||||||||
| Thirteen weeks ended | Common Stock | Treasury Stock | Retained | Comprehensive | Noncontrolling | Shareholders' | ||||||||||||||||||||||||||
| (shares in thousands, $ in millions) | Shares | Amount | Shares | Amount | Earnings | Loss | interests | Equity | ||||||||||||||||||||||||
| Balance at April 29, 2023 | $ | ( | ) | $ | ( | ) | $ | $ | ( | ) | $ | $ | ||||||||||||||||||||
| Restricted stock issued | — | |||||||||||||||||||||||||||||||
| Issued under director and stock plans | ||||||||||||||||||||||||||||||||
| Share-based compensation expense | ||||||||||||||||||||||||||||||||
| Shares of common stock used to satisfy tax withholding obligations | ( | ) | ||||||||||||||||||||||||||||||
| Reissued for Employee Stock Purchase Plan | ( | ) | ||||||||||||||||||||||||||||||
| Net income / (loss) | ( | ) | ( | ) | ||||||||||||||||||||||||||||
| Cash dividends on common stock ($ per share) | ( | ) | ( | ) | ||||||||||||||||||||||||||||
| Translation adjustment, net of tax | ||||||||||||||||||||||||||||||||
| Change in cash flow hedges, net of tax | (3 | ) | ( | ) | ||||||||||||||||||||||||||||
| Pension and postretirement adjustments, net of tax | ||||||||||||||||||||||||||||||||
| Balance at July 29, 2023 | $ | ( | ) | $ | ( | ) | $ | $ | ( | ) | $ | $ | ||||||||||||||||||||
| | | | | | | | | | ||||||||||||||||||||||||
| Balance at April 30, 2022 | $ | ( | ) | $ | ( | ) | $ | $ | ( | ) | $ | $ | ||||||||||||||||||||
| Restricted stock issued | ||||||||||||||||||||||||||||||||
| Issued under director and stock plans | ||||||||||||||||||||||||||||||||
| Share-based compensation expense | | |||||||||||||||||||||||||||||||
| Shares of common stock used to satisfy tax withholding obligations | | ( | ) | |||||||||||||||||||||||||||||
| Share repurchases | | ( | ) | ( | ) | ( | ) | |||||||||||||||||||||||||
| Reissued for Employee Stock Purchase Plan | ( | ) | ||||||||||||||||||||||||||||||
| Noncontrolling interest capital contribution | ||||||||||||||||||||||||||||||||
| Net income | | |||||||||||||||||||||||||||||||
| Cash dividends on common stock ($ per share) | | ( | ) | ( | ) | |||||||||||||||||||||||||||
| Translation adjustment, net of tax | | ( | ) | ( | ) | |||||||||||||||||||||||||||
| Change in hedges, net of tax | | ( | ) | ( | ) | |||||||||||||||||||||||||||
| Pension and postretirement adjustments, net of tax | | |||||||||||||||||||||||||||||||
| Balance at July 30, 2022 | $ | ( | ) | $ | ( | ) | $ | $ | ( | ) | $ | $ | ||||||||||||||||||||
| | Additional Paid-In | | | | Accumulated | | | |||||||||||||||||||||||||
| | Capital & | | | | Other | | Total | |||||||||||||||||||||||||
| Twenty-six weeks ended | Common Stock | Treasury Stock | Retained | Comprehensive | Noncontrolling | Shareholders' | ||||||||||||||||||||||||||
| (shares in thousands, $ in millions) | Shares | Amount | Shares | Amount | Earnings | Loss | interests | Equity | ||||||||||||||||||||||||
| Balance at January 28, 2023 | $ | ( | ) | $ | $ | $ | ( | ) | $ | $ | ||||||||||||||||||||||
| Restricted stock issued | — | |||||||||||||||||||||||||||||||
| Issued under director and stock plans | ||||||||||||||||||||||||||||||||
| Share-based compensation expense | ||||||||||||||||||||||||||||||||
| Shares of common stock used to satisfy tax withholding obligations | ( | ) | ( | ) | ( | ) | ||||||||||||||||||||||||||
| Reissued for Employee Stock Purchase Plan | ( | ) | ||||||||||||||||||||||||||||||
| Net income | ||||||||||||||||||||||||||||||||
| Cash dividends on common stock ($ per share) | ( | ) | ( | ) | ||||||||||||||||||||||||||||
