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8-K - FOOT LOCKER, INC.c81500_8k.htm

Exhibit 99.1

 

 

N E W S  R E L E A S E

 

 

  Contact:    John A. Maurer
    Vice President,
    Treasurer and Investor Relations
    Foot Locker, Inc.
    (212) 720-4092

 

FOOT LOCKER, INC. REPORTS 2015 FIRST QUARTER RESULTS

 

·      Net Income of $1.29 Per Share, a Record Quarterly Result

·      Earnings Per Share Increased 17 Percent

·      Comparable-Store Sales Increased 7.8 Percent

 

NEW YORK, NY, May 22, 2015 – Foot Locker, Inc. (NYSE: FL), the New York-based specialty athletic retailer, today reported financial results for its first quarter ended May 2, 2015.

 

First Quarter Results

Net income for the Company’s first quarter ended May 2, 2015 was $184 million, or $1.29 per share, compared with net income of $162 million, or $1.10 per share, last year, a 17 percent increase. First quarter comparable-store sales increased 7.8 percent. Total first quarter sales increased 2.6 percent, to $1,916 million this year, compared with sales of $1,868 million for the corresponding prior-year period. Excluding the effect of foreign currency fluctuations, total sales for the first quarter increased 7.9 percent.

 

“We have hit the ground running in 2015, producing the most profitable quarter in our history,” said Richard Johnson, President and Chief Executive Officer. “We are focused on executing the updated strategic priorities that we described in our investor meeting in March, and the results in the first quarter demonstrate that we remain on the right track, with strong performances across our channels, geographies, banners, and categories. Our core business improved and we made progress on each of our growth pillars, a team accomplishment of which we are all very proud.”

 

The Company’s gross margin rate improved to 35.0 percent of sales from 34.6 percent a year ago, while the selling, general, and administrative expense rate improved to 18.0 percent of sales from 19.0 percent.

 

“The team at Foot Locker continued to execute efficiently during the quarter, both operationally and financially,” said Lauren Peters, Executive Vice President and Chief Financial Officer. “Driven by solid performance on the top line that flowed effectively to the bottom line, we delivered results which surpassed our guidance at the start of the year. We remain intent on improving the productivity of all of our assets as we strive to attain our recently elevated long-term goals.”

 

Financial Position

At May 2, 2015, the Company’s merchandise inventories were $1,234 million, 2.7 percent lower than at the end of the first quarter last year. Using constant currencies, inventory increased 2.4 percent.

 

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Foot Locker, Inc. 112 West 34th Street, New York, NY 10120

 

The Company’s cash totaled $986 million, while the debt on its balance sheet was $133 million. The Company spent approximately $129 million to repurchase 2.3 million shares during the quarter and paid its quarterly stock dividend of $0.25, spending $35 million.

 

Store Base Update

During the first quarter, the Company opened 37 new stores, remodeled or relocated 55 stores, and closed 41 stores. As of May 2, 2015, the Company operated 3,419 stores in 23 countries in North America, Europe, Australia, and New Zealand. In addition, 55 franchised Foot Locker stores were operating in the Middle East and South Korea, as well as 27 franchised Runners Point and Sidestep stores in Germany and Switzerland.

 

The Company is hosting a live conference call at 9:00 a.m. (EDT) today, May 22, 2015, to review these results, provide comments on the status of its current initiatives, and discuss trends in its business and the athletic industry. This conference call may be accessed live by dialing 888-771-4371 (U.S. and Canada) or 847-585-4405 (International) using the passcode 39678293, or via the Investor Relations section of the Foot Locker, Inc. website at http://www.footlocker-inc.com. Please log on to the website 15 minutes prior to the call in order to download any necessary software. A replay of the call will be available via webcast from the same Investor Relations section of the Foot Locker, Inc. website at http://www.footlocker-inc.com through June 5, 2015.

 

Disclosure Regarding Forward-Looking Statements

This report contains forward-looking statements within the meaning of the federal securities laws. Other than statements of historical facts, all statements which address activities, events, or developments that the Company anticipates will or may occur in the future, including, but not limited to, such things as future capital expenditures, expansion, strategic plans, financial objectives, 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 which are 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, deterioration of global financial markets, economic conditions worldwide, 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 and strategic plans effectively with regard to each of its business units, and risks associated with global product sourcing, including political instability, changes in import regulations, and disruptions to transportation services and distribution.

