Vice President, Investor Relations

and Treasurer

Foot Locker, Inc.

(212) 720-4254

NEW YORK, NY, March 13, 2002 – Foot Locker, Inc. (NYSE: Z), the New York-based specialty athletic retailer, today reported financial results for its fourth quarter and full year ended February 2, 2002.

Adjusted net income for the Company’s fourth quarter ended February 2, 2002, increased to $42 million, or $0.28 per share, compared with $37 million, or $0.26 per share, last year. Last year’s fourth quarter included one additional week in line with the National Retail Federation calendar. Excluding last year's additional week, earnings per share increased 47 percent in 2001 from adjusted net income of $27 million, or $0.19 per share in last year’s fourth quarter.

For the 13-week fourth quarter periods, sales from adjusted operations were $1,155 million this year compared with $1,135 million last year, reflecting a comparable-store increase of 2.1 percent, and adjusted operating profit increased to $89 million in 2001 from $73 million in 2000. Last year’s additional week contributed an incremental $65 million of sales and $16 million of operating profit.

For the fourth quarter of 2001, reported results from continuing operations were essentially the same as adjusted results. For the fourth quarter of 2000, reported sales were $1,256 million, reported operating profit was $98 million and reported income from continuing operations was $42 million, or $0.31 per share.

Adjusted net income for the 52-week full year period ended February 2, 2002, increased to $142 million, or $0.98 per share, from $111 million, or $0.80 per share, in the 53-week full year period last year. Sales from adjusted operations rose to $4,325 million compared with $4,217 million, last year, reflecting a comparable-store increase of 4.9 percent. Adjusted operating profit increased 13 percent to $307 million from $272 million in 2000.

Reported income from continuing operations for the full year was $111 million, or $0.77 per share, compared with $107 million, or $0.77 per share, last year. Reported sales from continuing operations were $4,379 million in 2001 versus $4,356 million in 2000. Reported operating profit from continuing operations was $263 million in 2001 compared with $260 million last year.

“We are proud of our 2001 achievements, including our fourth quarter and full year financial results,” stated Mathew D. Serra, Foot Locker Inc.’s President and Chief Executive Officer. “I am particularly pleased that our Company was able to continue to grow earnings in spite of what has been an extremely challenging environment for retail businesses across the board. In fact, the full year 2001 represents the third year in a row of significant year-over-year adjusted earnings improvements. Several factors contributed to our year-over-year earnings performance, including:

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·         Expanded marquee footwear and private-label apparel offerings 

·         Higher gross margin rate reflecting improved merchandise purchasing

·         Focused and planned promotional strategy

·         Significantly lower SG&A rate resulting from corporate-wide expense initiatives

In addition to our earnings improvement, 2001 was a noteworthy year for us in realizing a number of our key ongoing strategic positioning goals: We completed the dispositions of our non-athletic businesses, changed our name to Foot Locker, Inc. in order to reflect our streamlined business focus, and accelerated our real estate initiatives with 116 new store openings and 193 store remodels or relocations.”

The Company’s financial position remains strong, with debt, net of cash, reduced to $184 million at year-end. Additionally, the Company did not borrow under its $190 million unsecured revolving credit facility during its fourth fiscal quarter. Merchandise inventories remain very current and well positioned to support 2002 sales. During the fourth quarter, the Company opened 54 stores, remodeled/relocated 51 stores and closed 32 athletic stores. At February 2, 2002 the Company operated 3,590 athletic stores in 14 countries in North America, Europe and Australia.

Foot Locker, Inc.’s focus in 2002 will be a continuation of those strategies that helped drive earnings per share growth this past year and are expected to drive future top-line sales increases. 

·         Aggressive store expansion program in Europe

·         Growth of highly profitable direct-to-customer Internet and catalog business

·         Significant productivity improvements at Champs Sports

·         Foot Locker store expansion in urban United States locations

In line with these strategies, the Company is planning three new growth initiatives in 2002 to further differentiate its business from the competition.

·         Open 25 new Nike Jordan shops in Foot Locker and Champs Sports stores

·         Expand Footlocker.com Internet presence to Europe

·         Open 3 new “Power Stores” in New York City

Foot Locker, Inc. and Nike are building a stronger strategic partnership by focusing on initiatives to grow high-end marquee footwear and apparel sales. Most recently, an agreement was reached to open 25 Nike Jordan shops in the Company’s more-important Foot Locker and Champs Sports urban stores. Merchandise selections will be targeted towards the strongest selling basketball footwear and athletic apparel endorsed by Michael Jordan. This initiative is in line with the Company’s strategic priority of increasing the productivity of its existing stores.

A second 2002 initiative is to expand the Company’s Internet presence to Europe with the introduction of a new division, Footlocker.com Europe. The Company rapidly grew its U.S. Internet business from its introduction in 1998 to $100 million in sales in 2001 by leveraging the infrastructure of its Eastbay catalog operation with its market-leading Foot Locker brand name. The Company sees a similar opportunity in Europe and plans to initiate this strategy by utilizing the expertise of its U.S. Footlocker.com management team to assist its Foot Locker Europe operation. This initiative is expected to complement the Company’s aggressive store expansion plans in this region.

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The third exciting initiative is the recent negotiation of three lease agreements to open new “power stores” in New York City.   The Company plans to open one Foot Locker and one Champs Sports store on Times Square and one Champs Sports store on 125^th Street in Manhattan. The addition of these three stores is in line with the Company’s strategy of targeting high-trafficked urban locations for new store growth.

“Our businesses are well positioned to continue our record of producing quarter-over-quarter profit gains and meaningful annual earnings increases during the next several years,” commented Mr. Serra. “Earnings improvements over the next 12 months are expected to come from a combination of continued productivity gains, and top-line sales growth that is expected to accelerate as we begin to grow our store count. We currently expect our first quarter 2002 earnings per share to approximate $0.25 to $0.27 per share, in line with current analysts’ estimates. For the full year, we continue to expect to generate 10 percent or higher annual earnings growth, which we will continue to update throughout the year.”

The Company is hosting a live conference call at 10:00 am (EST) on Wednesday, March 13, 2002.   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 Friday, March 15, 2002.

Operating profit reflects income before income taxes, corporate expense and income, and net interest expense.

Reported results are presented in accordance with accounting principles generally accepted in the United States of America. Adjusted results are presented to facilitate comparison. Adjusted results are from continuing operations and exclude the operations and disposition of The San Francisco Music Box Company, Burger King franchises, Afterthoughts, Foot Locker Outlets, Going to the Game, Randy River, Foot Locker Japan and the operations of the accelerated store closings for all periods presented. The reported results for all operations and a reconciliation between reported and adjusted results are attached to this press release.  

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, economic conditions worldwide, and the ability of the Company to execute its business plans effectively with regard to each of its business units. 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.

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Consolidated Statements of Operations

Periods ended February 2, 2002 and February 3, 2001

(In millions, except per share amounts)

* Excluding 53^rd week     

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