| Translation adjustment, net of tax | ( | ) | ( | ) | ||||||||||||||||||||||||||||
| Change in hedges, net of tax | ( | ) | ( | ) | ||||||||||||||||||||||||||||
| Pension and postretirement adjustments, net of tax | — | |||||||||||||||||||||||||||||||
| Balance at July 29, 2023 | $ | ( | ) | $ | ( | ) | $ | $ | ( | ) | $ | $ | ||||||||||||||||||||
| | | | | | | | | | ||||||||||||||||||||||||
| Balance at January 29, 2022 | $ | ( | ) | $ | ( | ) | $ | $ | ( | ) | $ | $ | ||||||||||||||||||||
| Restricted stock issued | ||||||||||||||||||||||||||||||||
| Issued under director and stock plans | ||||||||||||||||||||||||||||||||
| Share-based compensation expense | ||||||||||||||||||||||||||||||||
| Shares of common stock used to satisfy tax withholding obligations | ( | ) | ( | ) | ( | ) | ||||||||||||||||||||||||||
| Share repurchases | ( | ) | ( | ) | ( | ) | ||||||||||||||||||||||||||
| Reissued for Employee Stock Purchase Plan | ( | ) | ||||||||||||||||||||||||||||||
| Noncontrolling interest capital contribution | ||||||||||||||||||||||||||||||||
| Net income | (1 | ) | ||||||||||||||||||||||||||||||
| Cash dividends on common stock ($ per share) | ( | ) | ( | ) | ||||||||||||||||||||||||||||
| Translation adjustment, net of tax | ( | ) | ( | ) | ||||||||||||||||||||||||||||
| Change in hedges, net of tax | ( | ) | ( | ) | ||||||||||||||||||||||||||||
| Pension and postretirement adjustments, net of tax | ||||||||||||||||||||||||||||||||
| Balance at July 30, 2022 | $ | ( | ) | $ | ( | ) | $ | $ | ( | ) | $ | $ | ||||||||||||||||||||
See Accompanying Notes to the Unaudited Condensed Consolidated Financial Statements.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
| | Twenty-six weeks ended | |||||||
| | July 29, | July 30, | ||||||
| ($ in millions) | 2023 | 2022 | ||||||
| From operating activities: | ||||||||
| Net income | $ | $ | ||||||
| Adjustments to reconcile net income to net cash from operating activities: | | | ||||||
| Non-cash impairment and other | ||||||||
| Fair value adjustments to minority investments | ||||||||
| Depreciation and amortization | ||||||||
| Deferred income taxes | ( | ) | ||||||
| Share-based compensation expense | ||||||||
| Gain on sales of businesses | ( | ) | ( | ) | ||||
| Change in assets and liabilities: | | |||||||
| Merchandise inventories | ( | ) | ( | ) | ||||
| Accounts payable | ||||||||
| Accrued and other liabilities | ( | ) | ( | ) | ||||
| Other, net | ( | ) | ( | ) | ||||
| Net cash used in operating activities | ( | ) | ( | ) | ||||
| From investing activities: | ||||||||
| Capital expenditures | ( | ) | ( | ) | ||||
| Purchase of business, net of cash acquired | ( | ) | ||||||
| Minority investments | ( | ) | ( | ) | ||||
| Proceeds from sales of businesses | ||||||||
| Proceeds from minority investments | ||||||||
| Net cash used in investing activities | ( | ) | ( | ) | ||||
| From financing activities: | ||||||||
| Dividends paid on common stock | ( | ) | ( | ) | ||||
| Purchase of treasury shares | ( | ) | ||||||
| Payment of obligations under finance leases | ( | ) | ( | ) | ||||
| Shares of common stock repurchased to satisfy tax withholding obligations | ( | ) | ( | ) | ||||
| Treasury stock reissued under employee stock plan | ||||||||
| Proceeds from exercise of stock options | ||||||||
| Contribution from non-controlling interest | ||||||||
| Net cash used in financing activities | ( | ) | ( | ) | ||||
| Effect of exchange rate fluctuations on cash, cash equivalents, and restricted cash | ( | ) | ||||||
| Net change in cash, cash equivalents, and restricted cash | ( | ) | ( | ) | ||||
