FOOT LOCKER, INC. NEW YORK, May 20, 2016 /PRNewswire/ -- Foot Locker, Inc. (NYSE: FL), the New York-based specialty athletic retailer, today reported financial results for its first quarter ended April 30, 2016.
First Quarter Results
Net income for the Company's first quarter ended April 30, 2016 was $191 million, compared with net income of $184 million in the same period of 2015. Earnings were $1.39 per share, a 7.8 percent increase from the $1.29 per share earned in the comparable period last year. First quarter comparable-store sales increased 2.9 percent. Total first quarter sales increased 3.7 percent to $1,987 million this year, compared with sales of $1,916 million for the corresponding prior-year period. Excluding the effect of foreign currency fluctuations, total sales for the first quarter increased 3.9 percent.
The Company's gross margin rate remained stable year-over-year at 35.0 percent of sales, while the selling, general, and administrative expense rate increased slightly due to $4 million of one-time costs to relocate the Company's headquarters within New York City. The SG&A rate this year was 18.2 percent of sales, compared to 18.0 percent in the first quarter of 2015.
"We produced the most profitable quarter in the Company's long history, an accomplishment of which everyone at Foot Locker, Inc. should be very proud," said Richard Johnson, Chairman of the Board and Chief Executive Officer. "Our team navigated well through a variety of challenges, not least of which were rapidly-shifting product category preferences by our customers, to achieve our 25th consecutive quarter of meaningful sales and profit increases over the prior year. Never has it been more apparent how important is the work that we have done to build leadership positions across channels, geographies, banners, and product categories."
Financial Position
At April 30, 2016, the Company's merchandise inventories were $1,260 million, 2.1 percent higher than at the end of the first quarter last year. The Company's cash totaled $1,062 million, while the debt on its balance sheet was $129 million. The Company spent approximately $88 million to repurchase 1.37 million shares during the quarter and paid its quarterly stock dividend of $0.275, spending $37 million.
"We continue to manage the business tightly, particularly in terms of inventory, occupancy expense, and wages," said Lauren Peters, Executive Vice President and Chief Financial Officer. "We are focused on productivity as we work to drive top line sales, and we remain confident that we can achieve a mid-single digit comparable sales gain and a double-digit earnings per share increase for 2016."
Store Base Update
During the first quarter, the Company opened 32 new stores, remodeled or relocated 55 stores, and closed 19 stores. As of April 30, 2016, the Company operated 3,396 stores in 23 countries in North America, Europe, Australia, and New Zealand. In addition, 49 franchised Foot Locker stores were operating in the Middle East and South Korea, as well as 15 franchised Runners Point stores in Germany.
The Company is hosting a live conference call at 9:00 a.m. (EDT) today, May 20, 2016, 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 1-800-763-5615 (U.S. and Canada) or +44 208-196-2877 (International), or via the Investor Relations section of the Foot Locker, Inc. website at http://www.footlocker-inc.com. An archived replay of the conference call can be accessed approximately one hour following the end of the call at 1-800-633-8284 with the passcode 21810341 (U.S. and Canada) or +1 402-977-9140 with passcode 21810341 (International) through June 3, 2016. A replay of the call will also be available via webcast from the same Investor Relations section of the Foot Locker, Inc. website at http://www.footlocker-inc.com.
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), cybersecurity breaches, 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 2015 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 April 30, 2016 and May 2, 2015
(In millions, except per share amounts)
First First
Quarter
Quarter 2015
2016
----
Sales $1,987 $1,916
Cost of sales 1,291 1,246
SG&A 361 345
Depreciation and
amortization 39 35
Interest expense, net - 1
Other income (2) (1)
--- ---
1,689 1,626
----- -----
Income before taxes $298 $290
Income tax expense 107 106
--- ---
Net income $191 $184
==== ====
Diluted EPS $1.39 $1.29
Weighted-average diluted
shares outstanding
137.8 142.1
FOOT LOCKER, INC.
Condensed Consolidated Balance Sheets
(unaudited)
(In millions)
April 30, May 2,
2016 2015
---- ----
Assets
CURRENT ASSETS
Cash and cash equivalents $1,062 $986
Merchandise inventories 1,260 1,234
Other current assets 270 259
2,592 2,479
Property and equipment, net 706 639
Deferred tax assets 182 226
Other assets 278 287
--- ---
$3,758 $3,631
====== ======
Liabilities and Shareholders' Equity
CURRENT LIABILITIES
Accounts payable $230 $303
Accrued and other liabilities 347 387
Current portion of capital
lease obligations 1 2
--- ---
578 692
Long-term debt and
obligations under capital
leases 128 131
Other liabilities 377 253
SHAREHOLDERS' EQUITY 2,675 2,555
----- -----
$3,758 $3,631
====== ======
FOOT LOCKER, INC.
Store and Square Footage
(unaudited)
Store activity is as follows:
January 30, Opened Closed April 30, Relocations/
2016 2016 Remodels
---- ---- --------
Foot Locker US 971 3 3 971 18
Foot Locker Europe 606 3 3 606 9
Foot Locker Canada 125 - 1 124 2
Foot Locker Asia Pacific 94 1 - 95 3
Lady Foot Locker 156 - 7 149 1
SIX:02 30 - - 30 -
Kids Foot Locker 374 21 2 393 6
Footaction 268 1 3 266 5
Champs Sports 550 1 - 551 11
Runners Point 121 2 - 123 -
Sidestep 88 - - 88 -
Total 3,383 32 19 3,396 55
January 30, 2016 April 30, 2016
---------------- --------------
(in thousands) Selling Gross Selling Gross
------- ----- ------- -----
Foot Locker US 2,451 4,234 2,461 4,251
Foot Locker Europe 863 1,884 858 1,887
Foot Locker Canada 279 435 277 432
Foot Locker Asia Pacific 128 210 132 216
Lady Foot Locker 208 352 202 337
SIX:02 62 101 60 101
Kids Foot Locker 602 1,029 638 1,091
Footaction 800 1,303 791 1,295
Champs Sports 1,947 2,972 1,943 2,989
Runners Point 158 259 163 269
Sidestep 82 139 82 139
Total 7,580 12,918 7,607 13,007
Contact: John A. Maurer
Vice President,
Treasurer and Investor
Relations
Foot Locker, Inc.
(212) 720-4092
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SOURCE Foot Locker, Inc.
