Foot Locker, Inc. net income for the second quarter ended July 29, 2006 was nine cents per share, or $14 million, compared to 28 cents per share, or $44 million last year. This year’s results included a non-cash impairment charge of $0.08 per share, or $12 million after-tax, to write-down store long-lived assets at the Company’s European operation, pursuant to SFAS No. 144. The Company’s second quarter income before this non-cash charge was $0.17 per share, or $26 million. Second quarter sales were virtually flat with last year, at $1.30 billion this year compared with sales of $1.30 billion for the corresponding prior year period. Second quarter comparable-store sales decreased 1.3%.

“As we previously reported, our second quarter earnings reflected lower than expected sales in both our domestic and international operations,” stated Matthew D. Serra, Foot Locker, Inc.’s Chairman and Chief Executive Officer. “While the sales and earnings shortfalls were most pronounced at our European stores, sales in our U.S. stores also softened, particularly late in the month of July. In the U.S., we believe this partially reflects a later start than last year to the back-to-school selling season. While our business in Europe remains very profitable in total, we were required to write down the value of certain underperforming assets under the provisions of SFAS No. 144.”

Year-to-date net income was $0.47 per share, or $73 million, compared to $0.65 per share, or $102 million last year. This year’s income before the non-cash charge recorded in the second quarter was $0.55 per share, or $85 million. Year-to-date sales decreased 0.5 percent to $2,668 million compared with sales of $2,681 million last year. Comparable-store sales decreased 0.4 percent.

Mr. Serra continued, “Given the continuing challenging athletic retail environment in Europe and recent softening sales trends in U.S. markets, we believe it is prudent to take a cautious stand on the outlook for the balance of the year. As a result, we now see earnings per share from continuing operations for the full year of 2006 to be in the range of $1.52 to $1.62 before the non-cash charge ($1.44 to $1.54 after the non-cash charge).”

During the second quarter, the Company opened 38 new stores; remodeled/relocated 126 stores and closed 21 stores. At July 29, 2006, the Company operated 3,894 stores in 20 countries in North America, Europe and Australia. In addition, two Company franchised stores were opened in the Middle East, one in Kuwait and another in Saudi Arabia.

The Company ended the second quarter with cash and short-term investments totaling $318 million. Its cash position, net of debt increased by $34 million from the same time last year. After the close of its second quarter, the Company repurchased $22 million of its 8.5 percent bonds, due in 2022, at a discount to face value, in line with its objective to redeploy its cash flow to enhance shareholder value while maintaining a strong financial position.

                              FOOT LOCKER, INC.
               Condensed Consolidated Statements of Operations
                Periods ended July 29, 2006 and July 30, 2005
                   (In millions, except per share amounts)

                                                      Second         Second
                                                      Quarter        Quarter
                                                       2006           2005

    Sales                                             $1,303         $1,304

    Cost of sales                                        942            927
    Selling, general and administrative expenses         273            265
    Depreciation and amortization                         44             41
    Impairment charge                                     17              -
    Interest expense, net                                  1              3
    Other expense (income)                                 1             (3)
                                                       1,278          1,233
    Income before income taxes and cumulative
     effect of accounting change                          25             71
    Income tax expense                                    11             27
    Income before cumulative effect of accounting
     change                                               14             44
    Cumulative effect of accounting change, net
     of income tax                                         -              -
    Net income                                           $14            $44

    Diluted EPS:
    Income before cumulative effect of accounting
     change                                            $0.09          $0.28
    Cumulative effect of accounting change                 -              -
    Net income                                         $0.09          $0.28

    Weighted-average diluted shares outstanding        156.7          158.3