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): November 18, 1999 - -------------------------------------------------------------------------------- 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.) 233 Broadway, New York, New York 10279-0003 - -------------------------------------------------------------------------------- (Address of principal executive offices) (Zip Code) Registrant's telephone number, including area code: (212) 553-2000 -----------------
2 Item 5. Other Events. On November 18, 1999, the Registrant reported earnings for the third quarter ended October 30, 1999. (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: November 18, 1999 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 November 18, 1999 3
1 EXHIBIT 99 NEWS RELEASE CONTACT: Juris Pagrabs Vice President, Investor Relations Venator Group, Inc. (212) 553-7017 VENATOR GROUP REPORTS THIRD QUARTER EARNINGS PER SHARE OF $0.09 FROM ADJUSTED OPERATIONS, $0.07 EXCLUDING REAL ESTATE GAINS -- GROSS MARGINS IMPROVE 320 BASIS POINTS OVER LAST YEAR -- NEW YORK, New York, November 18, 1999 - Venator Group, Inc. (NYSE: Z) today reported that sales from adjusted operations for the 13 weeks ended October 30, 1999 were $1,068 million compared with $1,028 million in the year-earlier period, reflecting a comparable-store sales increase of 4.6 percent. For the 39 weeks, sales from adjusted operations were $3,000 million versus $2,950 million for the same period a year ago, reflecting a comparable-store sales increase of 1.0 percent. Adjusted income from operations before taxes rose $89 million to $20 million for the quarter ended October 30, 1999, which excludes a restructuring charge and reflects the expected disposition of several businesses (noted below) as if they had occurred at the beginning of 1998. Adjusted net income from operations was $12 million, or $0.09 per share, for the period compared to a loss of $39 million, or $0.29 per share, a year ago. Excluding $5 million of other income, resulting from several real estate transactions, adjusted earnings per share for the quarter would have been $0.07. The restructuring charge in the quarter consists of $3 million, or $0.01 per share, and reflects an adjustment to the previous charge taken in the second quarter relating to the disposition of several businesses. Results are presented on an adjusted basis to facilitate comparison. Adjusted comparisons assume that the disposition of non-core businesses, including Afterthoughts, occurred at the beginning of 1998 and exclude the 1999 restructuring charge. The reported results are attached to this press release. "Strategically, the third quarter was noteworthy for Venator Group, as it nears the completion of its repositioning strategy that began in 1995," stated Dale W. Hilpert, Venator Group's President and Chief Executive Officer. "Since August, the Company has announced the sale of Afterthoughts and Colorado Group in Australia, which in the aggregate are expected to total $325 million in gross proceeds, as well as the expected disposition of eight non-core businesses. These transactions will provide us with financial flexibility to help achieve and sustain our financial goals and at the same time allow us to focus our resources on our core athletic retailing businesses." "We are encouraged to see the stronger athletic footwear trends continue at our retail stores, particularly in the running and basketball categories, and we are also gratified to see a significant increase in sales of basic apparel," said Mr. Hilpert. "Our eVenator direct marketing businesses, catalog and e-commerce, also achieved significant sales gains during the quarter fueled by strong sales of footwear and sporting equipment, as well as sales of National Football League product through our exclusive agreement to manage the NFL's catalog and e-commerce business." 4