 

For additional discussion on risks and uncertainties that may affect forward-looking statements, see “Risk Factors” disclosed in the 2014 Annual Report on Form 10-K. 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.

 

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FOOT LOCKER, INC.

Condensed Consolidated Statements of Operations

(unaudited)

Periods ended May 2, 2015 and May 3, 2014

(In millions, except per share amounts)

 

    First Quarter  
    2015     2014  
Sales   $ 1,916     $ 1,868  
                 
Cost of sales     1,246       1,222  
SG&A     345       355  
Depreciation & amortization     35       36  
Impairment charge(1)           1  
Interest expense, net     1       1  
Other income     (1 )     (1 )
      1,626       1,614  
                 
Income before taxes   $ 290     $ 254  
Income tax expense     106       92  
Net income   $ 184     $ 162  
                 
Diluted EPS   $ 1.29     $ 1.10  
                 
Weighted-average diluted shares outstanding     142.1       147.6  
                 

 

Reconciliation of GAAP to Non-GAAP results  First Quarter 
       2014 
        After
tax
   EPS 
GAAP net income results       $162   $1.10 
                
Add back:               
Trade name impairment(1)        1    0.01 
RPG integration costs (2)        1     
                
Non-GAAP results       $164   $1.11 
                

 

Footnote to explain adjustments in 2014

 

(1) Write-down of trade name in Ireland acquired in 2004.

(2) Costs associated with the integration of Runners Point Group.

 

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FOOT LOCKER, INC.

Condensed Consolidated Balance Sheets

(unaudited)

(In millions)

 

 May 2,
2015
  May 3,
2014
Assets             
              
CURRENT ASSETS             
Cash, cash equivalents and short-term investments  $986      $1,007 
Merchandise inventories   1,234       1,268 
Other current assets   259       243 
    2,479       2,518 
              
Property and equipment, net   639       598 
Deferred tax assets   226       245 
Other assets   287       308 
   $3,631      $3,669 
              
Liabilities and Shareholders’ Equity             
              
CURRENT LIABILITIES             
Accounts payable  $303      $354 
Accrued and other liabilities   387       355 
Current portion of capital lease obligations   2       3 
    692       712 
              
Long-term debt and obligations under capital leases   131       135 
Other liabilities   253       229 
SHAREHOLDERS’ EQUITY   2,555       2,593 
   $3,631      $3,669 
              

 

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FOOT LOCKER, INC.

Store and Square Footage

(unaudited)

 

Store activity is as follows:

 

   January 31,
2015
  Opened   Closed   May 2,
2015
  Relocations
/Remodels
Foot Locker US   1,015    1    10    1,006    19 
Foot Locker Europe   603    3    4    602    6 
Foot Locker Canada   126    1    1    126    4 
Foot Locker Asia Pacific   91    1        92    1 
Lady Foot Locker/SIX:02   213    4    11    206     
Kids Foot Locker   357    13    6    364    14 
Footaction   272    5    5    272    5 
Champs Sports   547    5    3    549    5 
Runners Point   116    2        118    1 
Sidestep   83    2    1    84     
Total   3,423    37    41    3,419    55 

 

Selling and gross square footage are as follows:

 

   January 31, 2015  May 2, 2015
(in thousands)  Selling  Gross  Selling  Gross
Foot Locker US   2,494    4,298    2,490    4,299 
Foot Locker Europe   846    1,839    844    1,844 
Foot Locker Canada   270    422    274    426 
Foot Locker Asia Pacific   125    204    126    205 
Lady Foot Locker/SIX:02   299    501    293    491 
Kids Foot Locker   529    912    552    949 
Footaction   789    1,258    794    1,266 
Champs Sports   1,913    2,927    1,922    2,941 
Runners Point   143    244    144    247 
Sidestep   75    129    76    130 
Total   7,483    12,734    7,515    12,798 

 

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