floc20230911_8k.htm
false 0000850209 0000850209 2023-11-29 2023-11-29
 
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): November 29, 2023
 
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.)
 
330 West 34th Street, New York, New York 10001
(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:
 
Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
 
Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
 
Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
 
Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))
 
Securities registered pursuant to Section 12(b) of the Act:
Title of each class
 
Trading Symbol(s)
 
Name of each exchange on
which registered
Common Stock, par value $0.01 per share
 
FL
 
New York Stock Exchange
 
Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).
 
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. ☐
 
 

 
 
Item 2.02.
Results of Operations and Financial Condition.
 
On November 29, 2023, Foot Locker, Inc. (the “Company”) issued a press release (the “Press Release”) announcing its third quarter 2023 financial and operating results. A copy of the Press Release is furnished as Exhibit 99.1 to this Current Report on Form 8-K, which, in its entirety, is incorporated herein by reference.
 
The Company is hosting a conference call on November 29, 2023 to discuss its third quarter 2023 financial and operating results, during which the Company will provide an update on the business.
 
The Company is making reference to financial measures not presented in accordance with U.S. generally accepted accounting principles (“GAAP”) in the Press Release, an investor presentation concerning its third quarter 2023 financial and operating results (the “Investor Presentation”), and a conference call. A reconciliation of these non-GAAP financial measures to the nearest comparable GAAP financial measures is contained in the Press Release. The Company believes these non-GAAP financial measures provide useful information to investors because they allow for a more direct comparison of its third quarter 2023 performance to its performance in the comparable prior-year period. The non-GAAP financial measures are 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.
 
The information contained in Item 2.02 of this Current Report on Form 8-K, including Exhibit 99.1, shall not be deemed “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 (the “Securities Act”), or the Exchange Act, except as expressly set forth by specific reference in such filing.
 
Item 7.01.
Regulation FD Disclosure.
 
In conjunction with the Press Release, the Company also made available the Investor Presentation. The Investor Presentation, which is available under the “Investor Relations” section of the Company’s corporate website, located at investors.footlocker-inc.com, is included as Exhibit 99.2 to this Current Report on Form 8-K, which, in its entirety, is incorporated herein by reference. Information on the Company’s corporate website is not, and will not be deemed to be, a part of this Current Report on Form 8-K or incorporated into any other filings the Company may make with the U.S. Securities and Exchange Commission.
 
The information contained in Item 7.01 of this Current Report on Form 8-K, including Exhibits 99.1 and 99.2, shall not be deemed “filed” for purposes of Section 18 of 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, 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 November 29, 2023.
99.2 Investor Presentation, dated November 29, 2023.
104 Cover Page Interactive Data File (embedded within the Inline XBRL document).
 
 

 
 
SIGNATURE
 
Pursuant to the requirements of the Exchange Act, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
 
 
FOOT LOCKER, INC.
   
Date: November 29, 2023
By:
/s/ Michael Baughn
    Name: Michael Baughn
    Title:
Executive Vice President and
Chief Financial Officer
 
 
ex_568547.htm

Exhibit 99.1

 
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N  E  W  S     R  E  L  E  A  S  E

 

Contacts:

Kate Fitzsimons

Investor Relations

ir@footlocker.com

(212) 720-4600

 

Olivia Mata

Corporate Communications

mediarelations@footlocker.com

(815) 763-3159

 

 

FOOT LOCKER, INC. REPORTS 2023 THIRD QUARTER RESULTS; NARROWS 2023 OUTLOOK

 

●   Total Sales Decreased 8.6%; Comparable-Store Sales Decreased 8.0%

●   EPS of $0.30 and Non-GAAP EPS of $0.30

●   Narrowing 2023 Sales and Earnings Guidance Range

●   Investing in Basketball with NBA Partnership and Home Court Initiative

●   Strategically Entering India with License Partners

 

NEW YORK, NY, November 29, 2023 – Foot Locker, Inc. (NYSE: FL), the New York-based specialty athletic retailer, today reported financial results for its third quarter ended October 28, 2023.

