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 18, 2010
Foot Locker, Inc.
(Exact Name of Registrant as Specified in its Charter)
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New York |
1-10299 |
13-3513936 |
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(State
or other Jurisdiction |
(Commission File Number) |
(I.R.S.
Employer |
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112 West 34th Street, New York, New York |
10120 |
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(Address of Principal Executive Offices) |
(Zip Code) |
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Registrant’s telephone number, including area code: 212-720-3700
Former Name/Address
(Former name or former address, if changed from 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:
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Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) |
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Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) |
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Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) |
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Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) |
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Item 2.02. |
Results of Operation and Financial Condition |
On November 18, 2010, Foot Locker, Inc. (the “Company”) issued a press release announcing its operating results for the third quarter of 2010. The press release includes a non-GAAP financial measure of third quarter and year-to-date 2009 net income before an impairment charge, which the Company believes provides a useful measure to investors because it allows for a more direct comparison of the Company’s performance for the third quarter and year-to-date 2010 to the Company’s performance in the comparable prior-year periods. The non-GAAP financial measure is provided in addition to, and not as an alternative for, the Company’s reported results prepared in accordance with GAAP. A reconciliation schedule of net income from a GAAP-reported basis to a non-GAAP basis is provided in the release.
A copy of the press release is furnished as Exhibit 99.1, which, in its entirety, is incorporated herein by reference.
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Item 9.01. |
Financial Statements and Exhibits |
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(c) |
Exhibits |
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99.1 |
Press Release of Foot Locker, Inc. dated November 18, 2010 reporting operating results for the third quarter of 2010. |
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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.
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FOOT
LOCKER, INC. |
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Date: November 18, 2010 |
By: |
/s/ Robert W. McHugh |
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Executive Vice President and |
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EXHIBIT 99.1 |
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NEWS RELEASE |
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Contact: |
Peter D. Brown |
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Senior Vice President, |
FOOT LOCKER, INC. REPORTS THIRD QUARTER RESULTS
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Earnings of $0.33 Per Share |
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Comp-Store Sales Increase 8.1 percent |
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Gross Margin Rate Increases 320 basis points |
NEW YORK, NY, November 18, 2010 – Foot Locker, Inc. (NYSE: FL), the New York-based specialty athletic retailer, today reported financial results for its third quarter ended October 30, 2010.
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Third Quarter Results |
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Net income for the Company’s third quarter ended October 30, 2010 was $52 million, or $0.33 per share. This compares with a net loss of $6 million, or $0.04 per share, in the prior-year period, which included impairment charges of $22 million, after tax, or $0.14 per share. Excluding the impairment charges, net income for the third quarter of 2009 was $16 million, or $0.10 per share. |
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Third quarter sales increased 5.4 percent, to $1,280 million this year, compared with sales of $1,214 million for the corresponding prior-year period. Comparable-store sales increased 8.1 percent in the third quarter. Excluding the effect of foreign currency fluctuations, total sales for the thirteen-week period increased 7.0 percent. |
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“The more than tripling of our third quarter earnings per share versus our adjusted third quarter earnings in 2009 was driven by the combination of strong comparable-store sales growth and gross margin rate expansion,” stated Ken C. Hicks, Foot Locker, Inc.’s Chairman and Chief Executive Officer. “These improving results reflect the hard work of our associates worldwide as the organization continues to implement the initiatives outlined in our new strategic plan. It is encouraging that our increased sales and earnings reflect meaningful improvements in each of our operating divisions in the U.S., as well as in our largest international markets.” |
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Year-to-Date Results |
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For the first nine months of the year, the Company reported net income of $112 million, or $0.71 per share. This compares with net income of $25 million, or $0.16 per share, in last year’s period, which included impairment charges of $22 million, after tax, or $0.14 per share. Before the impairment charges, net income for the 2009 nine-month period was $47 million, or $0.30 per share. |
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Year-to-date sales increased 3.6 percent to $3,657 million compared with sales of $3,529 million last year. Comparable-store sales increased 5.2 percent. Excluding the effect of foreign currency fluctuations, total sales for the thirty-nine week period increased 3.8 percent. |
- MORE -
Foot Locker, Inc. 112 West 34th Street, New York, NY 10120
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Financial Position |
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The Company’s merchandise inventory at the end of the third quarter was $1,202 million, or 2.1 percent lower than at the end of the third quarter last year. |
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During the third quarter of 2010, the Company repurchased 1,135,000 shares of its common stock for $16.2 million under the Company’s $250 million share repurchase program. Year-to-date, the Company has repurchased 2.5 million shares of its common stock for $35.9 million and paid quarterly dividends to shareholders totaling $70 million. In September 2010, the Company also made a $30 million contribution to its U.S. defined benefit pension plan. |
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At October 30, 2010, the Company’s cash and short-term investments totaled $541 million while the debt on its balance sheet was $137 million. The Company’s total cash position, net of debt, was $104 million higher than the same time last year. |
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Store Base Update |
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The Company opened 35 new stores, remodeled or relocated 135 stores, and closed 61 stores during the first nine months of this year. At October 30, 2010, the Company operated 3,474 stores in 21 countries in North America, Europe and Australia. In addition, 24 franchised stores are currently operating in the Middle East and South Korea. |
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The Company is hosting a live conference call at 9:00 a.m. (ET) on Friday, November 19, 2010 to discuss these results. This conference call may be accessed live from the Investor Relations section of the Foot Locker, Inc. website at http://www.footlocker-inc.com. The conference call will be available for webcast replay until 5:00 p.m. on Friday, November 26, 2010. |
Disclosure Regarding Forward-Looking Statements
This report contains forward-looking statements within the meaning of the federal securities laws. All statements, other than statements of historical facts, which address activities, events or developments that the Company expects or anticipates will or may occur in the future, including, but not limited to, such things as future capital expenditures, expansion, strategic plans, 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 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, further deterioration of global financial markets, economic conditions worldwide, further 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 plans and strategic plans effectively with regard to each of its business units, and risks associated with foreign global sourcing, including political instability, changes in import regulations, and disruptions to transportation services and distribution. 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.
- MORE -
FOOT LOCKER, INC.
Condensed Consolidated Statements of Operations
(unaudited)
Periods ended October 30, 2010 and October 31, 2009
(In millions,
except per share amounts)
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Third Quarter |
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Third Quarter |
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Sales |
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$ |
1,280 |
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$ |