2 "Sales performance at remodeled and relocated stores continues to be very encouraging," said Mr. Hilpert. "Comparable-store sales for remodeled and relocated stores opened for the 12 months ended October 30, 1999 are up 26.5 percent at 133 Foot Locker U.S. stores, 13.4 percent at 77 Lady Foot Locker stores, 18.8 percent at 63 Kids Foot Locker stores and 48.2 percent at 34 Foot Locker International stores." Gross margins from adjusted operations, as a percentage of sales, improved 320 basis points to 27.2% for the quarter, reflecting better buying of merchandise and fewer clearance sales compared to last year, offset by increased occupancy costs and the continuing markdown of apparel inventories at Champs Sports to ensure competitiveness during the upcoming holiday selling season. "Although we expect the promotional retailing environment to continue, we are very encouraged by our back-to-school sales momentum and market share gains," said Mr. Hilpert. "Our inventory levels are on plan and we are well positioned for a strong holiday selling season." Merchandise inventories of adjusted operations decreased 15% to $863 million compared to $1,020 million a year ago, reflecting a 16% decrease in inventories per square foot. The Company's improvement in managing its inventories, together with a lower capital expenditures program and the proceeds expected from the sale of non-core businesses, should significantly reduce its total debt position, net of cash, by year-end. As the Company moves into the holiday season, it expects aggregate inventories to continue to be below last year's reported levels. Selling, general and administrative expenses from adjusted operations, as a percentage of sales, improved 630 basis points to 19.8% for the quarter. The improvement reflects primarily a reduction in corporate and divisional costs and expenses for marketing and advertising, logistics, salaries and wages, travel and store opening expenses, as a result of having significantly fewer new store openings this year versus the prior year. The Company opened 26 stores and remodeled 44 stores during the quarter. The Company also closed 33 stores to end the quarter with 4,640 stores from ongoing operations in 15 countries in North America, Europe, Australia, and Asia. Businesses held for sale, disposition or sold: Afterthoughts, San Francisco Music Box, Foot Locker Outlets, Colorado, Team Edition, Going To The Game, Randy River, Weekend Edition, Garden Centers and Burger King Franchises. 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. 5
3 The following adjusted results exclude 1999 restructuring charges and reflect the disposition of several businesses (noted above) as if they had occurred at the beginning of 1998. VENATOR GROUP, INC. CONSOLIDATED STATEMENTS OF OPERATIONS - AS ADJUSTED (In millions, except per share amounts) 13 Weeks Ended 39 Weeks Ended ----------------------------------- ---------------------------------- (unaudited) October 30, 1999 October 31, 1998 October 30, 1999 October 31, 199 ---------------- ---------------- ---------------- --------------- Sales $1,068 $1,028 $3,000 $2,950 Costs and expenses: Cost of sales 777 781 2,215 2,172 Selling, general and administrative expenses 211 268 632 703 Depreciation and amortization 46 30 129 99 Interest expense, net 19 18 45 35 Other income (5) - (36) - ---------------- ---------------- ---------------- --------------- 1,048 1,097 2,985 3,009 ---------------- ---------------- ---------------- --------------- Adjusted income (loss) from operations before income taxes 20 (69) 15 (59) Income tax expense (benefit) 8 (30) 6 (30) ---------------- ---------------- ---------------- --------------- Adjusted net income (loss) from operations $ 12 $ (39) $ 9 $ (29) ================ ================ ================ =============== Diluted Adjusted Earnings Per Share: Adjusted net income (loss) from operations $ 0.09 $(0.29) $ 0.07 $(0.21) ================ ================= ================ ================ Weighted-average common shares outstanding assuming dilution 138.4 135.6 138.1 135.4 SUPPLEMENTAL INFORMATION - AS ADJUSTED 13 Weeks Ended 39 Weeks Ended ----------------------------------- ---------------------------------- (unaudited) October 30, 1999 October 31, 1998 October 30, 1999 October 31, 1998 ---------------- ---------------- ---------------- ---------------- ADJUSTED SALES BY SEGMENT: Global Athletic Group $ 971 $ 931 $ 2,748 $ 2,694 Northern Group 97 97 252 256 ---------------- ---------------- --------------- --------------- Total $ 1,068 $ 1,028 $ 3,000 $ 2,950 ================ ================ =============== =============== ADJUSTED OPERATING RESULTS BY SEGMENT: Global Athletic Group $ 40 $ (15) $ 83 $ 72 Northern Group 1 (10) (21) (26) ---------------- ---------------- --------------- --------------- Total $ 41 $ (25) $ 62 $ 46 ================ ================ =============== =============== 6
