Foot Locker, Inc. reported net income of $0.33 per share for its fourth quarter and $0.99 per share for its full year for the period ended February 1, 2003. The Company also reported a substantially enhanced financial position, with a year-end cash balance of $357 million, and debt, net of cash reduced to zero.
Income from continuing operations for the fourth quarter ended February 1, 2003 increased 14 percent to $48 million, or $0.33 per share, compared with $42 million, or $0.28 per share, last year. Sales for this year’s fourth quarter increased 5.1 percent, to $1,214 million, as compared with $1,155 million last year, reflecting a comparable-store decrease of 0.9 percent.
Income from continuing operations for the full year increased 46 percent to $162 million, or $1.10 per share, as compared with $111 million, or $0.77 per share, last year. Last year’s full year results included a loss of $0.21 per share from disposed operations. Adjusted net income increased 13 percent, to $160 million, or $1.10 per share from $142 million, or $0.98 per share, last year. Sales for the full year increased 4.3 percent, to $4,509 million as compared with sales from adjusted operations of $4,325 million last year, reflecting a comparable-store increase of 0.1 percent.
“2002 represented the fourth consecutive year of significant earnings improvement for our Company,” stated Mathew D. Serra, Foot Locker Inc.’s President and Chief Executive Officer. “Additionally, the fourth quarter of 2002 represented the 14th consecutive quarter of adjusted earnings improvement versus the same period of the prior year. These profit improvements were largely attributable to the successful implementation of several strategic initiatives.” These strategic initiatives, which continue to be a priority, include the following:
* Significant growth of our European operation
* Profit Growth of Champs Sports division
* Development of highly profitable direct-to-customer channel
* Expanded offerings of private-label apparel
* Lower expense rates resulting from corporate-wide initiatives
The Company continued to substantially enhance its capital structure by employing free cash flow to reduce debt and increase its cash balance. At year-end, the Company’s cash balance was $357 million and its total balance sheet debt, net of cash, was zero. During 2002, the Company opened 157 stores, remodeled/relocated 205 stores and closed 122 stores. At February 1, 2003 the Company operated 3,625 stores in 14 countries in North America, Europe and Australia.
Mr. Serra continued, “We are proud that we ended 2002 with $357 million of cash, equal to our total balance sheet debt. Reducing our debt, net of cash, to zero, is the accomplishment of an objective that our organization set at the beginning of 1999, when our net debt balance was $574 million. This strengthened financial position allowed us to initiate our $0.12 per share annual shareholder dividend in the fourth quarter of 2002.”
During 2003, the Company plans to maintain a sharp focus on growing top-line sales, controlling expenses and generating positive cash flow. Maintaining a strong financial position will remain a high priority, together with investing in opportunities to increase shareholder value. These opportunities may include repurchasing some of the Company’s outstanding debt or common stock, increasing its shareholder dividend, accelerating capital investment in its existing business or new stores, or other opportunities that may become available.
“Our business remains well positioned to produce annual earnings growth over the next several years,” commented Mr. Serra. “The retail climate, however, remains challenging due to uncertain world events that have contributed to consumer confidence in the U.S. being at a nine-year low. Nevertheless, we remain committed to continuing our record of producing quarter-over-quarter earnings improvements.”
Foot Locker, Inc.’s ticker symbol on the New York Stock Exchange will be changed to “FL” from “Z”, effective with the beginning of trading on March 31, 2003.
FOOT LOCKER, INC.
Consolidated Statements of Operations
(unaudited)
Periods ended February 1, 2003 and February 2, 2002
(In millions, except per share amounts)
FOURTH QUARTER
Fourth Quarter 2002 Fourth Quarter 2001
Reported Disposed As Reported Disposed As
Results Operations Adjusted Results Operations Adjusted
Sales $1,214 -- $1,214 $1,155 $-- $1,155
Cost of sales 845 -- 845 806 -- 806
Selling,
general and
administrative
expenses 253 -- 253 236 -- 236
Depreciation
and
amortization 38 -- 38 40 -- 40
Restructuring
charge -- -- -- 1 1 --
Interest expense,
net 7 -- 7 6 -- 6
Other income -- -- -- (1) (1) --
1,143 -- 1,143 1,088 -- 1,088
Income from
continuing
operations
before
income
taxes 71 -- 71 67 -- 67
Income tax
expense 23 -- 23 25 -- 25
Income from
continuing
operations 48 -- 48 42 -- 42
Loss on disposal
of discontinued
operations,
net of
income taxes -- -- -- (6) (6) --
Net income $48 -- $48 $36 $(6) $42
FULL YEAR Full Year 2002 Full Year 2001
Reported Disposed As Reported Disposed As
Results Operations Adjusted Results Operations Adjusted
Sales $4,509 $-- $4,509 $4,379 $54 $4,325
Cost of sales 3,165 -- 3,165 3,071 37 3,034
Selling,
general and
administrative
expenses 928 -- 928 923 29 894
Depreciation
and
amortization 149 -- 149 154 -- 154
Restructuring
charge/(income) (2) (2) -- 34 34 --
Interest expense,
net 26 -- 26 24 -- 24
Other income (3) -- (3) (2) (1) (1)
4,263 (2) 4,265 4,204 99 4,105
Income from
continuing
operations
before
income taxes 246 2 244 175 (45) 220
Income tax
expense 84 -- 84 64 (14) 78
Income from
continuing
operations 162 2 160 111 (31) 142
Loss on
disposal of
discontinued
operations,
net of
income taxes (18) (18) -- (19) (19) --
Net income $144 $(16) $160 $92 $(50) $142
