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Foot Locker, Inc. Reports 2012 Fourth Quarter And Full Year Results

March 8, 2013

- Fourth Quarter GAAP Net Income of $0.68 Per Share, 28 Percent Above Last Year

NEW YORK, March 8, 2013 /PRNewswire/ — Foot Locker, Inc. (NYSE: FL), the New York-based specialty athletic retailer, today reported financial results for its fourth quarter and full year. The Company’s fiscal year ended on February 2, 2013, reflecting a 14-week fourth quarter and 53-week year, compared to the 13-week and 52-week periods in fiscal 2011. The additional week is not included in comparable store sales results for the quarter or the year.

Fourth Quarter Results
The Company reported net income of $104 million, or $0.68 per share, for the 14 weeks ended February 2, 2013. These results included an after-tax charge of $7 million, or $0.05 per share, for the impairment of certain tangible and intangible assets related to the Company’s CCS division. In the 13-week period a year ago, the Company reported net income of $81 million, or $0.53 per share, which included an after-tax charge of $3 million, or $0.02 per share, for the impairment of certain intangible assets.

Excluding the charges in both years, fourth quarter non-GAAP net income was $111 million, or $0.73 per share, in 2012, versus $84 million, or $0.55 per share, in 2011. The extra week in this year’s fourth quarter results contributed $14 million to net income, or $0.09 per share. Excluding this benefit, non-GAAP net income was $0.64 per share.

With the benefit of the extra week, total fourth quarter sales increased 14.0 percent, to $1,713 million this year, compared with sales of $1,502 million for the corresponding prior-year period. Fourth quarter comparable-store sales increased 7.9 percent. Foreign exchange rate fluctuations were not a material factor in the quarter.

Fiscal Year Results
For fiscal year 2012, which included 53 weeks, the Company reported net income of $397 million, or $2.58 per share. These results included the fourth quarter after-tax charge of $7 million mentioned above. In the 52 weeks last year, the Company reported net income of $278 million, or $1.80 per share, including the net charge of $3 million after-tax.

Excluding the impairment charges in both years, one-time tax benefits totaling $0.07 per share in 2012, and the benefit from the 53(rd) week, full-year non-GAAP net income was $380 million in 2012, or $2.47 per share, an increase of 36 percent over the $1.82 per share recorded in 2011.

Total sales increased 9.9 percent in 2012 to $6,182 million, compared with sales of $5,623 million last year. Excluding the effect of foreign currency fluctuations, total sales for the full year increased 11.4 percent. Comparable-store sales increased 9.4 percent in 2012.

“With the momentum we built from executing our strategic initiatives, the team at Foot Locker, Inc. was able to drive our sales and profits substantially higher than last year’s record results,” said Ken C. Hicks, Chairman of the Board and Chief Executive Officer of Foot Locker, Inc. “We believe that we can continue to build on this momentum and deliver a double digit percentage earnings per share gain for full-year 2013, compared to our 2012 non-GAAP results of $2.47 per share.”

“Our team is focused on consistently improving our financial and operational performance,” added Lauren B. Peters, Executive Vice President and Chief Financial Officer. “Our success in 2012 can be seen in such productivity measures as the 14.2 percent return on invested capital and the $443 in sales per gross square foot that we achieved.”

Financial Position
The Company’s merchandise inventory at February 2, 2013 was $1,167 million, which was $98 million, or 9.2 percent, higher than at the end of last year. The increase was primarily attributable to the 53(rd) week, during which the Company brought in additional inventory to position itself for February sales. On a comparable week basis, inventory was approximately flat.

At year-end 2012, the Company’s cash and short-term investments totaled $928 million, while the debt on its balance sheet was $133 million. The Company’s total cash position, net of debt, was $79 million higher than at the same time last year.

During the fourth quarter of 2012, the Company repurchased approximately 1 million shares of its common stock for $35 million. For the full year, the Company repurchased 4 million shares for approximately $129 million.

As announced in February, the Company’s financial position has enabled it to undertake three key capital allocation initiatives in 2013: an 11 percent increase in its quarterly dividend to 20 cents per share; a new $600 million share repurchase program, replacing its previous $400 million program; and an increase in capital expenditures to $220 million, from the $163 million spent in 2012.

Store Base Update
The Company opened 85 new stores, remodeled or relocated 198 stores, and closed 119 stores during fiscal 2012. At February 2, 2013, the Company operated 3,335 stores in 23 countries in North America, Europe, Australia, and New Zealand. In addition, 42 franchised stores were operating in the Middle East and South Korea.

The Company is hosting a live conference call at 9:00 a.m. (EST) today to discuss these results and provide its current outlook for 2013, comment on the status of its current initiatives, and discuss trends in its business and the athletic industry. 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 Friday, March 22, 2013.

Disclosure Regarding Non-GAAP Measures

This report refers to certain financial measures and ratios that are identified as non-GAAP. The Company believes that these non-GAAP measures and ratios are helpful to investors because they allow for a more direct comparison of the Company’s year-over-year performance and are useful in assessing the Company’s progress in achieving its long-term financial objectives. This supplemental information should not be considered in isolation or as a substitute for the related GAAP measures and ratios. A reconciliation of the non-GAAP measures and ratios to the comparable GAAP measures can be found in the Company’s Form 8-K filed with the Securities and Exchange Commission with this release.

