Foot Locker Q3 Net Income Up 19.4%; Comps Inch Up 1.2%

Foot Locker, Inc. reported net income for its third quarter ended October 30 increased 15% to 47 cents per share, or $74 million, from 41 cents per share, or $62 million last year. For the third quarter period, sales increased 14.4% to $1.37 billion this year compared with sales of $1.19 billion in the year-ago period. Third quarter comparable-store sales increased 1.2%.

Year-to-date net income increased 42%, to $1.31 per share, or $204 million, compared with 92 cents per share, or $136 million last year. Results from discontinued operations reflect an income tax benefit of $38 million, or $0.24 per share, in the second quarter of 2004, versus a loss related to revisions in estimates to discontinued reserves of $1 million, or $0.01 per share, in 2003. Income from continuing operations increased 15%, to $1.07 per share, or $166 million, versus 93 cents per share, or $138 million last year. Year-to-date sales increased 10.9% to $3.82 billion, compared with sales of $3.45 billion last year. Comparable- store sales increased 0.3%.

“Our 15% increase in third quarter EPS was in line with our guidance range, reflecting a strong top-line sales increase and our very disciplined approach to expense management,” stated Matthew D. Serra, Foot Locker, Inc.’s Chairman and Chief Executive Officer. “While our gross margin rate declined, primarily due to an unfavorable comparison to last year’s very strong performance, we expect our fourth quarter gross margin rate to improve versus last year as we plan to continue to temper our promotional posture and benefit from a lower occupancy rate.”

Mr. Serra continued, “We are also optimistic that the improving comparable-store sales trend in our U.S. stores will continue and contribute to a successful fourth quarter. We remain encouraged by new product launches that will be available in our U.S. stores, including gaining access to additional quantities of certain marquee products that were missing from our stores last year. As a result of these factors, we expect our fourth quarter earnings per share to increase by 10 to 20%.”

During the third quarter, Foot Locker continued to manage and expand its worldwide store base to provide for maximum long-term growth and profitability. The Company opened 21 new stores, remodeled/relocated 37 stores and closed 24 stores. At October 30, 2004, the Company operated 3,955 stores in 17 countries in North America, Europe and Australia. As previously announced, the Company also purchased 11 stores in the Republic of Ireland during the third quarter. These stores have since been remodeled and are currently operating under the Foot Locker banner.

The Company continued to utilize its internally generated cash flow to fund its store expansion plans, reduce its liabilities and increase its cash dividends to shareholders. At the end of the quarter, the Company’s cash position stood at $249 million. During the quarter, the Company also contributed an additional $56 million to its U.S. pension plan in advance of ERISA requirements.

As previously announced, on November 17, 2004, the Company’s Board of Directors increased Foot Locker, Inc.’s quarterly common stock dividend 25% from its previous amount to $0.075 per share, which is equivalent to an annualized rate of $0.30 per share. The increased dividend will be payable January 28, 2005 to shareholders of record on January 14, 2005.

                            FOOT LOCKER, INC.
             Condensed Consolidated Statements of Operations
                               (unaudited)
           Periods ended October 30, 2004 and November 1, 2003
                 (In millions, except per share amounts)

                                                Third Quarter  Third Quarter
                                                    2004             2003

  Sales                                            $1,366           $1,194

  Cost of sales                                       941              805
  Selling, general and administrative expenses        270              250
  Depreciation and amortization                        38               37
  Interest expense, net                                 4                5
                                                    1,253            1,097
  Income from continuing operations
   before income taxes                                113               97
  Income tax expense                                   39               35
  Income from continuing operations                    74               62

  Loss on disposal of discontinued
   operations, net of tax                             ---              ---
  Net income                                          $74              $62

  Diluted EPS:
  Income from continuing operations                 $0.47            $0.41
  Loss on disposal of discontinued
   operations, net of tax                             ---              ---
  Net income                                        $0.47            $0.41