4 The following are the reported results: VENATOR GROUP, INC. CONSOLIDATED STATEMENTS OF OPERATIONS - AS REPORTED (In millions, except per share amounts) 13 Weeks Ended 39 Weeks Ended ------------------------------------ ------------------------------------ (unaudited) October 30, 1999 October 31, 1998 October 30, 1999 October 31, 1998 ---------------- ---------------- ---------------- ---------------- Sales $ 1,178 $ 1,122 $ 3,320 $ 3,223 Costs and expenses: Cost of sales 848 840 2,430 2,324 Selling, general and administrative expenses 256 302 762 827 Depreciation and amortization 47 38 138 108 Restructuring charge 3 - 55 - Interest expense, net 17 18 45 35 Other income (5) - (36) (19) ---------------- ---------------- ---------------- ---------------- 1,166 1,198 3,394 3,275 ---------------- ---------------- ---------------- ---------------- Income (loss) from continuing operations before income taxes 12 (76) (74) (52) Income tax expense (benefit) 5 (36) (29) (26) ---------------- ---------------- ---------------- ---------------- Income (loss) from continuing operations 7 (40) (45) (26) Income (loss) from discontinued operations, net of income tax expense (benefit) of $6, $7 and $(14), respectively - 6 10 (26) Loss on disposal of discontinued operations, net of tax expense of $52 - (121) - (121) ---------------- ---------------- ---------------- ---------------- Net income (loss) $ 7 $ (155) $ (35) $ (173) ================ ================ ================ ================ Diluted Earnings Per Share: Income (loss) from continuing operations $ 0.05 $ (0.29) $ (0.33) $ (0.19) Income (loss) from discontinued operations - (0.85) 0.07 (1.08) ================ ================ ================ ================ Net income (loss) $ 0.05 $ (1.14) $ (0.26) $ (1.27) ================ ================= ================ ================ Weighted-average common shares Outstanding assuming dilution 138.4 135.6 137.1 135.4 SUPPLEMENTAL INFORMATION - AS REPORTED 13 Weeks Ended 39 Weeks Ended ------------------------------------ ------------------------------------ (unaudited) October 30, 1999 October 31, 1998 October 30, 1999 October 31, 1998 ---------------- ---------------- ---------------- ---------------- SALES BY SEGMENT: Global Athletic Group $ 1,001 $ 945 $ 2,825 $ 2,730 Northern Group 97 97 252 256 All other 80 80 243 237 ---------------- ---------------- ---------------- ---------------- Total $ 1,178 $ 1,122 $ 3,320 $ 3,223 ================ ================ ================ ================ OPERATING RESULTS BY SEGMENT: Global Athletic Group $ 35 $ (16) $ (4) $ 66 Northern Group 1 (10) (21) (26) All other (4) (4) (2) 3 ================ ================ ================ ================ Total $ 32 $ (30) $ (27) $ 43 ================ ================ ================ ================ 7
5 VENATOR GROUP, INC. CONDENSED CONSOLIDATED BALANCE SHEETS (In millions) October 30, 1999 October 31, 1998 (unaudited) (unaudited) --------------------- -------------------- ASSETS CURRENT ASSETS Cash and cash equivalents $ 63 $ 147 Merchandise inventories 863 1,112 Net assets of discontinued operations 85 220 Assets held for disposal 179 - Other current assets 174 136 --------------------- -------------------- 1,364 1,615 Property and equipment, net 882 916 Deferred tax assets 354 332 Other assets 251 282 --------------------- -------------------- $ 2,851 $ 3,145 ===================== ==================== LIABILITIES AND SHAREHOLDERS' EQUITY CURRENT LIABILITIES Short-term debt $ 300 $ 371 Accounts payable 354 386 Accrued liabilities 237 266 Current portion of reserve for discontinued operations 87 217 Current portion of long-term debt and obligations under capital leases 208 20 --------------------- -------------------- 1,186 1,260 Long-term debt and obligations under capital leases 313 508 Other liabilities 341 375 SHAREHOLDERS' EQUITY 1,011 1,002 --------------------- -------------------- $ 2,851 $ 3,145 ===================== ==================== -XXX- 8