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, 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 foreign global 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 February 2, 2013 and January 28, 2012
                                            (In millions, except per share amounts)

                                         Fourth Quarter                                        Full Year

                                    2012(1)                       2011                       2012(1)       2011
                                     ------                       ----                        ------       ----

    Sales                                     $1,713                                 $1,502              $6,182  $5,623

    Cost of sales                              1,149                                  1,022               4,148   3,827

    SG&A                                         363                                    325               1,294   1,244

    Depreciation & amortization                   30                                     28                 118     110

    Impairment charges(2)                         12                                      5                  12       5

    Interest expense, net                          2                                      2                   5       6

    Other income                                  (1)                                    (3)                 (2)     (4)
                                                 ---                                    ---                 ---     ---

                                               1,555                                  1,379               5,575   5,188
                                               -----                                  -----               -----   -----

    Income before taxes                         $158                                   $123                $607    $435

    Income tax expense                            54                                     42                 210     157
                                                 ---                                    ---                 ---     ---

    Net income                                  $104                                    $81                $397    $278
                                                ====                                    ===                ====    ====

    Diluted EPS                                $0.68                                  $0.53               $2.58   $1.80

    Weighted-average diluted shares

    outstanding                                153.2                                  153.1               154.0   154.4

    Reconciliation of GAAP                                                                   Fourth Quarter                  Full Year

    to Non-GAAP results                                                                                  2012           2011                       2012 2011
                                                                                                         ----           ----                       ---- ----

                                                                                                After tax     EPS               After tax     EPS            After tax     EPS       After tax     EPS
                                                                                                ---------     ---               ---------     ---            ---------     ---       ---------     ---

    GAAP results                                                                                         $104     $0.68                   $81     $0.53               $397     $2.58          $278     $1.80

    Add back:

    Impairment charges(2)                                                                                   7      0.05                     3      0.02                  7      0.05             3      0.02

    Deduct:

    53rd week(1)                                                                                           14      0.09                     -         -                 14      0.09             -         -

    Tax rate change and audit settlement(3)                                                                 -         -                     -         -                 10      0.07             -         -
                                                                                                          ---       ---                   ---       ---                ---      ----           ---       ---

    Non-GAAP results                                                                                      $97     $0.64                   $84     $0.55               $380     $2.47          $281     $1.82
                                                                                                          ===     =====                   ===     =====               ====     =====          ====     =====

    Footnote to explain adjustments

    (1) 2012 represents the 14 and 53 weeks ended February 2, 2013

    (2) Impairment of CCS trade names and fixed assets

    (3) Tax rate change and settlement of a foreign tax audit resulting in a reduction of tax reserves
    --------------------------------------------------------------------------------------------------


                                                  FOOT LOCKER, INC.

                                        Condensed Consolidated Balance Sheets

                                                     (unaudited)

                                                    (In millions)

                                                        February 2,           January 28,

                                                                       2013                 2012
                                                                       ----                 ----

    Assets

    CURRENT ASSETS

    Cash, cash
     equivalents and
     short-term
     investments                                                       $928                 $851

    Merchandise
     inventories                                                      1,167                1,069

    Other current
     assets                                                             268                  159

                                                                      2,363                2,079

    Property and
     equipment, net                                                     490                  427

    Deferred tax assets                                                 257                  284

    Other assets                                                        257                  260
                                                                        ---                  ---

                                                                     $3,367               $3,050
                                                                     ======               ======

    Liabilities and Shareholders' Equity

    CURRENT LIABILITIES

    Accounts payable                                                   $298                 $240

    Accrued and other
     liabilities                                                        338                  308

                                                                        636                  548

    Long-term debt and
     obligations under
     capital leases                                                     133                  135

    Other liabilities                                                   221                  257

    SHAREHOLDERS'
     EQUITY                                                           2,377                2,110
                                                                      -----                -----

                                                                     $3,367               $3,050
                                                                     ======               ======

                                       FOOT LOCKER, INC.

                              Store and Estimated Square Footage

                                          (unaudited)

                                 (Square footage in thousands)

                                 February 2,                 January 28,       January 29,

                                                2013                      2012              2011
                                                ----                      ----              ----

    Foot Locker U.S.

       Number of
        stores                                 1,072                     1,118             1,144

       Gross square
        footage                                4,311                     4,499             4,600

       Selling
        square
        footage                                2,515                     2,656             2,726

    Footaction

       Number of
        stores                                   283                       292               307

       Gross square
        footage                                1,299                     1,351             1,413

       Selling
        square
        footage                                  817                       846               888

    Lady Foot Locker

       Number of
        stores                                   303                       331               378

       Gross square
        footage                                  685                       737               838

       Selling
        square
        footage                                  398                       426               482

    Kids Foot Locker

       Number of
        stores                                   297                       289               294

       Gross square
        footage                                  714                       692               706

       Selling
        square
        footage                                  415                       403               411

    Champs Sports

       Number of
        stores                                   539                       534               540

       Gross square
        footage                                2,861                     2,845             2,880

       Selling
        square
        footage                                1,876                     1,868             1,910

    CCS

       Number of
        stores                                    22                        22                12

       Gross square
        footage                                   51                        51                31

       Selling
        square
        footage                                   34                        34                20

    Foot Locker International

       Number of
        stores                                   819                       783               751

       Gross square
        footage                                2,395                     2,276             2,167

       Selling
        square
        footage                                1,206                     1,148             1,101

    Total Stores Operated

       Number of
        stores                                 3,335                     3,369             3,426

       Gross square
        footage                               12,316                    12,451            12,635

       Selling
        square
        footage                                7,261                     7,381             7,538

    Total Franchised Stores

       Number of
        stores                                    42                        34                26

       Gross square
        footage                                   96                        84                84

       Selling
        square
        footage                                   65                        57                55
       --------                                  ---                       ---               ---

    Contact:                 John A. Maurer

                             Vice President,

                              Treasurer and Investor
                              Relations

                             Foot Locker, Inc.

                             (212) 720-4092

SOURCE Foot Locker, Inc.


Source: PR Newswire