1 SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM 8-K CURRENT REPORT Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 Date of Report (Date of earliest event reported): May 18, 2000 VENATOR GROUP, INC. (Exact name of registrant as specified in its charter) New York No. 1-10299 13-3513936 (State or other jurisdiction (Commission (IRS Employer of incorporation) File Number) Identification No.) 112 West 34th Street, New York, New York 10120 (Address of principal executive offices) (Zip Code) Registrant's telephone number, including area code: (212) 720-3700
2 Item 5. Other Events. On May 18, 2000 the Registrant reported sales and operating results for the quarter ended April 29, 2000. (See Exhibit 99, which, in its entirety, is incorporated herein by reference.) Item 7. Financial Statements and Exhibits. (c) Exhibits In accordance with the provisions of Item 601 of Regulation S-K, an index of exhibits is included in this Form 8-K on page 3. SIGNATURES 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 being hereunto duly authorized. VENATOR GROUP, INC. (Registrant) Date: May 19, 2000 By: /s/ Bruce L. Hartman Bruce L. Hartman Senior Vice President and Chief Financial Officer 2
3 VENATOR GROUP, INC. INDEX OF EXHIBITS FURNISHED IN ACCORDANCE WITH THE PROVISIONS OF ITEM 601 OF REGULATION S-K Exhibit No. in Item 601 of Regulation S-K Description ----------------- ----------- 99 News Release dated May 18, 2000 3
1 EXHIBIT 99 NEWS RELEASE CONTACT: Peter D. Brown Assistant Treasurer, Investor Relations Venator Group, Inc. (212) 720-4254 VENATOR GROUP REPORTS FIRST QUARTER RESULTS - - ADJUSTED NET INCOME FROM OPERATIONS OF $23 MILLION, OR $0.16 PER SHARE - - COMPARABLE-STORE SALES INCREASED 13.6 PERCENT - - ADJUSTED GROSS MARGIN RATE IMPROVED 390 BASIS POINTS - - DEBT, NET OF CASH, REDUCED BY $418 MILLION VERSUS PRIOR YEAR NEW YORK, New York, May 18, 2000 - Venator Group, Inc. (NYSE: Z) today reported adjusted net income from operations of $23 million, or $0.16 per share, for the quarter ended April 29, 2000 compared with $1 million, or $0.01 per share, last year. On a pre-tax basis, adjusted income from operations increased $35 million. Adjusted income from operations, before tax, excludes operating losses from non-core businesses and stores included in the accelerated store closing program of $12 million in 2000 and $19 million in 1999. Results of both periods include pre-tax real estate gains and other income of $10 million and $6 million in 2000 and 1999, respectively. Sales from adjusted operations for the 13 weeks ended April 29, 2000 were $1,072 million compared with $947 million in the year-earlier period, reflecting a comparable-store sales increase of 13.6 percent. Excluding the effect of foreign currency fluctuations, total adjusted sales for the quarter increased 14.5 percent. Adjusted gross margin from operations, as a percentage of sales, improved 390 basis points to 29.2 percent for the quarter, reflecting more favorable purchasing and a less promotional environment as compared with last year. Adjusted merchandise inventories decreased 2.8 percent to $766 million compared with $788 million a year ago. "We are encouraged with the first quarter results achieved by all of our operations," stated Dale W. Hilpert, Venator Group's Chairman and Chief Executive Officer. "Sales from all Athletic and Northern Group retail formats exceeded our plan. Our more-focused company continued to provide trend-right products to our mall-based customers. Additionally, sales of Footlocker.com, our direct-to-customer business, increased 16.7 percent to $57 million, which included $8 million of Internet-only sales." "Our inventory levels at the end of the first quarter were on plan. Enhanced control over merchandise inventories has significantly improved our sales productivity and positions us well for the balance of 2000." "Our financial position also improved," said Mr. Hilpert. "Debt, net of cash, of $363 million was reduced over $400 million from the corresponding prior year period. This reduction was the result of improved inventory management, tight expense controls, a focused capital expenditure program and proceeds from the sale of non-core businesses." The senior management team was realigned during the first quarter, with Dale W. Hilpert named Chairman of the Board and continuing in his role as Chief Executive Officer. Matthew D. Serra was promoted to President and Chief Operating Officer of the Corporation and elected to the Board of Directors. Mr. Serra's new role gives him responsibility for the athletic retail business. 4
