Foot Locker, Inc. reported financial results for its third quarter ended November 1, 2003. Income from continuing operations increased 44%to $62 million, or $0.41 per share, from $43 million, or $0.29 per share last Year. Sales increased 6.6% to $1,194 million this year compared with sales of $1,120 million in the year-ago period. Third
quarter comparable-store sales increased 0.4 percent.
Income from continuing operations for the 39-week period ended
November 1, 2003 increased 21 percent to $138 million, or $0.93 per share,
compared with $114 million, or $0.77 per share last year. Year-to-date sales
increased 4.6 percent to $3,445 million, compared with sales of $3,295 million
last year. Comparable-store sales decreased 2.2 percent.
“We are very pleased with our third quarter profit growth which reflects
an improving sales trend in our U.S. stores, a strong gross margin rate
improvement and diligent expense management,” stated Matthew D. Serra, Foot
Locker, Inc.'s President and Chief Executive Officer. “Our third quarter
results also benefited from a strong performance by our international Foot
Locker stores and direct-to-customers business. The improving
comparable-store sales trend is expected to continue as we begin to
anniversary against several factors that have negatively affected our sales
growth in the U.S. over the past 12 months, namely lower average price points,
a somewhat tempered promotional posture and weak external economic factors.”
Mr. Serra continued, “We also expect our operating profit margin rate to
continue to expand as a result of improved merchandise margins, lower
occupancy expense rates and tight expense management. In addition, we are
more encouraged by recent discussions with our top merchandise suppliers
regarding new product launches that will be available in our U.S. stores
beginning in the fourth quarter of 2003. Our inventories are current and well
positioned to support fourth quarter sales. As a result of these factors, we
are optimistic that we can exceed the current Wall Street analysts' fourth
quarter consensus estimate of $0.37 per share.”
The Company's financial position continued to strengthen as debt, net of
cash, was $34 million, a reduction of $68 million from the end of the third
quarter last year. During the third quarter, the Company repurchased
$17 million of its 81/2% debentures due in 2022, bringing the total amount
repurchased to date to $26 million. On November 19, 2003, the Company's Board
of Directors doubled Foot Locker, Inc.'s quarterly common stock dividend to
$0.06 per share. The dividend will be payable January 30, 2004 to
shareholders of record on January 16, 2004.
The Company today also announced that it signed a 5-year extension with
the National Football League, whereby Foot Locker designs, merchandises and
fulfills NFL's official catalog and E-commerce site. This high-growth
business is managed by the Company's Footlocker.com/Eastbay division and is
fully integrated within their existing operating structure. Sales of NFL
product through these catalogs and e-commerce sites are expected to be
approximately $50 million in 2003.
During the third quarter, the Company opened 30 stores,
remodeled/relocated 66 stores and closed 19 stores. The Company expects to
open an additional 28 stores during the fourth quarter, including 19 planned
to open during November in Western Europe. In 2004, Foot Locker, Inc. plans
to enter the Republic of Ireland, with 10 to 12 stores opened over time in
highly populated areas. At November 1, 2003 the Company operated 3,619 stores
in 16 countries in North America, Europe and Australia.
FOOT LOCKER, INC.
Consolidated Statements of Operations
(unaudited)
Periods ended November 1, 2003 and November 2, 2002
(In millions, except per share amounts)Third Quarter Third Quarter
2003 2002Sales $1,194 $1,120
Cost of sales 805 777
Selling, general and administrative expenses 250 235
Depreciation and amortization 37 37
Restructuring charge (income) (1) -- (1)
Interest expense, net 5 5
1,097 1,053Income from continuing operations before
income taxes 97 67
Income tax expense 35 24
Income from continuing operations 62 43Income (loss) on disposal of discontinued
operations, net of tax -- 2
Net income $62 $45Diluted EPS:
Income from continuing operations $0.41 $0.29
Income (loss) on disposal of discontinued
operations, net of tax -- 0.02
Net income $0.41 $0.31Weighted-average diluted shares outstanding 153.2 150.7
Year-To-Date Year-To-Date
2003 2002Sales $3,445 $3,295
Cost of sales 2,380 2,320
Selling, general and administrative expenses 724 675
Depreciation and amortization 112 111
Restructuring charge (income) (1) 1 (2)
Interest expense, net 14 19
Other income (2) -- (3)
3,231 3,120Income from continuing operations before
income taxes 214 175
Income tax expense 76 61
Income from continuing operations 138 114Loss on disposal of discontinued operations,
net of tax (1) (18)
Cumulative effect of accounting changes,
net of tax (3) (1) --
Net income $136 $96Diluted EPS:
Income from continuing operations $0.93 $0.77
Loss on disposal of discontinued operations,
net of tax (0.01) (0.11)
Net income $0.92 $0.66Weighted-average diluted shares outstanding 152.2 150.7
(1) Represents revisions in estimates to restructuring reserves for
disposed businesses.
(2) Amount in 2002 reflects real estate transactions.
(3) Related to adoption of SFAS No. 143 "Accounting for Asset Retirement
Obligations."