 

Mary Dillon, President and Chief Executive Officer, said, “We delivered third quarter results that were ahead of our expectations as strong execution and early progress against our Lace Up plan improved conversion trends across channels.  Looking forward, we are updating our outlook to reflect the momentum we have in our strategic initiatives into the fourth quarter, which includes strong results over the Thanksgiving week period, against the backdrop of ongoing consumer uncertainty.  As such, we are narrowing our 2023 outlook and still expect to end the year with inventory levels flat to down slightly, as compared with the prior year.”

 

Ms. Dillon continued, “As we move into the fourth quarter, we are thrilled to be partnering with the NBA as an official league marketing partner in the U.S. Combined with the recent rollout of our Home Court experience, we believe this will drive deeper engagement with our customers and cement Foot Locker’s leadership at the center of basketball and sneaker culture. We look forward to rounding out our reset year and building on our progress in 2024 and beyond, and we are confident we are on the right path to delivering longer-term shareholder value.”

 

Third Quarter Results

 

 

Total sales decreased by 8.6%, to $1,986 million, as compared with sales of $2,173 million in the third quarter of 2022. Excluding the effect of foreign exchange rate fluctuations, total sales for the third quarter decreased by 10.0%.

 

 

Comparable-store sales decreased by 8.0%, driven by ongoing consumer softness, changing vendor mix, and a 3% negative impact from the repositioning of Champs Sports.

 

Please refer to the Sales by Banner table below for detailed sales performance by banner and region.

 

 

Gross margin declined by 470 basis points as compared with the prior-year period, driven by higher markdowns as well as occupancy deleverage and higher shrink.

 

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SG&A increased by 100 basis points as a percentage of sales compared with the prior-year period, with savings from the cost optimization program more than offset by underlying deleverage on the sales decline, inflation, and investments in front-line wages and technology.

 

 

Net income was $28 million in the third quarter, as compared with net income of $96 million in the corresponding prior-year period. On a Non-GAAP basis, net income was $28 million, as compared with $121 million in the corresponding prior-year period.

 

 

For the quarter, the Company had earnings of $0.30 per share, as compared with $1.01 per share in the third quarter of 2022.  Non-GAAP earnings per share decreased to $0.30 per share, as compared with $1.27 per share in the corresponding prior-year period.

 

See the tables below for the reconciliation of Non-GAAP measures.

 

Balance Sheet

 

At quarter-end, the Company’s cash and cash equivalents totaled $187 million, while debt on its balance sheet was $449 million.

 

As of October 28, 2023, the Company’s merchandise inventories were $1.9 billion, 10.5% higher than at the end of the third quarter last year, including an approximate 6.0% impact from the strategic pull-forward of inventory into the third quarter to best position the Company for the upcoming holiday season. Excluding the effect of foreign currency fluctuations, merchandise inventories increased by 9.9% as compared with the third quarter of last year.

 

Dividend and Share Repurchases

 

During the third quarter of 2023, the Company paid a quarterly dividend of $0.40 per share for a total of $38 million. 

 

As previously announced, the Company has paused dividends to increase balance sheet flexibility in support of longer-term strategic initiatives.

 

The Company did not repurchase any shares during the third quarter.

 

Investing in Basketball Leadership

 

On November 16, 2023, Foot Locker and the National Basketball Association (NBA) announced a multi-year partnership under which Foot Locker will serve as an official league marketing partner in the U.S. This collaboration, which builds on a partnership history dating back to 1999, will enable Foot Locker to meaningfully engage with fans throughout the NBA season – including at marquee league events such as NBA All-Star – while celebrating the intersection of basketball and sneaker culture.

 

Foot Locker also will receive media exposure across league platforms, including on-court virtual signage during national broadcasts and on NBA social media channels. Additionally, the partnership will be extended to Foot Locker's loyalty program, FLX, providing additional connection points for customers throughout the season. 

 

In early November, Foot Locker rolled out its new global platform, The Heart of Sneakers, featuring a star-studded range of NBA talent including Nike’s Kevin Durant, adidas’ Anthony Edwards, Puma’s LaMelo Ball and Under Armour’s Steph Curry, in an engaging holiday campaign. The NBA partnership – supported by authentic brand campaigns – underscores Foot Locker’s rich history and longstanding connection to basketball and sneaker culture.

