NEW YORK, Feb. 24, 2017 /PRNewswire/ -- Foot Locker,
Inc. (NYSE: FL), the New
York-based specialty athletic retailer, reported today
financial results for its fourth quarter and full year ended
January 28, 2017.
Fourth Quarter Results
Net income for the Company's fourth quarter ended January 28, 2017 was $189
million, or $1.42 per share,
compared with net income of $158
million, or $1.14 per share in
the same period of 2015.
Fourth quarter comparable-store sales increased 5.0
percent. Total sales increased 5.3 percent, to $2,113 million this year, compared with sales of
$2,007 million for the corresponding
prior-year period. Excluding the effect of foreign currency
fluctuations, total sales for the fourth quarter increased 6.1
percent. The Company's gross margin rate improved to 33.7
percent of sales from 33.6 percent a year ago, and the selling,
general, and administrative expense rate improved 60 basis points
to 18.7 percent of sales.
"Generating our seventh consecutive year of meaningful sales and
profit growth is a strong testament to Foot Locker, Inc.'s solid
position at the center of sneaker culture," said Richard Johnson, Chairman of the Board and Chief
Executive Officer. "All credit goes to the incredibly
talented team of associates we have around the world, and I want to
thank them sincerely for another outstanding performance in
2016. Due in part to the change in the cadence of income tax
refund check distribution, we are facing a challenging retail sales
environment as we enter 2017; however, we believe the strategic
initiatives we have in place, coupled with our strong vendor
relationships, will enable us to deliver another year of record
performance."
Non-GAAP Adjustments
During the fourth quarter, the Company's tax expense was
affected by two non-recurring items. The first was a tax rate
change in France which caused the
Company to lower the value of certain deferred tax assets by
$2 million, decreasing GAAP earnings
by two cents per share. The
second item stems from new regulations issued under Section 987 of
the U.S. tax code which required the Company to record a non-cash
$9 million reduction in tax expense
related to foreign currency translation gains and losses of foreign
businesses operated as branches. This tax benefit increased
our GAAP earnings by seven cents per
share.
Excluding these items, the Company earned $1.37 per share this quarter on a non-GAAP basis,
an 18 percent increase over the non-GAAP earnings of $1.16 per share in the comparable 13-week period
in 2015. A reconciliation of GAAP to non-GAAP results is
included in the tables below.
Fiscal Year Results
Sales for 2016 were $7,766
million, an increase of 4.8 percent compared to sales of
$7,412 million in fiscal 2015.
Full-year comparable store sales increased 4.3 percent.
Excluding the effect of foreign currency fluctuations, total sales
increased 5.2 percent.
The Company's net income increased to $664 million in 2016, or $4.91 per share, compared to net income of
$541 million, or $3.84 per share in 2015. On a non-GAAP
basis, earnings per share totaled $4.82 in 2016, a 12 percent increase over last
year.
"We continued to make substantial progress in 2016 towards our
long-term goals," said Lauren
Peters, Executive Vice President and Chief Financial
Officer. "Our Earnings Before Interest and Taxes surpassed
$1 billion for the first time in our
history and the EBIT rate improved to 13 percent of sales.
Our adjusted net income margin increased to 8.4 percent and our
sales per gross square foot reached $515. Although we currently face a softer
sales environment than at this time last year, we are planning for
a mid-single digit comparable sales gain and a double-digit
earnings per share increase for the full year of 2017."
Financial Position
At January 28, 2017, the Company's
merchandise inventories were $1,307
million, 1.7 percent higher than at the end of the fourth
quarter last year. Using constant currencies, inventory
increased 2.0 percent.
The Company's cash totaled $1,046
million, while the debt on its balance sheet was
$127 million. The Company spent
$80 million to repurchase 1.1 million
shares during the quarter and paid a quarterly dividend of
$0.275 per share. For the full
year, the Company invested $284
million in its store fleet, its digital platform, and
infrastructure. The Company also returned $579 million to shareholders between its stock
repurchase program and dividends, spending $432 million to repurchase 7.0 million shares,
and paying $147 million in
dividends.
"As announced last week, our Board of Directors authorized
another double-digit percentage increase in our quarterly dividend
and a new share repurchase program that is 20 percent larger than
our prior program," added Ms. Peters. "Our excellent
financial position has enabled us to both return substantial
amounts of cash to our shareholders while also sustaining a strong,
$277 million capital investment
program in 2017."
Store Base Update
During the fourth quarter, the Company opened 20 new stores,
remodeled or relocated 59 stores, and closed 51 stores. As of
January 28, 2017, the Company
operated 3,363 stores in 23 countries in North America, Europe, Australia, and New Zealand. In addition,
59 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. (EST) today, February 24, 2017, to review these results and
provide its initial outlook for 2017, 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
by dialing 1-800-954-0597 (U.S. and Canada) or +44 203-300-0088 (International),
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
March 17, 2017.
