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): August 17, 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 August 17, 2000 the Registrant reported operating results for the quarter ended July 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: August 18, 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 August 17, 2000 3
1 EXHIBIT 99 NEWS RELEASE CONTACT: Peter D. Brown Assistant Treasurer, Investor Relations Venator Group, Inc. (212) 720-4254 VENATOR GROUP REPORTS SECOND QUARTER RESULTS - - ADJUSTED EARNINGS PER SHARE INCREASED 80 PERCENT TO $0.09 - - COMPARABLE-STORE SALES INCREASED 10.5 PERCENT - - ADJUSTED GROSS MARGIN RATE IMPROVED 270 BASIS POINTS - - DEBT, NET OF CASH, REDUCED BY $388 MILLION VERSUS PRIOR YEAR NEW YORK, New York, August 17, 2000 - Venator Group, Inc. (NYSE: Z) today reported adjusted net income from operations of $12 million, or $0.09 per share, for the quarter ended July 29, 2000 compared with $7 million, or $0.05 per share, last year. Included in adjusted net income were real estate gains of $0.02 per share in 2000 and $0.11 per share in 1999. Sales from adjusted operations for the 13 weeks ended July 29, 2000 were $1,014 million compared with $922 million in the year-earlier period, reflecting a comparable-store sales increase of 10.5 percent. Excluding the effect of foreign currency fluctuations, total adjusted sales for the quarter increased 11.4 percent. Adjusted gross margin from operations, as a percentage of sales, improved 270 basis points to 28.8 percent for the quarter, reflecting more favorable purchasing and less inventory clearance activity as compared with last year. This improvement also reflects lower occupancy and buying costs, as a percentage of sales, versus the prior-year period. "We continue to be encouraged by the results achieved by all of our operations during the second quarter of 2000," stated Dale W. Hilpert, Venator Group's Chairman and Chief Executive Officer. "Operating results from all Athletic and Northern Group retail store formats exceeded our plan. Additionally, sales from Footlocker.com, our direct-to-customer business, continued to perform above management's expectations, increasing 24 percent to $47 million, which included $8 million of Internet-only sales. We continue to grow this new channel of distribution while maintaining a tight control over our investment." Comparable-store sales from adjusted operations for the 26 week period ended July 29, 2000 increased 12.0 percent. Adjusted net income for the first half rose to $0.25 per share from $0.06 per share last year. Included in adjusted net income were real estate gains and other income of $0.07 per share in 2000 and $0.14 per share in 1999. Debt, net of cash, of $385 million was reduced by almost $400 million from the corresponding prior-year period. This reduction was the result of improved profitability, a focused capital expenditure program, and proceeds from the sale of non-core businesses and real estate. "Sales results from all operations exceeded our plan for the first half of 2000," said Mr. Hilpert. "More importantly, the flow through to operating profit from increased sales was particularly strong as we improved our gross margin rate and maintained tight control over expenses. Additionally, we continued to improve our financial flexibility by significantly reducing debt levels and financial leverage." 4
2 The Company opened 5 stores and remodeled/relocated 43 stores during the quarter. Additionally, the Company closed 69 stores, of which 45 were shuttered as a part of the 1999 Restructuring Program and competitively repositioning the Northern Group. The Company's 2000 capital expenditure program continues to track on schedule. At July 29, 2000 the Company operated 4,339 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, 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 VENATOR GROUP, INC. CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED) PERIODS ENDED JULY 29, 2000 AND JULY 31, 1999 (In millions, except per share amounts) THE FOLLOWING ADJUSTED RESULTS EXCLUDE THE DISPOSITION AND OPERATIONS OF SEVERAL BUSINESSES, THE OPERATIONS OF THE ACCELERATED STORE CLOSINGS AND THE ASSOCIATED RESTRUCTURING CHARGES FOR ALL PERIODS PRESENTED: 13 Weeks 26 Weeks -------------------------- --------------------------- Adjusted Adjusted Adjusted Adjusted 2000 1999 2000 1999 -------- -------- -------- -------- Sales $1,014 $922 $2,086 $1,869 Cost