Foot Locker Q1 Net Income Drops 71.2% on Negative Comps

Foot Locker, Inc. net income for the first quarter ended May 5, 2007 was $17 million, or 11 cents per share, as compared with $59 million, or 38 cents per share, last year. Last year's results benefited by $1 million, or one penny per share, from a cumulative effect of accounting change related to the Company's required adoption of SFAS 123.

First quarter sales decreased 3.6% to $1.316 billion, as compared with sales of $1.365 billion last year. Excluding the effect of foreign currency fluctuations, total sales for the 13- week period decreased 5.3%. First quarter comparable-store sales decreased 5.1%.

“Our first quarter financial results reflected a weak performance in each of our U.S. businesses partially offset by a solid profit increase at our international operations,” stated Matthew D. Serra, Foot Locker, Inc.'s Chairman and Chief Executive Officer. “Because of the disappointing sales at our U.S. stores, we increased our promotional posture to help clear older goods and reduce inventory levels. As a result, our gross margin in our U.S. store businesses fell significantly short of our plan.”

Mr. Serra continued, “While we are seeing signs of improvement in our U.S. store businesses, we believe it is prudent to more-conservatively plan our business for the balance of 2007. Therefore, for our second fiscal quarter, we currently expect earnings to be in the range of 15 cents to 20 cents per share. This forecast includes higher markdowns than last year to ensure that our inventory is well-positioned for the fall season. We currently expect that our earnings for the full year will be in the range of $1.15 to $1.25 per share.”

During the first quarter, the Company opened 61 new stores; remodeled/relocated 65 stores and closed 73 stores. At May 5, 2007, the Company operated 3,930 stores in 20 countries in North America, Europe and Australia. The store openings include 31 new Footquarters stores, the Company's new value-based footwear chain. In addition, three additional Foot Locker franchised stores were operating in the Middle East.

The Company continued to strengthen its financial position while also redeploying its strong cash flow with a goal of enhancing shareholder value. At the end of the first quarter, the Company's cash position, net of debt, was $183 million, an $85 million improvement from the same time last year. The Company's cash and short-term investments totaled $418 million, while its total debt was $235 million. During the first quarter, the Company paid out $19 million in shareholder dividends and repurchased 1.2 million shares of its common stock for $26 million.

                              FOOT LOCKER, INC.
               Condensed Consolidated Statements of Operations
                                 (unaudited)
                 Periods ended May 5, 2007 and April 29, 2006
                   (In millions, except per share amounts)


                                                      First           First
                                                     Quarter         Quarter
                                                      2007            2006

    Sales                                           $ 1,316         $ 1,365

    Cost of sales                                       956             946
    Selling, general and administrative expenses        290             283
    Depreciation and amortization                        43              43
    Interest expense, net                               ---               1
                                                      1,289           1,273

   Income before income taxes and
    cumulative effect of accounting change               27              92
   Income tax expense                                    10              34
   Income before cumulative effect of
    accounting change                                    17              58
   Cumulative effect of accounting
    change, net of income tax                           ---               1
   Net income                                       $    17          $   59

   Diluted EPS:
   Income before cumulative effect of
    accounting change                               $  0.11          $ 0.37
   Cumulative effect of accounting change               ---            0.01
   Net income                                       $  0.11          $ 0.38

   Weighted-average diluted shares outstanding        156.5           156.7