1,214 |
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Cost of sales |
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892 |
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885 |
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Selling, general and administrative expenses |
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287 |
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274 |
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Depreciation and amortization |
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27 |
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29 |
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Impairment charges |
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— |
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36 |
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Interest expense, net |
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2 |
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3 |
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Other (income) |
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(1 |
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— |
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1,207 |
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1,227 |
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Income (loss) before income taxes |
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73 |
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(13 |
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Income tax expense (benefit) (1) |
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21 |
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(7 |
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Net income (loss) |
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$ |
52 |
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$ |
(6 |
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Diluted EPS: |
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Net income (loss) |
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$ |
0.33 |
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$ |
(0.04 |
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Weighted-average diluted shares outstanding |
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156.2 |
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156.4 |
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Year-To-Date |
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Year-To-Date |
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Sales |
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$ |
3,657 |
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$ |
3,529 |
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Cost of sales |
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2,571 |
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2,564 |
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Selling, general and administrative expenses |
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835 |
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804 |
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Depreciation and amortization |
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79 |
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85 |
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Impairment charge |
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— |
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36 |
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Interest expense, net |
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7 |
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8 |
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Other (income) |
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(2 |
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(2 |
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3,490 |
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3,495 |
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Income from continuing operations before income taxes |
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167 |
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34 |
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Income tax expense (1) |
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55 |
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10 |
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Income from continuing operations |
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112 |
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24 |
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Discontinued operations, net of tax |
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— |
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1 |
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Net income |
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$ |
112 |
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$ |
25 |
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Diluted EPS: |
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Income from continuing operations |
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$ |
0.71 |
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$ |
0.16 |
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Discontinued operations, net of tax |
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— |
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— |
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Net income |
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$ |
0.71 |
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$ |
0.16 |
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Weighted-average diluted shares outstanding |
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156.8 |
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156.1 |
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(1) |
Third quarter and year-to-date results include benefits for income tax audit adjustments of $7 million, or $0.04 per share, in 2010 and $1 million, or $0.01 per share, in 2009. |
- MORE -
Reconciliation of Net Income from a GAAP-reported basis to a non-GAAP basis
(unaudited)
Periods ended October 30, 2010 and October 31, 2009
(In
millions, except per share amounts)
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Third Quarter |
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Third Quarter |
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Net income (loss): |
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GAAP basis |
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$ |
52 |
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$ |
(6 |
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Additions, after tax: |
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Impairment charge (1) |
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— |
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22 |
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Non-GAAP adjusted basis |
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$ |
52 |
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$ |
16 |
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Net income (loss) per share: |
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GAAP basis |
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$ |
0.33 |
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$ |
(0.04 |
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Additions, after tax: |
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Impairment charge (1) |
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— |
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0.14 |
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Non-GAAP adjusted basis |
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$ |
0.33 |
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$ |
0.10 |
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Year-To-Date |
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Year-To-Date |
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Net income: |
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GAAP basis |
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$ |
112 |
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$ |
25 |
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Additions, after tax: |
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Impairment charge (1) |
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— |
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22 |
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Non-GAAP adjusted basis |
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$ |
112 |
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$ |
47 |
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Net income per share: |
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GAAP basis |
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$ |
0.71 |
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$ |
0.16 |
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Additions, after tax: |
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Impairment charge (1) |
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— |
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0.14 |
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Non-GAAP adjusted basis |
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$ |
0.71 |
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$ |
0.30 |
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(1) |
2009 amount includes the write-down of long lived assets. |
- MORE -
FOOT LOCKER, INC.