 

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Foot Locker also recently began rolling out its Home Court experience in select locations in the U.S. Home Court brings the excitement and passion of basketball to customers in a multi-branded concept designed with elevated merchandising and storytelling. By creating distinct, basketball-led experiences for its customers, as well as players, fans, creators and sneakerheads, Foot Locker is investing in its basketball leadership while also supporting category growth across its brand partners.

 

Announcing Entry into India

 

As part of its efforts to pursue growth through license partners in newer markets, while still focusing on core banners and regions, Foot Locker also announced today its entry into India in 2024.  The Company has entered into long-term licensing agreements with two strong operators in India – Metro Brands Limited (MBL), one of India’s largest footwear and accessories specialty retailers, and Nykaa Fashion, a highly curated fashion and ecommerce destination showcasing #FirstInFashion selections from both domestic and global brands, attracting over 17.6 million monthly visitors.  Under the terms of the agreements, MBL is granted exclusive rights to own and operate Foot Locker stores within India and to sell authorized merchandise in Foot Locker stores. Nykaa Fashion will be the exclusive ecommerce partner and will operate the Foot Locker India website as well as retail authorized merchandise on a Foot Locker branded shop on the Nykaa platform.

 

These agreements will enable Foot Locker to efficiently access the large and growing sneaker market in India, consistent with the Company’s efforts to strategically pursue growth opportunities in new markets, expand sneaker culture globally and bring Foot Locker’s elevated, multi-brand experiences and strong vendor partnerships to even more people around the world.

 

Store Base Update

 

During the third quarter, the Company opened 22 new stores, remodeled, or relocated 36 stores, and closed 14 stores. 

 

As of October 28, 2023, the Company operated 2,607 stores in 26 countries in North America, Europe, Asia, Australia, and New Zealand. In addition, 190 franchised stores were operating in the Middle East and Asia.

 

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2023 Financial Outlook

 

 

Fiscal year 2023 represents the 53 weeks ending February 3, 2024.  The Company’s full year 2023 outlook, which includes the 53rd week, is summarized in the table below.

 

Note the Company still intends to update the market on its longer-term financial targets and updated capital allocation plans when it reports fourth quarter results. 

 

Metric

Prior Full Year Guidance

Updated Full Year Guidance

Fourth Quarter Guidance

Commentary

Sales Change Down 8.0% to 9.0% Down 8.0% to 8.5% Down 2.0% to 4.0% Includes 1% annual lift from the 53rd week

Comparable Sales Change

Down 9.0% to 10.0%

Down 8.5% to 9.0%

Down 7.0% to 9.0%  
Store Count Change Down ~9% Down ~7%   Delayed timing of store closures

Square Footage Change

Down ~4%

Down ~2%    

Licensing Revenue

~$17 million

~$15 million

~$5 million  

Gross Margin

27.8% to 28.0%

27.8%-27.9%

27.0% to 27.2%

 

SG&A Rate

22.7% to 22.9%

22.8%-22.9%

22.7% to 23.0%  

D&A

~$203 million

~$200 million

~$50 million  

Interest

~$12 million

~$11 million

~$4 million  

Non-GAAP Tax Rate

~33.0%

~36.0%

~33.0%-34.0%  

Non-GAAP EPS

$1.30-$1.50

$1.30-$1.40

$0.26-$0.36

Includes $0.11 from the 53rd week

Adj. Capital Expenditures*

~$290 million

~$275 million 

 

Project timing

* Adjusted Capex includes capitalized Technology expense

 

The Company provides earnings guidance only on a non-GAAP basis and does not provide a reconciliation of the Company’s forward-looking capital expenditures and diluted earnings per share guidance to the most directly comparable GAAP financial measures because of the inherent difficulty in forecasting and quantifying certain amounts that are necessary for such reconciliations.

