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- Third Quarter Net Income is $0.42 Per Share
- Third Quarter Income from Continuing Operations of $0.41 Per Share,
Including $0.02 Per Share in Hurricane and Other Charges, Net
- Cash Position, Net of Debt, Improves by $160 million from Last Year
- Company Increases Quarterly Dividend by 20 Percent
- Fourth Quarter EPS from Continuing Operations Estimated at $0.53-$0.61
NEW YORK, Nov. 17 /PRNewswire-FirstCall/ -- Foot Locker, Inc. (NYSE: FL),
the New York-based specialty athletic retailer, today reported financial
results for its third quarter ended October 29, 2005.
Third Quarter Results
Net income for the quarter was $0.42 per share, or $66 million, compared
with $0.47 per share, or $74 million in the third quarter of last year.
Income from continuing operations for the 2005 third quarter was $0.41 per
share, or $65 million compared to $0.47 per share, or $74 million last year.
Results from discontinued operations reflected revisions in estimates to
discontinued reserves and a favorable income tax settlement totaling $0.01 per
share, or $1 million, in the third quarter of 2005. Also included in this
years results were charges, net of credits, totaling $0.02 per share related
to hurricanes, potential insolvency of one of the Companys insurance
administrators and the settlement of litigation proceedings.
For the third quarter period, sales increased 3.1 percent to
$1,408 million this year compared with sales of $1,366 million in the year-ago
period. Third quarter comparable-store sales increased 2.7 percent.
"Our business in North America was very solid during the third quarter,
with strongest sales and profit increases posted by our Footaction, Champs
Sports and Foot Locker Canada divisions," stated Matthew D. Serra, Foot
Locker, Inc.s Chairman and Chief Executive Officer. "Third quarter results
were negatively impacted, however, by our increased promotional activity in
Europe that resulted in a reduction in our inventory growth and allowed us to
compete better in certain local markets."
Year-to-Date Results
Year-to-date net income was $1.07 per share, or $168 million, compared
with $1.31 per share, or $204 million last year. Income from continuing
operations in the year-to-date period was $1.06 per share, or $167 million,
versus $1.07 per share, or $166 million last year. Results from discontinued
operations reflected the $0.01 per share, or $1 million income, outlined above
in the third quarter of 2005 versus an income tax benefit of $0.24 per share,
or $38 million, included in last years results.
Year-to-date sales increased 7.0 percent to $4,089 million compared with
sales of $3,820 million last year. Comparable-store sales increased 2.2
percent.
Mr. Serra continued, "We expect that our fourth quarter comparable-store
sales will continue to increase in the low-to-mid single digit range.
Additionally, we do not expect to be as promotional in our European stores as
we were during the third quarter, given that our inventories are now at more
appropriate levels. Based upon this, we currently expect our income from
continuing operations per share in the fourth quarter to be in the range of
$0.53 to $0.61, versus the $0.57 that we reported in the comparable prior year
period. Last years fourth quarter results included an income tax rate of
31.5 percent which provided a $0.05 per share favorable comparison to this
years 37 percent estimated rate."
Operating Highlights
The Company opened 18 new stores, remodeled/relocated 57 stores and closed
58 stores during the third quarter. At October 29, 2005, the Company operated
3,886 stores in 20 countries in North America, Europe and Australia. The
Company also entered its 16th European country during the third quarter with a
new store in Greece.
Financial Position/Dividend Increase
The Companys financial position continues to strengthen, with its cash
and short-term investment position at the end of the third quarter of
$390 million and its cash and short-term investment position, net of debt,
$160 million greater than at the same time last year. During the third
quarter, the Company repurchased 790,200 shares of its common stock for
$17 million. To date, the Company has spent $20 million of a $50 million
board-authorized share repurchase program that expires in February 2006. The
Company expects its Board of Directors to consider the authorization of a new
share repurchase program early in 2006.
As previously announced, on November 16, 2005, the Companys Board of
Directors increased Foot Locker, Inc.s quarterly common stock dividend
20 percent from its previous amount to $0.09 per share, which is equivalent to
an annualized rate of $0.36 per share. The increased dividend will be payable
January 27, 2006 to shareholders of record on January 13, 2006.
The Company is hosting a live conference call at 10:00 am (EST) on Friday,
November 18, 2005 to discuss these results and provide guidance with regard to
its earnings outlook for the balance of 2005. 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 pm on Monday, November 28, 2005.