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
January 28, 2017 and January 30, 2016
(In millions,
except per share amounts)
|
|
|
Fourth
Quarter
2016
|
|
Fourth
Quarter
2015
|
|
|
Full
Year
2016
|
|
|
Full
Year
2015
|
|
|
Sales
|
$
|
2,113
|
|
$
|
2,007
|
|
|
$
|
7,766
|
|
|
$
|
7,412
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cost of
sales
|
|
1,400
|
|
|
1,332
|
|
|
|
5,130
|
|
|
|
4,907
|
|
|
SG&A
|
|
395
|
|
|
387
|
|
|
|
1,472
|
|
|
|
1,415
|
|
|
Depreciation and
amortization
|
|
40
|
|
|
39
|
|
|
|
158
|
|
|
|
148
|
|
|
Impairment and
litigation charges (1) (2) (3)
|
|
-
|
|
|
5
|
|
|
|
6
|
|
|
|
105
|
|
|
Interest expense,
net
|
|
-
|
|
|
1
|
|
|
|
2
|
|
|
|
4
|
|
|
Other
income
|
|
(3)
|
|
|
(2)
|
|
|
|
(6)
|
|
|
|
(4)
|
|
|
|
|
1,832
|
|
|
1,762
|
|
|
|
6,762
|
|
|
|
6,575
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income before
taxes
|
$
|
281
|
|
$
|
245
|
|
|
$
|
1,004
|
|
|
$
|
837
|
|
|
Income tax
expense
|
|
92
|
|
|
87
|
|
|
|
340
|
|
|
|
296
|
|
|
Net income
|
$
|
189
|
|
$
|
158
|
|
|
$
|
664
|
|
|
$
|
541
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Diluted
EPS
|
$
|
1.42
|
|
$
|
1.14
|
|
|
$
|
4.91
|
|
|
$
|
3.84
|
|
|
Wtg.avg. diluted
shares outstanding
|
|
133.3
|
|
|
138.9
|
|
|
|
135.1
|
|
|
|
140.8
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income before taxes
plus interest expense (EBIT)
|
$
|
281
|
|
$
|
246
|
|
|
$
|
1,006
|
|
|
$
|
841
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
The Company presents non-GAAP financial information because it
believes the information assists investors in comparing our
performance across reporting periods on a consistent basis by
excluding items that are not indicative of its core business.
The non-GAAP financial information is provided in addition to, and
not as an alternative to, the Company's reported results prepared
in accordance with GAAP. The Company uses the marginal tax
rate in effect in each local jurisdiction to calculate the tax
effect of non-GAAP items.
|
Fourth Quarter
2016
|
|
Fourth Quarter
2015
|
|
Full Year
2016
|
|
Full Year
2015
|
After-tax
|
|
EPS
|
|
After-tax
|
|
EPS
|
|
After-tax
|
|
EPS
|
|
After-tax
|
|
EPS
|
GAAP net income and
Diluted EPS
|
$
|
189
|
|
$
|
1.42
|
|
$
|
158
|
|
$
|
1.14
|
|
$
|
664
|
|
$
|
4.91
|
|
$
|
541
|
|
$
|
3.84
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
After-tax impairment
charges (1) (2)
|
|
-
|
|
|
-
|
|
|
4
|
|
|
0.02
|
|
|
5
|
|
|
0.03
|
|
|
4
|
|
|
0.02
|
After-tax
litigation charge
(3)
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
61
|
|
|
0.43
|
Tax-related
adjustments (4) (5)
|
|
(7)
|
|
|
(0.05)
|
|
|
-
|
|
|
-
|
|
|
(17)
|
|
|
(0.12)
|
|
|
-
|
|
|
-
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Non-GAAP
results
|
$
|
182
|
|
$
|
1.37
|
|
$
|
162
|
|
$
|
1.16
|
|
$
|
652
|
|
$
|
4.82
|
|
$
|
606
|
|
$
|
4.29
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Footnotes to explain
adjustments
|
(1)
|
In the third quarter
of 2016, the Company recorded a $6 million impairment charge ($5
million after tax) associated with underperforming store assets of
Runners Point and Sidestep.
|
(2)
|
The fourth quarter of
2015 includes the $5 million impairment ($4 million after tax) of
Runners Point Group assets.
|
(3)
|
In the third quarter
of 2015, the Company recorded a $100 million pension litigation
charge ($61 million after tax). The matter remains under
appeal, and there is no assurance that the ultimate resolution will
not differ from the amount currently accrued by the
Company.
|
(4)
|
In the fourth quarter
of 2016, the Company recorded a tax expense of $2 million due to a
tax rate change in France. Additionally in the fourth
quarter, the Company reduced its tax expense by $9 million stemming
from new regulations issued under Internal Revenue Code §987.