 

 

Conference Call and Webcast

The Company is hosting a live conference call at 9:00 a.m. ET today, November 29, 2023, to review these results and provide an update on the business. An investor presentation will be available under the Investor Relations section of the Company’s corporate website before the start of the conference call. This conference call may be accessed live by calling toll-free 1-844-701-1163 or international toll 1-412-317-5490, or via the Investor Relations section of footlocker-inc.com. Please log on to the website 15 minutes prior to the call to register. An archived replay of the conference call can be accessed approximately one hour following the end of the call at 1-877-344-7529 in the U.S., 1-855-669-9658 in Canada, and 1-412-317-0088 internationally with passcode 5718718 through December 13, 2023. A replay of the call will also be available via webcast from footlocker-inc.com.

 

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Disclosure Regarding Forward-Looking Statements

 

This press release 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, financial outlook, and other such matters, are forward-looking statements. These forward-looking statements are based on many assumptions and factors, which are detailed in the Companys filings with the U.S. Securities and Exchange Commission.

 

These forward-looking statements are based largely on our expectations and judgments and are subject to a number of risks and uncertainties, many of which are unforeseeable and beyond our control. For additional discussion regarding risks and uncertainties that may affect forward-looking statements, see Risk Factors disclosed in the Companys Annual Report on Form 10-K for the year ended January 28, 2023, filed on March 27, 2023. Any changes in such assumptions or factors could produce significantly different results. The Company undertakes no obligation to update the forward-looking statements, whether as a result of new information, future events, or otherwise.

 

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Condensed Consolidated Statements of Operations

(unaudited)

 

Periods ended October 28, 2023 and October 29, 2022

(In millions, except per share amounts)

 

   

Third Quarter

   

Year-to-Date

 
   

2023

   

2022

   

2023

   

2022

 

Sales

  $ 1,986     $ 2,173     $ 5,774     $ 6,413  

Licensing revenue

    3       3       10       9  

Total revenue

    1,989       2,176       5,784       6,422  

                       

Cost of sales

    1,443       1,477       4,149       4,323  

Selling, general and administrative expenses

    446       467       1,319       1,382  

Depreciation and amortization

    47       52       148       157  

Impairment and other

    6       20       59       38  

Income from operations

    47       160       109       522  

                       

Interest expense, net

    (2 )     (3 )     (7 )     (13 )

Other income / (expense), net

    2       (14 )     (1 )     (33 )

Income before income taxes

    47       143       101       476  

Income tax expense

    19       47       42       154  

Net income

    28       96       59       322  

Net loss attributable to noncontrolling interests

                      1  

Net income attributable to Foot Locker, Inc.

  $ 28     $ 96     $ 59     $ 323  
                 

Diluted earnings per share

  $ 0.30     $ 1.01     $ 0.63     $ 3.38  

Weighted-average diluted shares outstanding

    94.7       94.7       94.9       95.7  

 

Non-GAAP Financial Measures

 

In addition to reporting the Company’s financial results in accordance with generally accepted accounting principles (“GAAP”), the Company reports certain financial results that differ from what is reported under GAAP. Non-GAAP financial measures that will be presented will exclude (i) gains or losses related to our minority investments, (ii) impairments and other, and (iii) certain tax matters that we believe are nonrecurring or unusual in nature.

 

Certain financial measures are identified as non-GAAP, such as sales changes excluding foreign currency fluctuations, adjusted income before income taxes, adjusted net income, and adjusted diluted earnings per share. We present certain amounts as excluding the effects of foreign currency fluctuations, which are also considered non-GAAP measures. Where amounts are expressed as excluding the effects of foreign currency fluctuations, such changes are determined by translating all amounts in both years using the prior-year average foreign exchange rates. Presenting amounts on a constant currency basis is useful to investors because it enables them to better understand the changes in our business that are not related to currency movements.

 

These non-GAAP measures are presented because we believe they assist investors in comparing our performance across reporting periods on a consistent basis by excluding items that we do not believe are indicative of our core business or affect comparability. In addition, these non-GAAP measures are useful in assessing our progress in achieving our long-term financial objectives and are consistent with how executive compensation is determined.

