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Foot Locker, Inc. Reports Second Quarter Results

August 17, 2012

NEW YORK, Aug. 17, 2012 /PRNewswire/ — Foot Locker, Inc. (NYSE: FL), the New York-based specialty athletic retailer, today reported financial results for its second quarter ended July 28, 2012.

Second Quarter Results
Net income for the Company’s second quarter ended July 28, 2012 was $59 million, or $0.39 per share, compared with net income of $37 million, or $0.24 per share, last year. Second quarter sales increased 7.2 percent, to $1,367 million this year, compared with sales of $1,275 million for the corresponding prior-year period. Second quarter comparable-store sales increased 9.8 percent. Excluding the effect of foreign currency fluctuations, total sales for the second quarter increased 10.6 percent.

Year-to-Date Results
Net income for the Company’s first six months of the year increased 43 percent to $187 million, or $1.21 per share, compared with net income of $131 million, or $0.84 per share, for the corresponding period last year. Year-to-date sales increased 8.0 percent, to $2,945 million, compared with sales of $2,727 million last year. Year-to-date comparable-store sales increased 9.8 percent. Excluding the effect of foreign currency fluctuations, total sales year-to-date increased 10.1 percent.

“I’m very proud of the entire Foot Locker, Inc. team,” said Ken C. Hicks, Chairman and Chief Executive Officer. “We have achieved consistently strong financial and operational results since we began implementing our long-term plan over two years ago. This consistency was also evident with the good profitability we achieved this quarter across our divisions, from the North American stores, to Europe, and to our direct-to-customer business.”

Financial Position
The Company’s merchandise inventory at the end of the second quarter was $1,231 million, 3 percent lower than at the end of the second quarter last year. On a per store basis using constant currencies, inventory grew approximately 1 percent.

During the second quarter of 2012, the Company repurchased approximately 1.2 million shares of its common stock for $37.5 million. Year-to-date, the Company has repurchased approximately 2.1 million shares of its common stock for $64.6 million under the Company’s $400 million share repurchase program.

At July 28, 2012, the Company’s cash and short-term investments totaled $820 million, while the debt on its balance sheet was $133 million. The Company’s total cash position, net of debt, was $142 million higher than the same time last year.

Non-GAAP Adjustment
Included in the Company’s second quarter results is a tax benefit of just over $1 million, or 1 cent per share, to reflect the repeal of the last two stages of a Canadian provincial tax rate change. When the tax rate change was originally announced in the fourth quarter of 2009, the Company recorded a tax charge of approximately $4 million, which was excluded in calculating non-GAAP results in that year. Excluding the second quarter benefit of 1 cent per share, non-GAAP earnings per share is $0.38. A reconciliation of GAAP to non-GAAP results for the second quarter of 2012 will be provided in our Form 10-Q filing.

Store Base Update
During the first six months of the year, the Company opened 47 new stores, remodeled/relocated 109 stores and closed 62 stores. At July 28, 2012, the Company operated 3,354 stores in 23 countries in North America, Europe, Australia, and New Zealand. In addition, 37 franchised stores were operating in the Middle East and South Korea.

The Company is hosting a live conference call at 9:00 a.m. (EDT) today, August 17, 2012 to discuss these results and provide comments on the current business environment and trends. This conference call may be accessed live by dialing 888-446-3850 (U.S. and Canada) or 630-691-2739 (International) using the passcode 33054945, 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 August 31, 2012.

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, further deterioration of global financial markets, economic conditions worldwide, further 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. 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 July 28, 2012 and July 30, 2011
                                 (In millions, except per share amounts)

                                             Second Quarter                    Second Quarter
                                                           2012                               2011
                                                           ----                               ----
    Sales                                                $1,367                             $1,275

    Cost of sales                                           939                                887
    Selling, general and
     administrative expenses                                306                                301
    Depreciation and amortization                            29                                 28
    Interest expense, net                                     1                                  1
                                                            ---                                ---
    Other income                                             (1)                               ---
                                                            ---                                ---
                                                          1,274                              1,217
                                                          -----                              -----
    Income before income taxes                               93                                 58
    Income tax expense                                       34                                 21
                                                            ---                                ---
    Net Income                                              $59                                $37
                                                            ===                                ===