These regulations require the Company to change its method for
determining the tax effects of foreign currency translation gains
and losses of our foreign businesses that are operated as
branches.
|
(5)
|
During the third
quarter of 2016, the Company's scheduled triennial reassessment of
the value of the intellectual property provided to our European
business by Foot Locker in the U.S. resulted in a $10 million tax
reduction.
|
FOOT LOCKER,
INC.
Condensed
Consolidated Balance Sheets
(unaudited)
(In
millions)
|
|
|
January 28,
2017
|
|
January 30,
2016
|
Assets
|
|
|
|
|
|
|
|
CURRENT
ASSETS
|
|
|
|
Cash and cash
equivalents
|
$
1,046
|
|
$
1,021
|
Merchandise
inventories
|
1,307
|
|
1,285
|
Other current
assets
|
280
|
|
300
|
|
2,641
|
|
2,606
|
|
|
|
|
Property and
equipment, net
|
765
|
|
661
|
Deferred tax
assets
|
161
|
|
234
|
Other
assets
|
281
|
|
274
|
|
$
3,840
|
|
$
3,775
|
|
|
|
|
Liabilities and
Shareholders' Equity
|
|
|
|
|
|
|
|
CURRENT
LIABILITIES
|
|
|
|
Accounts
payable
|
$
249
|
|
$
279
|
Accrued and other
liabilities
|
363
|
|
420
|
Current portion of
capital lease obligations
|
-
|
|
1
|
|
612
|
|
700
|
|
|
|
|
Long-term debt and
obligations under capital leases
|
127
|
|
129
|
Other
liabilities
|
391
|
|
393
|
SHAREHOLDERS'
EQUITY
|
2,710
|
|
2,553
|
|
$
3,840
|
|
$
3,775
|
|
|
|
|
FOOT LOCKER,
INC.
Store and Square
Footage
(unaudited)
|
|
Store activity is
as follows:
|
|
|
January 30,
2016
|
Opened
|
Closed
|
January 28,
2017
|
Relocations/
Remodels
|
Foot Locker
US
|
971
|
10
|
33
|
948
|
73
|
|
Foot Locker
Europe
|
606
|
22
|
6
|
622
|
43
|
|
Foot Locker
Canada
|
125
|
1
|
7
|
119
|
10
|
|
Foot Locker Asia
Pacific
|
94
|
3
|
2
|
95
|
9
|
|
Lady Foot
Locker
|
156
|
-
|
32
|
124
|
1
|
|
SIX:02
|
30
|
1
|
1
|
30
|
-
|
|
Kids Foot
Locker
|
374
|
45
|
8
|
411
|
26
|
|
Footaction
|
268
|
5
|
12
|
261
|
17
|
|
Champs
Sports
|
550
|
7
|
12
|
545
|
36
|
|
Runners
Point
|
121
|
2
|
1
|
122
|
2
|
|
Sidestep
|
88
|
-
|
2
|
86
|
1
|
|
Total
|
3,383
|
96
|
116
|
3,363
|
218
|
|
Selling and gross
square footage are as follows:
|
|
|
|
|
|
|
|
|
|
|
|
January 30,
2016
|
|
January 28,
2017
|
|
|
(in
thousands)
|
Selling
|
Gross
|
|
Selling
|
Gross
|
|
|
Foot Locker
US
|
2,451
|
4,234
|
|
2,453
|
4,250
|
|
|
Foot Locker
Europe
|
863
|
1,884
|
|
907
|
1,971
|
|
|
Foot Locker
Canada
|
279
|
435
|
|
265
|
432
|
|
|
Foot Locker Asia
Pacific
|
128
|
210
|
|
134
|
220
|
|
|
Lady Foot
Locker
|
208
|
352
|
|
167
|
280
|
|
|
SIX:02
|
62
|
101
|
|
61
|
101
|
|
|
Kids Foot
Locker
|
602
|
1,029
|
|
688
|
1,175
|
|
|
Footaction
|
800
|
1,303
|
|
786
|
1,309
|
|
|
Champs
Sports
|
1,947
|
2,972
|
|
1,930
|
2,978
|
|
|
Runners
Point
|
158
|
259
|
|
162
|
267
|
|
|
Sidestep
|
82
|
139
|
|
81
|
135
|
|
|
Total
|
7,580
|
12,918
|
|
7,634
|
13,118
|
Contact:
|
John A.
Maurer
|
|
Vice
President,
|
|
Treasurer and
Investor Relations
|
|
Foot Locker,
Inc.
|
|
(212)
720-4092
|
To view the original version on PR Newswire,
visit:http://www.prnewswire.com/news-releases/foot-locker-inc-reports-2016-fourth-quarter-and-full-year-results-300412989.html
SOURCE Foot Locker, Inc.