 

We estimate the tax effect of all non-GAAP adjustments by applying a marginal tax rate to each item. The income tax items represent the discrete amount that affected the period. The non-GAAP financial information is provided in addition, and not as an alternative, to our reported results prepared in accordance with GAAP. The various non-GAAP adjustments are summarized in the tables below.

 

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Non-GAAP Reconciliation

(unaudited)

 

Periods ended October 28, 2023 and October 29, 2022

(In millions, except per share amounts) 

 

Reconciliation of GAAP to non-GAAP results:

 

   

Third Quarter

   

Year-to-Date

 
   

2023

   

2022

   

2023

      2022  

Pre-tax income:

                               

Income before income taxes

  $ 47     $ 143     $ 101     $ 476  

Pre-tax adjustments excluded from GAAP:

 

                         

Impairment and other (1)

    6       20       59       38  

Other income / expense (2)

    (5 )     14       (6 )     32  

Adjusted income before income taxes (non-GAAP)

  $ 48     $ 177     $ 154     $ 546  
                                 

After-tax income:

                               

Net income attributable to Foot Locker, Inc.

  $ 28     $ 96     $ 59     $ 323  

After-tax adjustments excluded from GAAP:

 

                         

Impairment and other, net of income tax benefit of $2, $5, $11, and $10 million, respectively (1)

    4       15       48       28  

Other income / expense, net of income tax (expense)/benefit of $(1), $4, $(1), and $7 million, respectively (2)

    (4 )     10       (5 )     25  

Tax reserves benefit / charge (3)

                (4 )     5  

Adjusted net income (non-GAAP)

  $ 28     $ 121     $ 98     $ 381  

 

   

Third Quarter

   

Year-to-Date

 
   

2023

   

2022

   

2023

   

2022

 

Earnings per share:

                               

Diluted earnings per share

  $ 0.30     $ 1.01     $ 0.63     $ 3.38  

Diluted EPS amounts excluded from GAAP:

                               

Impairment and other (1)

    0.04       0.16       0.51       0.29  

Other income / expense (2)

    (0.04 )     0.10       (0.06 )     0.26  

Tax reserves benefit / charge (3)

                (0.04 )     0.05  

Adjusted diluted earnings per share (non-GAAP)

  $ 0.30     $ 1.27     $ 1.04     $ 3.98  

 

Notes on Non-GAAP Adjustments:

 

(1)

For the third quarter of 2023, impairment and other included $7 million of reorganization costs, primarily related to severance and transformation consulting expense of $1 million. Additionally in the quarter, we recorded a $3 million net benefit from the settlement of lease obligations associated with Sidestep stores, partially offset by impairment on atmos U.S. assets of $1 million. For year-to-date 2023, impairment and other included transformation consulting expense of $27 million, impairment charges of $19 million, primarily accelerated tenancy charges on right-of-use assets for the closures of the Sidestep banner and certain Foot Locker Asia stores, and $12 million of reorganization costs, related to severance and the closure of the Sidestep banner, certain Foot Locker Asia stores, and a North American distribution center.

For the third quarter of 2022, impairment and other charges included $17 million of transformation consulting, $2 million of severance costs for the closure of a North American distribution center, and $1 million of acquisition integration costs. For year-to-date 2022, impairment and other charges included $27 million of transformation consulting, $5 million of impairment of long-lived assets and right-of-use assets and accelerated tenancy charges, $4 million of acquisition integration costs, and $2 million of severance costs related to the distribution center closure.

 

(2)

For the third quarter of 2023, other income / expense consisted of a $3 million gain from the sale of a North American corporate office property and an additional $2 million gain from the second quarter sale of our Singapore and Malaysian Foot Locker businesses to our license partner. The 2023 year-to-date period also included $1 million of our share of losses related to equity method investments. 

Other income / expense for the third quarter of 2022 primarily consisted of a $15 million loss on minority investments, primarily due to a change in fair value of the investment in Retailors, Ltd., a publicly-listed entity, partially offset by an additional $1 million gain on the divestiture of the Team Sales business that occurred in the second quarter. The year-to-date 2022 amount includes $52 million of losses on minority investments, primarily from Retailors, Ltd., a $19 million gain on the Team Sales business divestiture, and $1 million of dividend income.