Condensed Consolidated Balance Sheets
(unaudited)
(In millions)
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October 30, |
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October 31, |
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Assets |
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CURRENT ASSETS |
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Cash, cash equivalents and short-term investments |
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$ |
541 |
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$ |
438 |
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Merchandise inventories |
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1,202 |
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1,228 |
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Other current assets |
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162 |
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216 |
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1,905 |
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1,882 |
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Property and equipment, net |
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387 |
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400 |
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Deferred tax assets |
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324 |
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376 |
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Other assets |
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296 |
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305 |
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$ |
2,912 |
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$ |
2,963 |
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Liabilities and Shareholders’ Equity |
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CURRENT LIABILITIES |
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Accounts payable |
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$ |
286 |
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$ |
276 |
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Accrued and other liabilities |
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263 |
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202 |
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549 |
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478 |
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Long-term debt and obligations under capital leases |
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137 |
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138 |
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Other liabilities |
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248 |
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365 |
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SHAREHOLDERS’ EQUITY |
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1,978 |
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1,982 |
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$ |
2,912 |
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$ |
2,963 |
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- MORE -
FOOT LOCKER, INC.
Stores and Estimated Square Footage
(unaudited)
(Square footage in thousands)
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October 30, |
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October 31, |
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November 1, |
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Foot Locker U.S. |
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Number of stores |
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1,152 |
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1,198 |
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1,240 |
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Gross square footage |
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4,633 |
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4,860 |
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5,055 |
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Selling square footage |
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2,744 |
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2,878 |
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3,014 |
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Footaction |
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Number of stores |
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312 |
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323 |
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341 |
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Gross square footage |
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1,439 |
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1,498 |
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1,589 |
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Selling square footage |
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904 |
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940 |
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985 |
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Lady Foot Locker |
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Number of stores |
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399 |
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466 |
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|
507 |
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Gross square footage |
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|
882 |
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|
1,028 |
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1,123 |
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Selling square footage |
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|
506 |
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|
588 |
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|
640 |
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Kids Foot Locker |
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Number of stores |
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302 |
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304 |
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|
314 |
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Gross square footage |
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|
724 |
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|
725 |
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|
759 |
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Selling square footage |
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|
421 |
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|
426 |
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|
448 |
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Champs Sports |
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Number of stores |
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547 |
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|
564 |
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|
575 |
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Gross square footage |
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2,919 |
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3,016 |
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3,107 |
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Selling square footage |
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1,938 |
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|
2,002 |
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|
2,088 |
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CCS |
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Number of stores |
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12 |
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|
2 |
|
|
— |
|
|
Gross square footage |
|
|
31 |
|
|
6 |
|
|
— |
|
|
Selling square footage |
|
|
20 |
|
|
4 |
|
|
— |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Foot Locker International |
|
|
|
|
|
|
|
|
|
|
|
Number of stores |
|
|
750 |
|
|
744 |
|
|
737 |
|
|
Gross square footage |
|
|
2,168 |
|
|
2,161 |
|
|
2,150 |
|
|
Selling square footage |
|
|
1,099 |
|
|
1,098 |
|
|
1,099 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total Stores Operated |
|
|
|
|
|
|
|
|
|
|
|
Number of stores |
|
|
3,474 |
|
|
3,601 |
|
|
3,714 |
|
|
Gross square footage |
|
|
12,796 |
|
|
13,294 |
|
|
13,783 |
|
|
Selling square footage |
|
|
7,632 |
|
|
7,936 |
|
|
8,274 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total Franchised Stores |
|
|
|
|
|
|
|
|
|
|
|
Number of stores |
|
|
24 |
|
|
20 |
|
|
16 |
|
|
Gross square footage |
|
|
87 |
|
|
74 |
|
|
63 |
|
|
Selling square footage |
|
|
57 |
|
|
50 |
|
|
42 |
|
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