NEWS RELEASE
CONTACT: Peter D. Brown
Vice
President, Investor Relations
and
Treasurer
Foot
Locker, Inc.
(212)
720-4254
·
Fourth Quarter Income from Continuing Operations
Increases 48 Percent to $0.47 Per Share
· Year-end Cash Balance is $448 Million
· 2004 EPS Expected to Increase 10-to-20 Percent
· 2004 Capital Expenditures Planned at $165 Million
· Company Signs 6 Year Agreement with United States Olympic Committee
· Moody’s Upgrades Company’s Senior Implied Credit Rating to Ba1
NEW YORK, NY, March 2, 2004 –
Foot Locker, Inc. (NYSE: FL), the New York-based specialty athletic retailer,
today reported net income from continuing operations of $0.47 per share for its
fourth quarter and $1.40 per share for its full year for the period ended
January 31, 2004. The Company also
reported a substantially enhanced financial position, with a year-end cash
balance of $448 million, up 25 percent from the 2002 year-end cash balance of
$357 million.
Income from continuing
operations for the fourth quarter ended January 31, 2004 increased 48 percent
to $71 million, or $0.47 per share, compared with $48 million, or $0.33 per
share, last year. Sales for this year’s
fourth quarter increased 9.9 percent, to $1,334 million, as compared with
$1,214 million last year, reflecting a comparable-store increase of 3.9
percent.
Income from continuing
operations for the full year increased 29 percent to $209 million, or $1.40 per
share, as compared with $162 million, or $1.10 per share, last year. Sales for the full year increased 6.0 percent,
to $4,779 million as compared with sales of $4,509 million last year,
reflecting a comparable-store decrease of 0.5 percent.
“Over the past five years, we
significantly increased our earnings and strengthened our financial position,”
stated Matthew D. Serra, Foot Locker Inc.’s Chairman and Chief Executive
Officer. “We are particularly pleased
with our fourth quarter results which exceeded our expectations. During this recent quarter, our comparable
store sales strengthened versus earlier in the year and we benefited from a
higher gross margin rate and more efficient expense structure.”
The Company continued to
utilize its cash flow to reduce its debt, increase its cash balance and enhance
its financial position. At year-end,
the Company’s cash balance grew to $448
million. Net of debt, the Company’s
cash position increased $112 million versus last year.
During 2003, the Company
continued to focus on maximizing its store base’s productivity, in the process
opening 113 new stores, remodeling/relocating 250 stores, and closing 128
stores. At January 31, 2004, the
Company operated 3,610 stores in 16 countries in North America, Europe and
Australia.
“Continuing to strengthen our
financial position remains a high priority for our Company, as we strive to
attain an investment grade credit rating,” continued Mr. Serra. “During the past five years we increased our
cash, net of debt position by $686 million.
As a result, our net interest expense declined significantly by $33
million, to $18 million in 2003 as compared with $51 million in 1999. This strengthened financial position allowed
us to initiate a shareholder dividend program in 2002, and enabled the Company
to double the amount of its quarterly dividend payout beginning in the fourth
quarter of 2003.”
On February 26, 2004, Moody’s
Investor Services upgraded the Company’s Senior Implied Credit Rating to
Ba1. The upgrade was “based on the
company’s considerable progress in improving profit margins, free cash flow and
credit metrics despite shifts in consumer preferences and a challenging retail
environment.”
The Company expects to generate
a mid-to-high single digit total sales increase during 2004, and continue to
improve, as compared with the prior year, its gross margin rate and SG&A
expenses, as a percentage of sales. As
a result, earnings per share growth of 10-to-20 percent is currently expected
for the full year. A similar EPS growth
rate of 10-to-20 percent is currently anticipated for the Company’s first
fiscal quarter. The Company’s capital
expenditure program is planned at $165 million for 2004, and includes the
opening of 110 new stores, the roll-out of a new point-of-sale system in the
Foot Locker stores in the U.S. and an expansion of the Company’s European
distribution center.
“We remain confident that our
business will continue to grow and produce meaningful annual earnings increases
over the next several years,” commented Mr. Serra. “The economic environment in the United States is improving and
the retail climate, including mall traffic and promotional climate, has
stabilized. Our merchandise inventory
is well positioned for 2004, and additional expense leveraging is expected to
result from infrastructure enhancements and our cost reduction efforts.”
In January 2004, Footlocker.com
entered into a six-year agreement with the United States Olympic Committee
providing the Company with the exclusive rights to sell USOC licensed products
through catalogs and via a new E-commerce site.
The Company is hosting a live
conference call at 10:00 am (ET) on Wednesday, March 3, 2004 to review the 2003
fourth quarter and full year results, discuss our 2004 outlook, and respond to
analysts’ questions. This conference
call may be accessed live from the Investor Relations section of the Foot
Locker, Inc. website at http://www.footlocker-inc.com. The conference call will be available for
webcast replay until 5:00 pm on Monday, March 8, 2004.
