Foot Locker, Inc. reported earnings rose to $57 million, or 36 cents a share, in the fourth quarter compared to net earnings of $23 million, or 14 cents, a year ago. Excluding net charges in both years, fourth quarter net
income surged 56.4% to $61 million, or 39 cents per share, from $39 million,
or 24 cents, a year ago.

These net results included an after-tax charge of $4 million, or 3 cents a share, for the write-down of assets, net of the partial recovery of a short-term investment that was written down in 2008.  In the year-ago period, the company reported net income of $23 million, or 14 cents per share, which included after-tax charges of $16 million, or 10 cents a share, related to inventory write-downs, corporate restructuring costs and an income tax adjustment.

Fourth quarter comparable-store sales increased 7.3%. Total fourth quarter sales increased 5.1% to $1.39 billion this year, compared with sales of $1.33 billion for the corresponding prior-year period.  Excluding the effect of foreign currency fluctuations, total sales for the thirteen-week period increased 6.5%.

“The significant increase in our fourth quarter net income resulted from strong comparable-store sales growth and gross margin rate expansion, as well as effective expense management,” stated Ken C. Hicks, chairman of the board and chief executive officer of Foot Locker, Inc.  “We are very encouraged with the ongoing improvement in our operating performance, as the initial steps we are taking in executing our new strategic plan have led to positive strides toward achieving our long-term financial objectives.  Heading into 2011, we will remain focused on the further implementation of our strategic initiatives, which we believe will lead to continued profitable growth of our business.”

Fiscal Year Financial Results

For the fiscal year, the company reported net income of $169 million, or $1.07 per share.  These results included the fourth quarter net charges of $4 million, or 3 cents a share.  Last year, the company reported net income of $48 million, or 30 cents per share, including an inventory write-down, corporate restructuring charges, the write-down of long-lived assets, and an income tax adjustment that totaled $38 million, after-tax, or 24 cents per share.  

Excluding the net charges in both years, full year non-GAAP net income was $173 million, or $1.10 per share, in 2010 versus $86 million, or 54 cents per share, in 2009.  

Comparable-store sales increased 5.8% in 2010, and total sales increased 4.0% to $5.05 biillion, compared with sales of $4.85 billion last year. Excluding the effect of foreign currency fluctuations, total sales for the full year increased 4.6%.

Financial Position

The company's merchandise inventory at year end was $1.06 billion, which was $22 million, or 2.1%, higher than at the end of last year.  The company currently believes that its inventory is positioned well for 2011.

During the fourth quarter of 2010, the company repurchased 705,000 shares of its common stock for $13.7 million under the Company's $250 million share repurchase program.  For the fiscal year, the company repurchased 3.2 million shares of common stock for $49.6 million and paid quarterly dividends to shareholders totaling $93 million.  As announced last month, the company increased its quarterly dividend by 10 percent, beginning with its first quarter 2011 dividend payment.

At year end 2010, the company's cash and short-term investments totaled $696 million, while the debt on its balance sheet was $137 million.  The company's total cash position, net of debt, was $108 million higher than at the same time last year.

Store Base Update

The company opened 43 stores, remodeled or relocated 171 stores, and closed 117 stores during fiscal 2010.  At January 29, 2011, the company operated 3,426 stores in 21 countries in North America, Europe, and Australia.  In addition, 26 franchised stores are currently operating in the Middle East and South Korea.

FOOT LOCKER, INC.


Condensed Consolidated Statements of Operations


(unaudited)


Periods ended January 29, 2011 and January 30, 2010


(In millions, except per share amounts)












Fourth Quarter 2010


Fourth Quarter 2009



GAAP

Adjustments

Non-GAAP,

As Adjusted


GAAP

Adjustments

Non-GAAP,

As Adjusted


Sales

$  1,392

$       –

$  1,392


$  1,325

$       –

$  1,325











Cost of sales (1)

962

962


958

(14)

944


Selling, general and administrative expenses

303

303


295

295


Depreciation and amortization

27

27


27

27


Impairment / other charges (2)

10

(10)


5

(5)


Other (income) (3)

(2)

2


(1)

(1)


Interest expense, net

2

2


2

2



1,302

(8)

1,294


1,286

(19)

1,267


Income from continuing operations    









  before income taxes

90

8

98


39

19

58


Income tax expense (4)

33

4

37


16

3

19


Income from continuing operations

57

4

61


23

16

39


Discontinued operations, net of tax

About The Author

Thomas J. Ryan

Thomas J. Ryan Senior Business Editor | SGB Media tryan@sgbonline.com | 917.375.4699

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