2 The Company opened 16 stores and remodeled/relocated 23 stores during the quarter. Additionally, the Company closed 303 stores, of which 291 were shuttered as a part of the 1999 Restructuring Program. The Company's 2000 capital expenditure program continues to track on schedule. At April 29, 2000 the Company operated 4,403 stores from ongoing operations in 14 countries in North America, Europe and Australia. Results are presented on an adjusted basis to facilitate comparison. Adjusted comparisons exclude the operations and disposition of non-core businesses noted below and the operations of the accelerated store closings for all periods presented. The reported results for all operations are attached to this press release. Businesses disposed or held for disposal: Afterthoughts, San Francisco Music Box, Foot Locker Outlets, Colorado, Team Edition, Going To The Game, Randy River, Weekend Edition, Garden Centers, Burger King Franchises, Foot Locker Japan, Northern Getaway US and Northern Elements US. DISCLOSURE REGARDING FORWARD-LOOKING STATEMENTS This press release contains forward-looking statements, which reflect management's current views of future events and financial performance. These forward-looking statements are based on many assumptions and factors including the effects of currency fluctuations, consumer preferences, economic conditions worldwide and other factors detailed in the Company's filings with the Securities and Exchange Commission. Any changes in such assumptions or factors could produce significantly different results. -MORE- 5
3 The following adjusted results exclude the disposition and operations of several businesses, the operations of the accelerated store closings and the 1999 restructuring charges for all periods presented. VENATOR GROUP, INC. CONSOLIDATED STATEMENTS OF OPERATIONS - AS ADJUSTED (In millions, except per share amounts) 13 Weeks Ended --------------------------- April 29, May 1, (unaudited) 2000 1999 ------- ------- Sales $ 1,072 $ 947 Costs and expenses: Cost of sales 759 707 Selling, general and administrative 238 193 expenses Depreciation and amortization 40 41 Interest expense, net 9 11 Other income (10) (6) ------- ------- 1,036 946 ------- ------- Adjusted income from operations before income taxes 36 1 Income tax expense 13 -- ------- ------- Adjusted net income from operations $ 23 $ 1 ======= ======= Diluted Adjusted Earnings Per Share $ 0.16 $ 0.01 ======= ======= Weighted-average common shares outstanding assuming dilution 138.5 137.3 SUPPLEMENTAL INFORMATION - AS ADJUSTED 13 Weeks Ended --------------------------- April 29, May 1, (unaudited) 2000 1999 ------- ------- ADJUSTED SALES BY SEGMENT: Global Athletic Group: Retail Stores $ 952 $ 838 Direct to Customer 57 48 ------- ------- 1,009 886 Northern Group 63 61 ------- ------- Total $ 1,072 $ 947 ======= ======= ADJUSTED OPERATING RESULTS BY SEGMENT: Global Athletic Group: Retail Stores $ 68 $ 28 Direct to Customer (3) 4 ------- ------- 65 32 Northern Group (9) (10) ------- ------- Total $ 56 $ 22 ======= ======= 6
4 The following are the reported results: VENATOR GROUP, INC. CONSOLIDATED STATEMENTS OF OPERATIONS - AS REPORTED (In millions, except per share amounts) (unaudited) 13 Weeks Ended --------------------------- April 29, May 1, 2000 1999 ------- ------- Sales $ 1,108 $ 1,079 Costs and expenses: Cost of sales 787 791 Selling, general and administrative 258 256 expenses Depreciation and amortization 40 45 Interest expense, net 9 11 Other income (10) (6) ------- ------- 1,084 1,097 ------- ------- Income (loss) from continuing operations before income taxes 24 (18) Income tax expense (benefit) 9 (7) ------- ------- Income (loss) from continuing operations 15 (11) Cumulative effect of accounting change, net of income tax expense of $6 -- 8 ------- ------- Net income (loss) $ 15 $ (3) ======= ======= Diluted Earnings Per Share: Income (loss) from continuing operations $ 0.11 $ (0.08) Cumulative effect of accounting change -- 0.06 ======= ======= Net income (loss) $ 0.11 $ (0.02) ======= ======= Weighted-average common shares outstanding assuming dilution 138.5 136.7 - MORE - 7
5 VENATOR GROUP, INC. SUPPLEMENTAL INFORMATION - AS REPORTED (In millions) 13 Weeks Ended --------------------------- April 29, May 1, (unaudited) 2000 1999 ------- ------- SALES BY SEGMENT: Global Athletic Group: Retail Stores $ 963 $ 883 Direct to Customer 57 48 ------- ------- 1,020 931 Northern Group 70 69 Other 18 79 ======= ======= Total $ 1,108 $ 1,079 ======= ======= OPERATING RESULTS BY SEGMENT: Global Athletic Group: Retail Stores $ 65 $ 16 Direct to Customer (3) 4 ------- ------- 62 20 Northern Group (14) (17) Other (4) -- ======= ======= Total $ 44 $ 3 ======= ======= - MORE - 8
6 VENATOR GROUP, INC. CONDENSED CONSOLIDATED BALANCE SHEETS (In millions) April 29, May 1, 2000 1999 (unaudited) (unaudited) ------ ------ ASSETS CURRENT ASSETS Cash and cash equivalents $ 54 $ 13 Restricted cash 90 -- Merchandise inventories 766 889 Net assets of discontinued operations 13 101 Assets held for disposal 47 -- Other current assets 122 205 ------ ------ 1,092 1,208 Property and equipment, net 782 984 Deferred tax assets 315 357 Other assets 294 260 ------ ------ $2,483 $2,809 ====== ====== LIABILITIES AND SHAREHOLDERS' EQUITY CURRENT LIABILITIES Short-term debt $ 101 $ 274 Accounts payable 249 276 Accrued liabilities 218 218 Current portion of reserve for restructuring and discontinued operations 91 135 Current portion of long-term debt and obligations under capital leases 94 7 ------ ------ 753 910 Long-term debt and obligations under capital leases 312 513 Other liabilities 276 343 SHAREHOLDERS' EQUITY 1,142 1,043 ------ ------ $2,483 $2,809 ====== ====== - XXXX - 9