Foot Locker’s Q1 Comps Grow 5.2 Percent

Foot Locker, Inc. reported net income increased 7.8 percent in the  first quarter ended May 4, to $138 million, or 90 cents per share, compared with net income of $128 million, 83 cents per share, last year. First quarter comparable-store sales increased 5.2 percent.

Total first quarter sales increased 3.8 percent, to $1.64 billion this year, compared with sales of $1.58 billion for the corresponding prior-year period. Excluding the effect of foreign currency fluctuations, total sales for the first quarter increased 4.1 percent.

“I am pleased to report that the thoughtful implementation of our strategic priorities continues to deliver record financial and operational results for our shareholders and other stakeholders” said Ken C. Hicks, chairman of the board and chief executive officer.  “It takes a true team effort and excellent performance to generate the kind of momentum that enabled us to post the best quarterly profit results in our history as an athletic company — for the second year in a row.  I want to thank all of our associates for their consistent focus on, and strong execution of, our key initiatives, which led to this achievement.”

Non-GAAP Adjustment

During the first quarter, the company incurred approximately $1 million in transaction costs related to the pending acquisition of Runners Point Group that was announced earlier in May.  Excluding this expense, first quarter earnings were 91 cents per share on a non-GAAP basis, an increase of almost 10 percent over the record 83 cents that the company earned in the first quarter last year.

Financial Position

At May 4, 2013, the company’s merchandise inventory was $1.17 billion, 2 percent higher than at the end of the first quarter last year. The company’s cash and short-term investments totaled $1,105 million, while the debt on its balance sheet was $132 million. The company’s total cash position, net of debt, was $199 million higher than at the same time last year.

As previously announced, the company did not repurchase any shares during the first quarter because of the ongoing negotiations related to the acquisition of Runners Point Group; however, the company plans to reinitiate the program in the second quarter.

Store Base Update 
 
During the first quarter, the company opened 25 new stores, remodeled/relocated 64 stores and closed 39 stores. As of May 4, 2013, the company operated 3,321 stores in 23 countries in North America, Europe, Australia, and New Zealand.  In addition, 45 franchised stores were operating in the Middle East and South Korea.