    Diluted EPS:
    ------------
    Net Income                                            $0.39                              $0.24
                                                          =====                              =====

    Weighted-average diluted shares outstanding
    ----------------------------------
                                 153.9                    155.2
                                 -----                    -----

                                              Year-To-Date                      Year-To-Date
                                                           2012                               2011
                                                           ----                               ----
    Sales                                                $2,945                             $2,727

    Cost of sales                                         1,980                              1,864
    Selling, general and
     administrative expenses                                612                                599
    Depreciation and amortization                            58                                 55
    Interest expense, net                                     2                                  3
                                                            ---                                ---
    Other income                                             (1)                                (1)
                                                            ---                                ---
                                                          2,651                              2,520
                                                          -----                              -----
    Income before income taxes                              294                                207
    Income tax expense                                      107                                 76
                                                            ---                                ---
    Net Income                                             $187                               $131
                                                           ====                               ====

    Diluted EPS:
    ------------
    Net Income                                            $1.21                              $0.84
                                                          =====                              =====

    Weighted-average diluted shares
     outstanding                                          154.1                              155.4
    -------------------------------                       -----                              -----

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

                                                     July 28,          July 30,
                                                              2012              2011
                                                              ----              ----
    Assets

    CURRENT ASSETS
    Cash, cash equivalents and
     short-term investments                                   $820              $681
    Merchandise inventories                                  1,231             1,269
    Other current assets                                       199               189

                                                             2,250             2,139

    Property and equipment, net                                447               408
    Deferred tax assets                                        284               298
    Other assets                                               253               274
                                                               ---               ---
                                                            $3,234            $3,119
                                                            ======            ======

    Liabilities and Shareholders' Equity

    CURRENT LIABILITIES
    Accounts payable                                          $391              $365
    Accrued and other liabilities                              278               255

                                                               669               620

    Long-term debt and obligations
     under capital leases                                      133               136
    Other liabilities                                          253               248
    SHAREHOLDERS' EQUITY                                     2,179             2,115
                                                             -----             -----
                                                            $3,234            $3,119
                                                            ======            ======
                                      FOOT LOCKER, INC.
                              Store and Estimated Square Footage
                                         (unaudited)
                                (Square footage in thousands)

                                      July 28,              July 30,       July 31,
                                                2012                  2011          2010
                                                ----                  ----          ----
    Foot Locker U.S.
       Number of stores                        1,092                 1,136         1,155
       Gross square footage                    4,380                 4,572         4,658
       Selling square
        footage                                2,563                 2,702         2,759

    Footaction
       Number of stores                          287                   304           313
       Gross square footage                    1,329                 1,400         1,442
       Selling square
        footage                                  832                   878           906

    Lady Foot Locker
       Number of stores                          320                   353           400
       Gross square footage                      714                   785           883
       Selling square
        footage                                  412                   454           506

    Kids Foot Locker
       Number of stores                          291                   291           304
       Gross square footage                      696                   697           728
       Selling square
        footage                                  406                   406           426

    Champs Sports
       Number of stores                          506                   536           548
       Gross square footage                    2,716                 2,861         2,923
       Selling square
        footage                                1,787                 1,899         1,940

    CCS
       Number of stores                           22                    16            12
       Gross square footage                       51                    40            31
       Selling square
        footage                                   34                    26            20

    Foot Locker International
       Number of stores                          836                   771           744
       Gross square footage                    2,488                 2,236         2,147
       Selling square
        footage                                1,274                 1,140         1,091

    Total Stores Operated
       Number of stores                        3,354                 3,407         3,476
       Gross square footage                   12,374                12,591        12,812
       Selling square
        footage                                7,308                 7,505         7,648

    Total Franchised Stores
       Number of stores                           37                    25            20
       Gross square footage                       88                    82            78
       Selling square
        footage                                   60                    55            50
       --------------                            ---                   ---           ---

SOURCE Foot Locker, Inc.


Source: PR Newswire