FOOT LOCKER, INC. NEW YORK, May 22, 2015 /PRNewswire/ -- Foot Locker, Inc. (NYSE: FL), the New York-based specialty athletic retailer, today reported financial results for its first quarter ended May 2, 2015.
First Quarter Results
Net income for the Company's first quarter ended May 2, 2015 was $184 million, or $1.29 per share, compared with net income of $162 million, or $1.10 per share, last year, a 17 percent increase. First quarter comparable-store sales increased 7.8 percent. Total first quarter sales increased 2.6 percent, to $1,916 million this year, compared with sales of $1,868 million for the corresponding prior-year period. Excluding the effect of foreign currency fluctuations, total sales for the first quarter increased 7.9 percent.
"We have hit the ground running in 2015, producing the most profitable quarter in our history," said Richard Johnson, President and Chief Executive Officer. "We are focused on executing the updated strategic priorities that we described in our investor meeting in March, and the results in the first quarter demonstrate that we remain on the right track, with strong performances across our channels, geographies, banners, and categories. Our core business improved and we made progress on each of our growth pillars, a team accomplishment of which we are all very proud."
The Company's gross margin rate improved to 35.0 percent of sales from 34.6 percent a year ago, while the selling, general, and administrative expense rate improved to 18.0 percent of sales from 19.0 percent.
"The team at Foot Locker continued to execute efficiently during the quarter, both operationally and financially," said Lauren Peters, Executive Vice President and Chief Financial Officer. "Driven by solid performance on the top line that flowed effectively to the bottom line, we delivered results which surpassed our guidance at the start of the year. We remain intent on improving the productivity of all of our assets as we strive to attain our recently elevated long-term goals."
Financial Position
At May 2, 2015, the Company's merchandise inventories were $1,234 million, 2.7 percent lower than at the end of the first quarter last year. Using constant currencies, inventory increased 2.4 percent.
The Company's cash totaled $986 million, while the debt on its balance sheet was $133 million. The Company spent approximately $129 million to repurchase 2.3 million shares during the quarter and paid its quarterly stock dividend of $0.25, spending $35 million.
Store Base Update
During the first quarter, the Company opened 37 new stores, remodeled or relocated 55 stores, and closed 41 stores. As of May 2, 2015, the Company operated 3,419 stores in 23 countries in North America, Europe, Australia, and New Zealand. In addition, 55 franchised Foot Locker stores were operating in the Middle East and South Korea, as well as 27 franchised Runners Point and Sidestep stores in Germany and Switzerland.
The Company is hosting a live conference call at 9:00 a.m. (EDT) today, May 22, 2015, to review these results, provide comments on the status of its current initiatives, and discuss trends in its business and the athletic industry. This conference call may be accessed live by dialing 888-771-4371 (U.S. and Canada) or 847-585-4405 (International) using the passcode 39678293, or via the Investor Relations section of the Foot Locker, Inc. website at http://www.footlocker-inc.com. Please log on to the website 15 minutes prior to the call in order to download any necessary software. A replay of the call will be available via webcast from the same Investor Relations section of the Foot Locker, Inc. website at http://www.footlocker-inc.com through June 5, 2015.
Disclosure Regarding Forward-Looking Statements
This report contains forward-looking statements within the meaning of the federal securities laws. Other than statements of historical facts, all statements which address activities, events, or developments that the Company anticipates will or may occur in the future, including, but not limited to, such things as future capital expenditures, expansion, strategic plans, financial objectives, dividend payments, stock repurchases, growth of the Company's business and operations, including future cash flows, revenues, and earnings, and other such matters, are forward-looking statements. These forward-looking statements are based on many assumptions and factors which are 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), pandemics and similar major health concerns, unseasonable weather, deterioration of global financial markets, economic conditions worldwide, deterioration of business and economic conditions, 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, the ability of the Company to execute its business and strategic plans effectively with regard to each of its business units, and risks associated with global product sourcing, including political instability, changes in import regulations, and disruptions to transportation services and distribution.