| Cash, cash equivalents, and restricted cash at beginning of year | ||||||||
| Cash, cash equivalents, and restricted cash at end of period | $ | $ | ||||||
| | | | ||||||
| Supplemental information: | ||||||||
| Interest paid | $ | $ | ||||||
| Income taxes paid | ||||||||
| Cash paid for amounts included in measurement of operating lease liabilities | ||||||||
| Cash paid for amounts included in measurement of finance lease liabilities | ||||||||
| Right-of-use assets obtained in exchange for operating lease obligations | ||||||||
| Assets obtained in exchange for finance lease obligations | ||||||||
See Accompanying Notes to the Unaudited Condensed Consolidated Financial Statements.
NOTES TO THE UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
1. Summary of Significant Accounting Policies
Business
Foot Locker, Inc., together with its consolidated subsidiaries (“Foot Locker,” “Company,” “we,” “our,” and “us”), is a leading footwear and apparel retailer. We have integrated all available shopping channels including stores, websites, apps, and social channels. Store sales are primarily fulfilled from the store’s inventory, but may also be shipped from any of our distribution centers or from a different store location if an item is not available at the original store. Direct-to-customer orders are generally shipped to our customers through our distribution centers but may also be shipped from any store or a combination of our distribution centers and stores depending on availability of particular items. We operate in North America, Europe, and Asia Pacific, representing our operating segments. We aggregate these operating segments into one reportable segment based upon their shared customer base and similar economic characteristics.
Basis of Presentation
The accompanying interim Unaudited Condensed Consolidated Financial Statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”) and the rules and regulations of the Securities and Exchange Commission. Accordingly, they do not include all of the information and notes required by U.S. GAAP for complete financial statements. In the opinion of management, all adjustments (consisting of normal recurring accruals) considered necessary for a fair presentation have been included. The results of operations for any interim period are not necessarily indicative of the results expected for the year. Additionally, the results of operations for the period ended July 29, 2023 are not necessarily indicative of the results to be expected for the full fiscal year due to the continued uncertainty of general economic conditions that may affect us for the remainder of the year. Fiscal year 2023 will include the 53-week period that ends on February 3, 2024.
The accompanying unaudited condensed consolidated financial statements should be read in conjunction with the Notes to Consolidated Financial Statements contained in our 2022 Form 10-K. Certain reclassifications have been made to prior period financial statements to conform to the current period presentation. In 2023, we separately present licensing revenue as a component of total revenue in the Condensed Consolidated Statements of Operations, as previously licensing revenue was presented within other income / (expense), net.
There were no significant changes to the policies disclosed in Note 1, Summary of Significant Accounting Policies of our 2022 Form 10-K.
Recent Accounting Pronouncements
Recently issued accounting pronouncements did not, or are not believed by management to, have a material effect on our present or future consolidated financial statements.