 

(3)

In the first quarter of 2023, the Company recorded a $4 million benefit related to income tax reserves due to a statute of limitations release. In the second quarter of 2022, the Company recorded a $5 million charge related to income tax reserves due to the resolution of a foreign tax settlement. 

 

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Sales by Banner

(unaudited)

 

Periods ended October 28, 2023 and October 29, 2022

(In millions)

 

   

Third Quarter

   

Year-to-Date

 
   

2023

   

2022

   

Constant Currencies

   

Comparable Sales

   

2023

   

2022

   

Constant Currencies

   

Comparable Sales

 

Foot Locker

  $ 796     $ 852       (6.5 )%     (4.9 )%   $ 2,244     $ 2,411       (6.5 )%     (5.0 )%

Champs Sports

    311       406       (23.4 )     (20.9 )     932       1,266       (26.1 )     (23.6 )

Kids Foot Locker

    189       181       4.4       5.0       502       516       (2.7 )     (2.4 )

WSS

    163       162       0.6       (9.4 )     458       438       4.6       (7.0 )

Other

    1       21       n.m.       n.m.       1       111       n.m.       n.m.  

North America

    1,460       1,622       (10.0 )     (9.5 )     4,137       4,742       (12.5 )     (11.5 )

Foot Locker

    407       392       (5.6 )     (3.9 )     1,202       1,173       (0.6 )     (1.3 )

Sidestep

          20       n.m.       n.m.       26       69       (63.8 )     (38.3 )

EMEA

    407       412       (10.2 )     (4.2 )     1,228       1,242       (4.1 )     (2.5 )

Foot Locker

    81       99       (16.2 )     (1.2 )     281       292       -       6.3  

atmos

    38       40       5.0       0.8       128       137       (0.7 )     (2.8 )

Asia Pacific

    119       139       (10.1 )     (0.5 )     409       429       (0.2 )     3.4  

Total

  $ 1,986     $ 2,173       (10.0

)%

    (8.0

)%

  $ 5,774     $ 6,413       (10.0

)%

    (8.9

)%

 

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Condensed Consolidated Balance Sheets

(unaudited)

(In millions)

 

   

October 28,

   

October 29,

 
   

2023

   

2022

 

ASSETS

               
                 

Current assets:

               

Cash and cash equivalents

  $ 187     $ 351  

Merchandise inventories

    1,862       1,685  

Other current assets

    325       302  
      2,374       2,338  

Property and equipment, net

    884       897  

Operating lease right-of-use assets

    2,182       2,449  

Deferred taxes

    91       65  

Goodwill

    763       764  

Other intangible assets, net

    407       424  

Minority investments

    630       722  

Other assets

    89       103  
    $ 7,420     $ 7,762  
                 

LIABILITIES AND SHAREHOLDERS' EQUITY

               
                 

Current liabilities:

               

Accounts payable

  $ 593     $ 522  

Accrued and other liabilities

    369       455  

Current portion of long-term debt and obligations under finance leases

    6       6  

Current portion of lease obligations

    491       539  
      1,459       1,522  

Long-term debt and obligations under finance leases

    443       448  

Long-term lease obligations

    1,994       2,212  

Other liabilities

    319       321  

Total liabilities

    4,215       4,503  

Total shareholders' equity

    3,205       3,259  
    $ 7,420     $ 7,762  

 

-MORE-

 

 

https://cdn.kscope.io/1f9175de1067e04bd4aa3259f1645a2f-a002.jpg

 

Condensed Consolidated Statement of Cash Flows

(unaudited)

(In millions)

 

 

Thirty-nine weeks ended

 

 

October 28,

   

October 29,

 

($ in millions)

 

2023

   

2022

 

From operating activities:

               

Net income

  $ 59     $ 322  

Adjustments to reconcile net income to net cash from operating activities:

               