For additional discussion on risks and uncertainties that may affect forward-looking statements, see "Risk Factors" disclosed in the 2014 Annual Report on Form 10-K. 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.
FOOT LOCKER, INC.
Condensed Consolidated Statements of Operations
(unaudited)
Periods ended May 2, 2015 and May 3, 2014
(In millions, except per share amounts)
First Quarter
2015 2014
---- ----
Sales $1,916 $1,868
Cost of sales 1,246 1,222
SG&A 345 355
Depreciation & amortization 35 36
Impairment charge(1) - 1
Interest expense, net 1 1
Other income (1) (1)
---
1,626 1,614
----- -----
Income before taxes $290 $254
Income tax expense 106 92
---
Net income $184 $162
==== ====
Diluted EPS $1.29 $1.10
Weighted-average diluted shares outstanding 142.1 147.6
Reconciliation of GAAP First Quarter
to Non-GAAP results 2014
----
After EPS
tax
---
GAAP net income results $162 $1.10
Add back:
Trade name impairment(1) 1 0.01
RPG integration costs (2) 1 -
Non-GAAP results $164 $1.11
==== =====
Footnote to explain adjustments in 2014
---------------------------------------
(1) Write-down of trade name in Ireland acquired in 2004.
(2) Costs associated with the integration of Runners Point Group.
FOOT LOCKER, INC.
Condensed Consolidated Balance Sheets
(unaudited)
(In millions)
May 2, May 3,
2015 2014
---- ----
Assets
CURRENT ASSETS
Cash, cash equivalents
and short-term
investments $986 $1,007
Merchandise
inventories 1,234 1,268
Other current assets 259 243
2,479 2,518
Property and
equipment, net 639 598
Deferred tax assets 226 245
Other assets 287 308
--- ---
$3,631 $3,669
====== ======
Liabilities and Shareholders' Equity
CURRENT LIABILITIES
Accounts payable $303 $354
Accrued and other
liabilities 387 355
Current portion of
capital lease
obligations 2 3
--- ---
692 712
Long-term debt and
obligations under
capital leases 131 135
Other liabilities 253 229
SHAREHOLDERS' EQUITY 2,555 2,593
----- -----
$3,631 $3,669
====== ======
FOOT LOCKER, INC.
Store and Square Footage
(unaudited)
Store activity is as follows:
January 31, May 2, Relocations/
Remodels
2015 Opened Closed 2015
---- ------ ------ ----
Foot Locker US 1,015 1 10 1,006 19
Foot Locker Europe 603 3 4 602 6
Foot Locker Canada 126 1 1 126 4
Foot Locker Asia
Pacific 91 1 - 92 1
Lady Foot Locker/
SIX:02 213 4 11 206 -
Kids Foot Locker 357 13 6 364 14
Footaction 272 5 5 272 5
Champs Sports 547 5 3 549 5
Runners Point 116 2 - 118 1
Sidestep 83 2 1 84 -
Total 3,423 37 41 3,419 55
Selling and gross square footage are as follows:
January 31, 2015 May 2, 2015
---------------- -----------
(in thousands) Selling Gross Selling Gross
------- ----- ------- -----
Foot Locker US 2,494 4,298 2,490 4,299
Foot Locker Europe 846 1,839 844 1,844
Foot Locker Canada 270 422 274 426
Foot Locker Asia Pacific 125 204 126 205
Lady Foot Locker/SIX:02 299 501 293 491
Kids Foot Locker 529 912 552 949
Footaction 789 1,258 794 1,266
Champs Sports 1,913 2,927 1,922 2,941
Runners Point 143 244 144 247
Sidestep 75 129 76 130
Total 7,483 12,734 7,515 12,798
Contact: John A. Maurer
Vice President,
Treasurer and Investor
Relations
Foot Locker, Inc.
(212) 720-4092
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SOURCE Foot Locker, Inc.