2. Revenue
The table below presents sales disaggregated by sales channel, as well as licensing revenue earned from our various franchised arrangements. Sales are attributable to the channel in which the sales transaction is initiated.
| | Thirteen weeks ended | Twenty-six weeks ended | ||||||||||||||
| | July 29, | July 30, | July 29, | July 30, | ||||||||||||
| ($ in millions) | 2023 | 2022 | 2023 | 2022 | ||||||||||||
| Sales by Channel | ||||||||||||||||
| Stores | $ | $ | $ | $ | ||||||||||||
| Direct-to-customers | ||||||||||||||||
| Total sales | ||||||||||||||||
| Licensing revenue | ||||||||||||||||
| Total revenue | $ | $ | $ | $ | ||||||||||||
NOTES TO THE UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
2. Revenue (continued)
Revenue is attributed to the country in which the transaction is fulfilled, and revenue by geographic area is presented in the following table.
| | Thirteen weeks ended | Twenty-six weeks ended | ||||||||||||||
| | July 29, | July 30, | July 29, | July 30, | ||||||||||||
| ($ in millions) | 2023 | 2022 | 2023 | 2022 | ||||||||||||
| Revenue by Geography | ||||||||||||||||
| United States | $ | $ | $ | $ | ||||||||||||
| International | ||||||||||||||||
| Total revenue | $ | $ | $ | $ | ||||||||||||
Sales by banner and operating segment are presented in the following table.
| | Thirteen weeks ended | Twenty-six weeks ended | ||||||||||||||
| | July 29, | July 30, | July 29, | July 30, | ||||||||||||
| ($ in millions) | 2023 | 2022 | 2023 | 2022 | ||||||||||||
| Foot Locker | $ | $ | $ | $ | ||||||||||||
| Champs Sports | ||||||||||||||||
| Kids Foot Locker | ||||||||||||||||
| WSS | ||||||||||||||||
| Other (1) | ||||||||||||||||
| North America | ||||||||||||||||
| Foot Locker (2) | ||||||||||||||||
| Sidestep | ||||||||||||||||
| EMEA | ||||||||||||||||
| Foot Locker | ||||||||||||||||
| atmos | ||||||||||||||||
| Asia Pacific | ||||||||||||||||
| Total sales | $ | $ | $ | $ | ||||||||||||
| (1) | Other includes sales from banners that we no longer operate and primarily represented Eastbay in the prior-year period. |
| (2) | Includes sales from 14 and 15 Kids Foot Locker stores operating in Europe for July 29, 2023 and July 30, 2022, respectively. |
Contract Liabilities
We sell gift cards, which do not have expiration dates. Revenue from gift card sales is recorded when the gift cards are redeemed by customers. Breakage income is recognized as revenue in proportion to the pattern of rights exercised by the customer. The table below presents the activity of our gift card liability balance.
| | July 29, | July 30, | ||||||
| ($ in millions) | 2023 | 2022 | ||||||
| Gift card liability at beginning of year | $ | $ | ||||||
| Redemptions | ( | ) | ( | ) | ||||
| Breakage recognized in sales | ( | ) | ( | ) | ||||
| Activations | ||||||||
| Foreign currency fluctuations | ( | ) | ||||||
| Gift card liability | $ | $ | ||||||
We elected not to disclose the information about remaining performance obligations since the amount of gift cards redeemed after 12 months is not significant.
NOTES TO THE UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
3. Segment Information
Foot Locker, Inc. operates reportable segment. Division profit reflects income before income taxes, impairment and other, corporate expense, other income / (expense), net, and net interest expense.
