Foot Locker Q2 Net Income Up 14% Despite 4.4% Comp Store Decline

Foot Locker, Inc. reported that second quarter income from continuing operations increased 14 percent to $0.25 per share, or $37 million, from $0.22 per share, or $33 million last year. For the 13-week second quarter period, sales increased 3.5 percent to $1,123 million this year compared with sales of $1,085 million last year. Second quarter comparable-store sales decreased 4.4 percent.

Income from continuing operations for the 26-week period ended August 2, 2003, increased to $0.52 per share, or $76 million, compared with $0.48 per share, or $71 million last year. Year-to-date sales increased 3.5 percent to $2,251 million, compared with sales of $2,175 million last year. Comparable-store sales decreased 3.5 percent.

Debt, net of cash, was reduced to $24 million from $87 million last year. Merchandise inventories remain current, and are both on plan and well positioned to support third quarter sales expectations.

Matthew D. Serra, Foot Locker, Inc.'s President and Chief Executive Officer stated, “The Company's sales trend significantly improved in late July and this has continued into the third week of August. We expect our average price points to stabilize later in the third quarter as we anniversary against the current fashion trend of lower-priced classic footwear. Additionally, we expect our gross margin rate to continue to be favorable to last year due to our somewhat tempered promotional posture in the United States. Therefore, we currently expect third quarter earnings of $0.31-to-$0.33 per share, in line with analysts' estimates.”

On July 30, 2003, the Company amended and restated its revolving credit facility with its existing bank group, achieving a lower pricing structure and increased covenant flexibility, while extending the maturity date to July 2006. The credit facility was also increased in size by $10 million, to $200 million.

On August 20, 2003, the Board of Directors declared a quarterly dividend on the Company's common stock of $0.03 per share. The dividend will be payable October 31, 2003 to shareholders of record on October 17, 2003.

During the second quarter, the Company opened 38 stores, remodeled/relocated 118 stores and closed 30 stores. The store openings included the Company's entrance into the Portugal and New Zealand markets. At August 2, 2003 the Company operated 3,608 stores in 16 countries in North America, Europe and Australia.

                                  FOOT LOCKER, INC.
                    Consolidated Statements of Operations
                                 (unaudited)
               Periods ended August 2, 2003 and August 3, 2002
                   (In millions, except per share amounts)

                                                      Second         Second
                                                     Quarter        Quarter
                                                        2003           2002
    Sales                                             $1,123         $1,085

    Cost of sales                                        792            773
    Selling, general and administrative expenses         233            220
    Depreciation and amortization                         38             38
    Restructuring charge (income)(1)                       1             (1)
    Interest expense, net                                  4              7
    Other income (2)                                      --             (3)
                                                       1,068          1,034
    Income from continuing
     operations before income taxes                       55             51
    Income tax expense                                    18             18
    Income from continuing operations                     37             33

    Loss on disposal of discontinued
     operations, net of tax                               (1)            (2)
    Net income                                           $36            $31

    Diluted EPS:
    Income from continuing operations                  $0.25          $0.22
    Loss on disposal of discontinued
     operations, net of tax                            (0.01)         (0.01)

    Net income                                         $0.24          $0.21