NEW YORK, NY, March 10, 2008 – Foot Locker, Inc. (NYSE: FL), the New York-based specialty athletic retailer, today reported financial results for its fourth quarter ended February 2, 2008.  In accordance with the National Retail Federation’s recommended calendar, the Company’s prior fiscal year, which ended on February 3, 2007, reflected a 14-week fourth quarter and 53-week fiscal year, thereby adding one additional week to the 2006 fourth quarter and fiscal year periods.

Fourth Quarter Results
The Company reported net income of $87 million, or $0.56 per share, this year as compared with net income of $113 million, or $0.72 per share, last year.  Income from continuing operations was $86 million, or $0.55 per share, this year as compared with $110 million, or $0.70 per share, last year.

This quarter’s results included a non-cash impairment charge to write down long-lived assets for the Company’s U.S. store operations pursuant to SFAS No. 144 and expenses associated with closing unproductive stores, totaling $15 million, after tax, or $0.10 per share.  A $65 million, or $0.42 per share, income tax benefit was also recorded during the fourth quarter to decrease a Canadian income tax valuation allowance related primarily to income tax deductions that the Company now expects will be utilized.  Last year’s results included a benefit of $18 million, or $0.11 per share, due to the additional week. 

For comparative purposes, fourth quarter income from continuing operations, before the non-cash impairment charge, incremental expenses of closing stores and reduction of income tax valuation allowance in 2007, and the benefit of the additional week in 2006, was $36 million, or $0.23 per share, this year versus $92 million, or $0.59 per share, last year.

Sales for the 13-week fourth quarter decreased 10.3 percent to $1,482 million this year, compared with sales of $1,652 million in the 14-week year-earlier period, negatively affected by the additional week last year, and reflecting a 13-week comparable-store sales decrease of 7.8 percent.

“Our fourth quarter sales reflected a very challenging external environment, as overall consumer confidence weakened and retail sales, in general, softened,” stated Matthew D. Serra, Foot Locker, Inc.’s Chairman and Chief Executive Officer.  “Due to lower than expected customer traffic, we employed an aggressive inventory clearance strategy to reduce our merchandise inventory and strengthen our cash position.  As a result, we ended the year with our merchandise inventory well positioned for 2008, and our combined cash and short-term investments greater than at the end of the prior year.”

Fiscal Year Results
For the full year, the Company reported net income of $53 million, or $0.34 per share, compared with net income of $251 million, or $1.60 per share, last year.  Income from continuing operations was $51 million, or $0.33 per share in 2007, versus $247 million, or $1.58 per share, in 2006.

This year’s results included non-cash impairment charges pursuant to SFAS No. 144 and expenses associated with closing unproductive stores totaling $81 million, after tax, or $0.52 per share, and a Canadian income tax valuation allowance adjustment that increased net income by $65 million, or $0.42 per share.  Last year’s results included an impairment charge pursuant to SFAS No. 144 of $12 million, after tax, or $0.08 per share, and an additional week that contributed $18 million, after tax, or $0.11 per share.

Income from continuing operations, before the non-cash impairment charges in 2007 and 2006, expenses of closing unproductive stores, and the income tax valuation allowance adjustment in 2007, and the additional week in 2006, was $67 million, or $0.43 per share this year, versus $241 million, or $1.55 per share, last year.

Sales for the 52-week 2007 period decreased 5.4 percent, to $5,437 million, compared with sales of $5,750 million for the 53-week 2006 fiscal year, negatively affected by the additional week last year and reflecting a comparable-store sales decrease of 6.3 percent.

Financial Position
At year end, the Company’s cash and short-term investments totaled $493 million.  The Company’s total cash position, net of debt, at year end was $272 million, $36 million greater than last year.  During the year, the Company invested $148 million in capital expenditures, paid $77 million in shareholder dividends and repurchased $50 million of its common stock.

Merchandise inventory at year end was 1.7 percent lower than at the end of last year.  Stated in constant currency dollars, the Company’s merchandise inventory decreased by approximately 4 percent versus last year. 

Store Base Update
During the year, the Company opened 117 stores and remodeled or relocated 196 stores. The Company also closed 274 stores in 2007, most of which were unproductive.  At February 2, 2008, the Company operated 3,785 stores in 21 countries in North America, Europe and Australia.  In addition, 10 franchised stores are currently operating in the Middle East and South Korea.

2008 Outlook
The Company’s current guidance for its full year 2008 is as follows:

• Net income in a range of $0.65-to-$0.85 per share
• Comparable-store sales being relatively flat
• Gross margin rate improvement of between 200 and 300 basis points
• Continued expense management discipline
• Positive cash flow at a level exceeding 2007 reflecting higher net income and improved working capital management

Mr. Serra remarked, “Despite our outlook for substantial earnings improvement in 2008 versus 2007, we still regard the economic climate for footwear retailers in the United States to be challenging.  As a result, we have planned our business conservatively for 2008, although we do expect to benefit from a meaningful improvement in our gross margin rate primarily reflecting lower markdowns.”

“Given our solid financial position at the end of 2007 and confidence in the ability of our businesses to sustain positive cash flow generation, as we have previously announced, our Board of Directors voted last month to increase our common stock dividend for 2008 by 20 percent.  We will continue to evaluate all opportunities to enhance shareholder value, balanced prudently against maintaining a strong financial structure.” 

Capital expenditures for 2008 are planned at $160 million, with a focus on implementing initiatives designed to improve the Company’s existing business.  The Company plans to open approximately 60 stores, remodel or relocate 200 stores, and close approximately 140 stores.  Included in the capital plan are funds to freshen the look of additional stores with improved flooring, lighting and other modifications to provide a more pleasant shopping experience.

The Company is hosting a live conference call at 9:00 a.m. (ET) on Tuesday, March 11, 2008 to discuss these results.  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 p.m. on Monday, March 17, 2008.

FOOT LOCKER, INC.
Condensed Consolidated Statements of Operations
(unaudited)
Periods ended February 2, 2008 and February 3, 2007
(In millions, except per share amounts)

FOOT LOCKER, INC.
Reconciliation of Income from Continuing Operations from a GAAP-reported basis to a non-GAAP basis
(unaudited)
Periods ended February 2, 2008 and February 3, 2007
(In millions, except per share amounts)

FOOT LOCKER, INC.
Condensed Consolidated Balance Sheets
(unaudited)
(In millions)

FOOT LOCKER, INC.
Stores and Estimated Square Footage
(unaudited)
(Square footage in thousands)

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Foot Locker, Inc. 112 West 34th Street, New York, NY 10120