of sales 722 681 1,478 1,378 Selling, general and administrative expenses 231 195 472 398 Depreciation and amortization 41 42 81 83 Interest expense, net 6 17 15 28 Other income (6) (25) (16) (31) ----- ----- ----- ----- 994 910 2,030 1,856 ----- ----- ----- ----- Income before income taxes 20 12 56 13 Income tax expense 8 5 21 5 ----- ----- ----- ----- Net income $12 $7 $35 $8 ===== ===== ===== ===== Diluted earnings per share $0.09 $0.05 $0.25 $0.06 Weighted-average diluted shares outstanding 139.0 138.7 138.8 138.0 THE FOLLOWING ARE REPORTED RESULTS: 13 Weeks 26 Weeks ------------------------ ------------------------ Reported Reported Reported Reported 2000 1999 2000 1999 --------- -------- --------- -------- Sales $1,041 $1,063 $2,149 $2,142 Cost of sales 743 791 1,530 1,582 Selling, general and administrative expenses 241 248 499 504 Depreciation and amortization 41 46 81 91 Restructuring charge -- 52 -- 52 Interest expense, net 6 17 15 28 Other income (6) (25) (16) (31) ------ ------ ------ ------ 1,025 1,129 2,109 2,226 ------ ------ ------ ------ Income (loss) from continuing operations before income taxes 16 (66) 40 (84) Income tax expense (benefit) 7 (26) 16 (33) ------ ------ ------ ------ Income (loss) from continuing operations 9 (40) 24 (51) Discontinued operations, net of income tax -- 10 -- 10 Cumulative effect of accounting change, net of income tax -- -- -- 8 ------ ------ ------ ------ Net income (loss) $9 $(30) $24 $(33) ====== ====== ====== ====== Diluted earnings per share: Income (loss) from continuing operations $0.07 $(0.29) $0.18 $(0.37) Income from discontinued operations -- 0.07 -- 0.07 Cumulative effect of accounting change -- --- -- 0.06 ------ ------ ------ ------ Net income (loss) $0.07 $(0.22) $0.18 $(0.24) ====== ====== ====== ====== Weighted-average diluted shares outstanding 139.0 137.3 138.8 137.0 - MORE - 6
4 VENATOR GROUP, INC. SUPPLEMENTAL INFORMATION (UNAUDITED) PERIODS ENDED JULY 29, 2000 AND JULY 31, 1999 (In millions) AS ADJUSTED 13 Weeks Ended 26 Weeks Ended --------------------------- ------------------------- Adjusted Adjusted Adjusted Adjusted 2000 1999 2000 1999 -------- -------- -------- -------- ADJUSTED SALES BY SEGMENT: Global Athletic Group: Retail Stores $891 $808 $1,843 $1,646 Direct to Customer 47 38 104 86 ------ ---- ------ ------ 938 846 1,947 1,732 Northern Group 76 76 139 137 ------ ---- ------ ------ Total $1,014 $922 $2,086 $1,869 ====== ==== ====== ====== ADJUSTED OPERATING RESULTS BY SEGMENT: Global Athletic Group: Retail Stores $47 $17 $115 $45 Direct to Customer (5) (1) (8) 3 ------ ---- ------ ------ 42 16 107 48 Northern Group (1) -- (10) (10) ------ ---- ------ ------ Total $41 $16 $97 $38 ====== ==== ====== ====== AS REPORTED 13 Weeks Ended 26 Weeks Ended -------------------------- --------------------------- Reported Reported Reported Reported 2000 1999 2000 1999 -------- -------- -------- -------- SALES BY SEGMENT: Global Athletic Group: Retail Stores $899 $855 $1,862 $1,738 Direct to Customer 47 38 104 86 ------ ---- ------ ------ 946 893 1,966 1,824 Northern Group 76 86 146 155 Other 19 84 37 163 ------ ---- ------ ------ Total $1,041 $1,063 $2,149 $2,142 ====== ====== ====== ====== OPERATING RESULTS BY SEGMENT: Global Athletic Group: Retail Stores (1) $48 $(58) $113 $(42) Direct to Customer (5) (1) (8) 3 ------ ---- ------ ------ 43 (59) 105 (39) Northern Group (2) (5) (16) (22) Other (4) 2 (13) 2 ------ ------ ------ ------ Total $37 $(62) $76 $(59) ====== ====== ====== ====== (1) 1999 amounts include restructuring charge of $64. - MORE - 7
5 VENATOR GROUP, INC. CONDENSED CONSOLIDATED BALANCE SHEETS (UNAUDITED) (In millions) July 29, July 31, 2000 1999 -------- -------- ASSETS CURRENT ASSETS Cash and cash equivalents $ 25 $ 78 Merchandise inventories 841 812 Net assets of discontinued operations 9 93 Assets held for disposal 45 82 Other current assets 126 158 ------ ------ 1,046 1,223 Property and equipment, net 764 941 Deferred tax assets 316 354 Other assets 295 255 ------ ------ $2,421 $2,773 ====== ====== LIABILITIES AND SHAREHOLDERS' EQUITY CURRENT LIABILITIES Short-term debt $ 95 $ 332 Accounts payable 315 260 Accrued liabilities 273 320 Current portion of long-term debt and obligations under capital leases 5 206 ------ ------ 688 1,118 Long-term debt and obligations under capital leases 310 313 Other liabilities 267 333 SHAREHOLDERS' EQUITY 1,156 1,009 ------ ------ $2,421 $2,773 ====== ====== - XXXX - 8