| | Thirteen weeks ended | Twenty-six weeks ended | ||||||||||||||
| | July 29, | July 30, | July 29, | July 30, | ||||||||||||
| ($ in millions) | 2023 | 2022 | 2023 | 2022 | ||||||||||||
| Division profit | $ | $ | $ | $ | ||||||||||||
| Less: Impairment and other (1) | ||||||||||||||||
| Less: Corporate expense (2) | ||||||||||||||||
| Income from operations | ||||||||||||||||
| Interest expense, net | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||
| Other income / (expense), net (3) | ( | ) | ( | ) | ||||||||||||
| Income / (loss) before income taxes | $ | ( | ) | $ | $ | $ | ||||||||||
| (1) | See Note 4, Impairment and Other Charges for further detail. |
| (2) | Corporate expense consists of unallocated selling, general and administrative expenses, as well as depreciation and amortization related to our corporate headquarters, centrally managed departments, unallocated insurance and benefit programs, certain foreign exchange transaction gains and losses, and other items. |
| (3) | See Note 5, Other Income / (Expense), net. |
4. Impairment and Other
| | Thirteen weeks ended | Twenty-six weeks ended | ||||||||||||||
| | July 29, | July 30, | July 29, | July 30, | ||||||||||||
| ($ in millions) | 2023 | 2022 | 2023 | 2022 | ||||||||||||
| Transformation consulting | $ | $ | $ | $ | ||||||||||||
| Impairment of long-lived assets and right-of-use assets | ||||||||||||||||
| Reorganization costs | ||||||||||||||||
| Acquisition and integration costs | ||||||||||||||||
| Other | ||||||||||||||||
| Total impairment and other | $ | $ | $ | $ | ||||||||||||
For the thirteen and twenty-six weeks ended July 29, 2023, we incurred $
NOTES TO THE UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
5. Other Income / (Expense), net
| | Thirteen weeks ended | Twenty-six weeks ended | ||||||||||||||
| July 29, | July 30, | July 29, | July 30, | |||||||||||||
| ($ in millions) | 2023 | 2022 | 2023 | 2022 | ||||||||||||
| Pension and postretirement net benefit expense, excluding service cost | $ | ( | ) | $ | $ | ( | ) | $ | ||||||||
| Foot Locker Singapore and Malaysia divestiture | ||||||||||||||||
| Share of earnings / (losses) related to minority investments | ( | ) | ||||||||||||||
| Team Sales divestiture | ||||||||||||||||
| Minority investment in Retailors, Ltd. | ( | ) | ( | ) | ||||||||||||
| Other | ( | ) | ||||||||||||||
| Total other income / (expense), net | $ | $ | $ | ( | ) | $ | ( | ) | ||||||||
Effective July 1, 2023, the Company sold its Foot Locker Singapore and Malaysia businesses, consisting primarily of inventory and fixed assets. We received proceeds of $
6. Cash, Cash Equivalents, and Restricted Cash
The table below provides a reconciliation of cash and cash equivalents, as reported on our Condensed Consolidated Balance Sheets, to cash, cash equivalents, and restricted cash, as reported on our Condensed Consolidated Statements of Cash Flows.
| | July 29, | July 30, | ||||||
| ($ in millions) | 2023 | 2022 | ||||||
| Cash and cash equivalents | $ | $ | ||||||
| Restricted cash included in other current assets | ||||||||
| Restricted cash included in other non-current assets | ||||||||
| Cash, cash equivalents, and restricted cash | $ | $ | ||||||
Amounts included in restricted cash primarily relate to amounts held in escrow in connection with various leasing arrangements in Europe and deposits held in insurance trusts to satisfy the requirement to collateralize part of the self-insured workers’ compensation and liability claims.
7. Accumulated Other Comprehensive Loss
Accumulated other comprehensive loss (“AOCL”), net of tax, is comprised of the following:
| | July 29, | July 30, | January 28, | |||||||||
| ($ in millions) | 2023 | 2022 | 2023 | |||||||||
| Foreign currency translation adjustments | $ | ( | ) | $ | ( | ) | $ | ( | ) | |||
| Hedge contracts | ( | ) | ( | ) | ( | ) | ||||||
| Unrecognized pension cost and postretirement benefit | ( | ) | ( | ) | ( | ) | ||||||
| | $ | ( | ) | $ | ( | ) | $ | ( | ) | |||
NOTES TO THE UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
7. Accumulated Other Comprehensive Loss (continued)
The changes in AOCL for the twenty-six weeks ended July 29, 2023 were as follows:
| | Foreign | | Items Related | | ||||||||||||
| | Currency | | to Pension and | |||||||||||||