Disclosure Regarding Forward-Looking Statements
This press release contains forward-looking statements, which reflect
managements current views of future events and financial performance. These
forward-looking statements are based on many assumptions and factors detailed
in the Companys 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 Companys
merchandise mix and retail locations, the Companys reliance on a few key
vendors for a majority of its merchandise purchases (including a significant
portion from one key vendor), unseasonable weather, risks associated with
foreign global sourcing, including political instability, changes in import
regulations, disruptions to transportation services and distribution, economic
conditions worldwide, 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 and the ability of the Company to execute its business plans
effectively with regard to each of its business units. 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.
FOOT LOCKER, INC.
Condensed Consolidated Statements of Operations
(unaudited)
Periods ended October 29, 2005 and October 30, 2004
(In millions, except per share amounts)
Third Quarter Third Quarter
2005 2004
Sales $1,408 $1,366
Cost of sales (1) 978 940
Selling, general and administrative expenses 280 270
Depreciation and amortization (1) 46 39
Interest expense, net 2 4
1,306 1,253
Income from continuing operations before
income taxes 102 113
Income tax expense 37 39
Income from continuing operations 65 74
Income from disposal of discontinued operations,
net of tax 1 --
Net income $66 $74
Diluted EPS:
Income from continuing operations $0.41 $0.47
Income from disposal of discontinued operations,
net of tax 0.01 --
Net income $0.42 $0.47
Weighted-average diluted shares outstanding 157.4 157.4
Year-To-Date Year-To-Date
2005 2004
Sales $4,089 $3,820
Cost of sales (1) 2,864 2,664
Selling, general and administrative expenses 828 786
Depreciation and amortization (1) 128 112
Restructuring charge -- 2
Interest expense, net 8 12
Other income (3) --
3,825 3,576
Income from continuing operations before income
taxes 264 244
Income tax expense 97 78
Income from continuing operations 167 166
Income from disposal of discontinued operations,
net of tax 1 38
Net income $168 $204
Diluted EPS:
Income from continuing operations $1.06 $1.07
Income from disposal of discontinued operations,
net of tax 0.01 0.24
Net income $1.07 $1.31
Weighted-average diluted shares outstanding 157.9 156.9
(1) Certain amounts in the prior year have been reclassified to conform to
the presentation in the current fiscal year related to the accounting
for construction allowances received from landlords.
FOOT LOCKER, INC.
Condensed Consolidated Balance Sheets
(unaudited)
(In millions)
October 29, October 30,
2005 2004
Assets
CURRENT ASSETS
Cash, cash equivalents and short-term
investments $390 $249
Merchandise inventories 1,400 1,291
Other current assets 191 155
1,981 1,695
Property and equipment, net (1) 686 724
Deferred tax assets 209 204
Other assets 479 507
$3,355 $3,130
Liabilities and Shareholders Equity
CURRENT LIABILITIES
Accounts payable $451 $420
Accrued liabilities and other liabilities 312 253
Current portion of long-term debt and obligations
under capital leases 18 18
781 691
Long-term debt and obligations under capital leases 327 346
Other liabilities (1) 307 348
SHAREHOLDERS EQUITY 1,940 1,745
$3,355 $3,130
(1) Certain amounts in the prior year have been reclassified to conform
to the presentation in the current fiscal year related to the
accounting for construction allowances received from landlords.
FOOT LOCKER, INC.
Store and Estimated Square Footage - Continuing Operations
(unaudited)
(Square footage in thousands)
October 29, October 30, January 29,
2005 2004 2005
Foot Locker U.S.
Number of stores 1,376 1,429 1,428
Gross square footage 5,548 5,821 5,809
Selling square footage 3,255 3,393 3,390
Footaction
Number of stores 355 349 349
Gross square footage 1,679 1,689 1,683
Selling square footage 1,042 1,052 1,049
Lady Foot Locker
Number of stores 549 567 567
Gross square footage 1,226 1,265 1,265
Selling square footage 686 705 705
Kids Foot Locker
Number of stores 327 346 346
Gross square footage 788 837 837
Selling square footage 471 497 497
Champs Sports
Number of stores 557 574 570
Gross square footage 3,040 3,192 3,173
Selling square footage 2,093 2,192 2,178
Foot Locker
International
Number of stores 722 690 707
Gross square footage 2,068 1,975 2,013
Selling square footage 1,097 1,055 1,069
Total Athletic Group
Number of stores 3,886 3,955 3,967
Gross square footage 14,349 14,779 14,780
Selling square footage 8,644 8,894 8,888
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