Charges Sink Foot Locker’s Q3; Sales Slide 7.3%

 

Excluding the impairment charges, third quarter net income was $16 million, or 10 cents per share, in 2009. In the year-ago period, net income was $24 million, or 16 cents per share, including an impairment charge of $3 million, after tax, or 2 cents per share, to write down the value of a short-term investment.

 

Before the impairment charge, net income was $27 million, or 18 cents per share, in the 2008 third quarter period. Third quarter sales decreased 7.3%, to $1,214 million this year compared with sales of $1,309 million for the corresponding prior-year period. Excluding the effect of foreign currency fluctuations, total sales for the thirteen-week period decreased 7.6%.

 

Third quarter comparable-store sales decreased 8.2%.

 

“Our success in reducing expenses and tightly managing inventory helped to offset lower than anticipated sales in our U.S. operations,” stated Ken C. Hicks, Foot Locker, Inc.'s president and CEO. “The financial results at our international operations were far more encouraging, particularly as we experienced a favorable sales trend improvement in Europe as we progressed through the quarter and continuing sales gains in the Asia/Pacific region. We are also pleased with our strong internally-generated cash flow and quarter-end financial position.”

 

Year-to-Date Results

 

For the first nine months of the year, the company reported net income of $25 million, or 16 cents per share, including impairment charges of $22 million, after-tax, or 14 cents per share. Excluding the impairment charges, year-to-date net income was $47 million, or 30 cents per share. This compares with net income of $45 million, or 29 cents per share, in last year's period, which included impairment charges and store closing expenses of $21 million, after tax, or 14 cents per share.

 

Before the impairment charges, net income was $66 million, or 43 cents per share, in the 2008 nine-month period. Year-to-date sales decreased 10.0% to $3,529 million compared with sales of $3,920 million last year. Excluding the effect of foreign currency fluctuations, total sales for the thirty-nine week period decreased 7.2%. Comparable-store sales decreased 7.6%.

 

Financial Position

 

During the past 12 months, the company generated $134 million of positive cash flow, after capital expenditures and shareholder dividends. The company utilized $106 million of this cash to acquire CCS in November 2008 and $28 million is reflected on its third quarter balance sheet as an increase in its total cash position, net of debt versus the same period last year.

 

At the end of the third quarter, the company's cash and short-term investments totaled $438 million. Merchandise inventory at the end of the third quarter was $1,228 million, or 2.7% less than the comparable period of last year.

 

Store Base Update

 

The company opened 33 new stores, remodeled or relocated 130 stores, and closed 73 stores during the first nine months of this year. At October 31, 2009, the company operated 3,601 stores in 21 countries in North America, Europe and Australia. In addition, 20 franchised stores are currently operating in the Middle East and South Korea.