Foot Locker Inc. said first quarter sales decreased 0.5% to $1.31 billion from $1.32 billion. Excluding the effect of foreign currency fluctuations, total sales for the first quarter decreased 3.7%. First quarter comparable-store sales decreased 2.9%.
Net income for the first quarter ended was $3 million, or 2 cents a share, after store closing expenses of $3 million, after-tax, or two cents a share, and a non-cash impairment charge of $15 million, after-tax, or 10 cents a share. Excluding these charges, earnings were $21 million, or 14 cents a share. In the first quarter of 2007, the company reported net income of $17 million, or 11 cents per share.
Store closing expenses primarily reflect negotiated landlord settlements associated with exiting 15 stores prior to lease expirations in line with a program initiated by the company in 2007. The impairment charge recognized during the first quarter relates to a note receivable due from the purchaser of the company's former Northern Group operation in
“Although the external environment remained challenging, our first quarter net income, excluding the impairment charge, was in line with our expectations going into the quarter,” stated Matthew D. Serra, Foot Locker, Inc.'s chairman and CEO. “The inventory initiatives that we undertook last year helped position our company for an improved gross margin rate for this year. Additionally, our first quarter profit was enhanced by lower depreciation expense than last year and expense containment initiatives. We continue to expect our net income for the full year, excluding the impairment charge, to be in a range of $0.65 to $0.85 per share.”
Financial Position
At the end of the first quarter, the company's cash position, net of debt, was $283 million, a $100 million improvement from the same time last year. Subsequent to the end of the first quarter, the company completed a new, 3-year, $175 million revolving credit facility with its banks. Concurrently, the company repaid the $88 million balance that was outstanding on its term loan which was scheduled to mature in May 2009.
Serra continued, “In line with a strategic initiative, we decreased our merchandise inventory by $99 million versus the first quarter of last year, which was the primary factor that contributed to the increase in our net cash position. With the recent completion of a new credit facility and repayment of debt, we have strengthened further our financial foundation. At closing of the facility, our cash and short-term investment position, and availability under our new revolving credit facility totaled nearly $600 million, while our debt was reduced to $129 million.”
Store Base Update
During the first quarter, the company opened 33 new stores; remodeled/relocated 73 stores and closed 60 stores. At May 3, 2008, the company operated 3,758 stores in 21 countries in North America, Europe and