This press release contains forward-looking statements, which reflect
management’s current views of future events and financial performance. These forward-looking statements are based
on many assumptions and factors detailed in the Company’s filings with the
Securities and Exchange Commission, including the effects of currency
fluctuations, customer demand, fashion trends, competitive market forces,
uncertainties related to the effect of competitive products and pricing,
customer acceptance of the Company’s merchandise mix and retail locations, the
Company’s reliance on a few key vendors for a majority of its merchandise
purchases (including a significant portion from one key vendor), unseasonable
weather, risks associated with foreign global sourcing, including political instability,
changes in import regulations, disruptions to transportation services and
distribution, and the presence of severe acute respiratory syndrome, economic
conditions worldwide, any changes in business, political and economic
conditions due to the threat of future terrorist activities in the United
States or in other parts of the world and related U.S. military action
overseas, and the ability of the Company to execute its business plans
effectively with regard to each of its business units, including its plans for
the marquee and launch footwear component of its business. Any changes in such assumptions or factors
could produce significantly different results.
The Company undertakes no obligation to update forward-looking
statements, whether as a result of new information, future events, or
otherwise.
- MORE -
FOOT LOCKER, INC.
Consolidated Statements of
Operations
(unaudited)
Periods ended January 31, 2004 and
February 1, 2003
(In millions, except per share
amounts)
|
|
Fourth Quarter 2003 |
|
Fourth Quarter 2002 |
|
Sales |
$ 1,334 |
|
$
1,214 |
|
|
|
|
|
|
Cost of sales |
922 |
|
845 |
|
Selling, general and administrative expenses |
263 |
|
253 |
|
Depreciation and amortization |
35 |
|
38 |
|
Interest expense, net |
4 |
|
7 |
|
|
1,224 |
|
1,143 |
|
Income from continuing operations before income taxes |
110 |
|
71 |
|
Income tax expense |
39 |
|
23 |
|
Income from continuing operations |
71 |
|
48 |
|
|
|
|
|
|
Income on disposal of discontinued operations, net of
tax |
--- |
|
9 |
|
Net income |
$ 71 |
|
$
57 |
|
|
|
|
|
|
Diluted EPS: |
|
|
|
|
Income from continuing operations |
$
0.47 |
|
$
0.33 |
|
Income on disposal of discontinued operations |
--- |
|
0.06
|
|
Net income |
$ 0.47 |
|
$
0.39 |
|
|
|
|
|
|
Weighted-average diluted shares outstanding |
155.0 |
|
150.8 |
|
|
|
|
|
|
|
Full Year 2003 |
|
Full Year 2002 |
|
Sales |
$
4,779 |
|
$
4,509 |
|
|
|
|
|
|
Cost of sales |
3,302 |
|
3,165 |
|
Selling, general and administrative expenses |
987
|
|
928 |
|
Depreciation and amortization |
147 |
|
149 |
|
Restructuring charge (income) (1) |
1 |
|
(2) |
|
Interest expense, net |
18 |
|
26 |
|
Other income (2) |
--- |
|
(3) |
|
|
4,455 |
|
4,263 |
|
Income from continuing operations before income taxes |
324 |
|
246 |
|
Income tax expense |
115 |
|
84 |
|
Income from continuing operations |
209 |
|
162 |
|
|
|
|
|
|
Loss on disposal of discontinued operations, net of tax |
(1) |
|
(9) |
|
Cumulative effect of accounting change, net of tax (3) |
(1) |
|
--- |
|
Net income |
$ 207 |
|
$
153 |
|
|
|
|
|
|
Diluted EPS: |
|
|
|
|
Income from continuing operations |
$
1.40 |
|
$
1.10 |
|
Loss on disposal of discontinued operations |
(0.01) |
|
(0.05) |
|
Net income |
$ 1.39 |
|
$
1.05 |
|
|
|
|
|
|
Weighted-average diluted shares outstanding |
152.9 |
|
150.8 |
|
|
|
|
|
(1) Represents revisions in estimates to restructuring
reserves for disposed businesses.
(2) Amount in 2002 reflects real
estate transactions.
(3) Related to adoption of SFAS No.
143 “Accounting for Asset Retirement Obligations.”
- MORE
-
FOOT LOCKER, INC.
Condensed Consolidated Balance Sheets
(unaudited)
(In millions)
|
|
January 31, 2004 |
|
February 1, 2003 |
|
|
Assets |
|
|
|
|
|
|
|
|
|
|
|
CURRENT ASSETS |
|
|
|
|
|
Cash and cash equivalents |
$
448 |
|
$ 357 |
|
|
Merchandise inventories |
920 |
|
835 |
|