Foot Locker reported net income for the second quarter increased 121% to 53 cents per share, or $82 million, compared with 24 cents per share, or $36 million in Q2 last year. Sales increased 12.9% to $1.27 billion compared with sales of $1.12 billion in the year-ago period. Second quarter comparable-store sales decreased 0.5%.

Second quarter results in 2004 included an income tax benefit of $37 million, or $0.24 per share, related to discontinued businesses.

Income from continuing operations increased 16 percent to $0.29 per share, or $45 million, from $0.25 per share, or $37 million last year. Included in this year's results was a loss of $10 million, or $0.07 per share, related to the integration and operation of the 349-store Footaction chain that the Company acquired in May. Income from continuing operations, excluding the Footaction results, increased 44 percent to $0.36 per share, or $55 million during the second quarter. Also included in this year's income from continuing operations were income tax benefits related to resolutions of U.S. and foreign income tax exams, resulting in an effective tax rate that was significantly lower than the second quarter of last year. The lower effective tax rate versus the second quarter of last year, resulted in the Company's earnings being enhanced by $0.04 per share.

Year-to-date reported net income increased 65 percent to $0.84 per share, or $130 million, compared with $0.51 per share, or $74 million last year. Income from continuing operations for the 26-week period ended July 31, 2004 increased 15 percent, to $0.60 per share, or $92 million, compared with $0.52 per share, or $76 million last year. Excluding the Footaction results, year- to-date income from continuing operations increased 29 percent to $0.67 per share, or $102 million. Year-to-date sales increased 9.0 percent to $2,454 million, compared with sales of $2,251 million last year. Comparable-store sales decreased 0.1 percent.

“By any measure, we reported outstanding second quarter and year to date earnings results. Our strong profit growth reflects an improving sales trend in our U.S. stores and impressive gross margin rate improvement in our comparable-store base, combined with our continued diligent expense management,” stated Matthew D. Serra, Foot Locker, Inc.'s Chairman and Chief Executive Officer. “We are very pleased with the efficiency with which our organization completed the integration of the Footaction chain and re-merchandised its product offerings for the fall season. We believe that these stores are well positioned for a profitable fall season, and when added to the performance of our existing store base, makes us optimistic for our financial performance for the balance of the year.”

Mr. Serra continued, “There is an excellent opportunity for our comparable-store sales trend in our U.S. businesses to improve going forward as our stores regain access to higher end marquee footwear products from our largest supplier, which we expect will result in higher average price points. We also expect to continue to temper our promotional posture to enhance our merchandise margin rate and aggressively work on cost efficiencies. Earnings per share from continuing operations are expected to continue to show increases of 10 to 20 percent for each remaining quarter of 2004.”

The Company's financial position continued to strengthen as its cash position, net of debt, of $37 million, represented a $61 million increase from the end of the second quarter last year. This improvement includes the effects of the conversion of $150 million of subordinated debt into equity and the Company's $225 million investment in the Footaction chain. In addition, the Company's balance sheet was enhanced by $46 million as a result of a reduction in income tax liabilities, net related to resolutions of U.S. and foreign income tax exams.

During the second quarter, the Company added 389 stores, including 40 new stores in existing formats and 349 acquired Footaction stores. The Company also remodeled/relocated 48 stores and closed 18 stores. At July 31, 2004, the Company operated 3,958 stores in 17 countries in North America, Europe and Australia.

                            FOOT LOCKER, INC.
                  Consolidated Statements of Operations
                               (unaudited)
              Periods ended July 31, 2004 and August 2, 2003


  (In millions, except per share        Second Quarter        Second Quarter
   amounts)                                  2004                   2003

                                                       Adjusted
                                                       Results
                                                      to exclude
                                   As     Footaction  Footaction      As
                                reported   Results     Results     reported

  Sales                          $1,268     $104       $1,164       $1,123

  Cost of sales                     900       91          809          792
  Selling, general and
   administrative expenses          268       26          242          233
  Depreciation and amortization      37        2           35           38
  Restructuring charge  (1)           2       --            2            1
  Interest expense, net               4        1            3            4
                                  1,211      120        1,091        1,068
  Income from continuing
   operations before income taxes    57      (16)          73           55
  Income tax expense                 12       (6)          18           18
  Income from continuing
   operations                        45      (10)          55           37

  Income/(loss) on disposal of
   discontinued operations, net      37       --           37           (1)
  of tax(2)
  Net income                        $82     $(10)         $92          $36

  Diluted EPS:
  Income from continuing
   operations                     $0.29   $(0.07)       $0.36        $0.25
  Income/(loss) on disposal of
   discontinued operations, net
   of tax                          0.24       --         0.24        (0.01)
  Net income                      $0.53   $(0.07)       $0.60        $0.24