Non-cash impairment and other

    20       5  

Fair value adjustments to minority investments

          52  

Depreciation and amortization

    148       157  

Deferred income taxes

    (5 )     14  

Share-based compensation expense

    9       25  

Gain on sales of businesses

    (4 )     (19 )

Gain on sale of property

    (3 )      

Change in assets and liabilities:

               

Merchandise inventories

    (249 )     (466 )

Accounts payable

    110       (58 )

Accrued and other liabilities

    (131 )     (46 )

Other, net

    (52 )     (18 )

Net cash used in operating activities

    (98 )     (32 )

From investing activities:

               

Capital expenditures

    (165 )     (218 )

Purchase of business, net of cash acquired

          (18 )

Minority investments

    (2 )     (5 )

Proceeds from sales of businesses

    16       47  

Proceeds from minority investments

          12  

Proceeds from sale of property

    6        

Net cash used in investing activities

    (145 )     (182 )

From financing activities:

               

Dividends paid on common stock

    (113 )     (113 )

Purchase of treasury shares

          (129 )

Payment of obligations under finance leases

    (5 )     (5 )

Shares of common stock repurchased to satisfy tax withholding obligations

    (10 )     (1 )

Treasury stock reissued under employee stock plan

    3       3  

Proceeds from exercise of stock options

    5       4  

Contribution from non-controlling interest

          4  

Net cash used in financing activities

    (120 )     (237 )

Effect of exchange rate fluctuations on cash, cash equivalents, and restricted cash

    4       (6 )

Net change in cash, cash equivalents, and restricted cash

    (359 )     (457 )

Cash, cash equivalents, and restricted cash at beginning of year

    582       850  

Cash, cash equivalents, and restricted cash at end of period

  $ 223     $ 393  

 

-MORE-

 

 

https://cdn.kscope.io/1f9175de1067e04bd4aa3259f1645a2f-a002.jpg

 

Store Count and Square Footage

(unaudited)

 

Store activity is as follows:

 

   

January 28,

                   

October 28,

   

Relocations/

 
   

2023

   

Opened

   

Closed

   

2023

   

Remodels

 

Foot Locker U.S.

    747       2       9       740       24  

Foot Locker Canada

    86             2       84       4  

Champs Sports

    486       1       12       475       6  

Kids Foot Locker

    394       2       4       392       9  

WSS

    115       16       2       129        

Footaction

    2             1       1        

North America

    1,830       21       30       1,821       43  

Foot Locker Europe (1)

    644       24       26       642       17  

Sidestep

    78             78              

EMEA

    722       24       104       642       17  

Foot Locker Pacific

    94       4       1       97       10  

Foot Locker Asia

    33             20       13        

atmos

    35       1       2       34        

Asia Pacific

    162       5       23       144       10  

Total

    2,714       50       157       2,607       70  

 

Selling and gross square footage are as follows:

 

 

October 29, 2022

October 28, 2023

(in thousands)

Selling

Gross

Selling

Gross

Foot Locker U.S.

  2,382   4,105   2,383   4,063

Foot Locker Canada

  248   408   250   412

Champs Sports

  1,879   2,940   1,778   2,792

Kids Foot Locker

  751   1,267   760   1,271

WSS

  1,067   1,341   1,332   1,600

Footaction

  29   51   3   6

North America

  6,356   10,112   6,506   10,144

Foot Locker Europe (1)

  1,148   2,371   1,190   2,433

Sidestep

  100   189   -   -

EMEA

  1,248   2,560   1,190   2,433

Foot Locker Pacific

  204   315   235   356

Foot Locker Asia

  126   233   52   98

atmos

  37   66   35   61

Asia Pacific

  367   614   322   515

Total

  7,971   13,286   8,018   13,092

 

(1)  Includes 16 and 14 Kids Foot Locker stores, and the related square footage, operating in Europe for January 28, 2023 and October 28, 2023, respectively.

 

- END -

 
Image Exhibit

Exhibit 99.2

 

 

 

https://cdn.kscope.io/1f9175de1067e04bd4aa3259f1645a2f-a01.jpg

 

 

 

 
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