- Total Sales Increased 1.0%; Comparable-Store Sales
Decreased 1.9%
- EPS of $1.37 and Non-GAAP
EPS $1.60
- Expect to Reach Upper End of 2022 Sales and Earnings Range
- Repurchased $89 million of
stock
NEW YORK, May 20, 2022 /PRNewswire/ -- Foot Locker,
Inc. (NYSE: FL), the New
York-based specialty athletic retailer, today reported
financial results for its first quarter ended April 30, 2022.
"We are off to a strong start in 2022, reporting a solid
quarter against the tough comparisons of fiscal stimulus and
historically-low promotions from last year," said Richard Johnson, Chairman and Chief Executive
Officer. "Our progress in broadening and enriching our
assortment continues, as we continue to meet our customers' demand
for choice. These efforts helped drive our strong results in
the first quarter, and we believe will allow us to more fully
participate in the robust growth of our category going
forward."
Mr. Johnson continued, "As we elevate brands across our
portfolio, continue to use our real estate flexibility to optimize
our footprint, and evolve our omni-channel capabilities, we are
excited about our improving ability to expand our customer base and
fuel our consumer's desire for self-expression."
First Quarter
Results
The Company reported net income of
$133 million, or $1.37 per share, for the 13 weeks ended
April 30, 2022, compared with net
income of $202 million, or
$1.93 per share, for the
corresponding prior-year period.
On a non-GAAP basis, the Company earned $1.60 per share, compared with non-GAAP earnings
per share of $1.96 in the prior-year
period.
First quarter comparable-store sales decreased by 1.9%,
with apparel significantly outpacing footwear. Total sales
increased by 1.0%, to $2,175 million,
compared with sales of $2,153 million
in the first quarter of 2021. Excluding the effect of foreign
exchange rate fluctuations, total sales for the first quarter
increased by 3.0%.
Gross margin declined by 80 basis points compared with the
prior-year period, driven by higher supply chain costs and slightly
higher markdowns versus historically-low levels.
SG&A deleveraged by 190 basis points driven by labor
costs and technology spend.
Non-GAAP Adjustments
Effective
with the first quarter of 2022, the calculation for non-GAAP
earnings will exclude gains and losses from all minority
investments, including the adjustments related to the investment in
Retailors, Ltd. The Company believes this is a more
representative measure of its recurring earnings, assists in the
comparability of results, and is consistent with how management
reviews performance. The non-GAAP results for 2021 will be recast
to conform to the current year's presentation. As the Company
reports quarterly results through 2022, it will provide updated
non-GAAP reconciliations for the corresponding prior year's quarter
under this revised definition.
During the first quarter of 2022, the Company recorded
adjustments to earnings, which are detailed below in the
accompanying reconciliation of GAAP to non-GAAP results.
Adjustments included primarily 1) $6
million of impairments and other charges, including
acquisition and integration costs, and 2) $24 million in minority interests net losses,
primarily representing the investment in Retailors,
Ltd.
Financial Position
As
of April 30, 2022, the Company's merchandise inventories
were $1.4 billion, 37% higher than at the end of the first
quarter last year putting us in a strong position to fulfill demand
going forward. At quarter-end, the Company's cash and cash
equivalents totaled $551 million, while debt on its balance
sheet was $456 million.
The Company's total cash position, net of debt, was
$95 million, as compared with
$1.9 billion last year. During the
first quarter of 2022, the Company repurchased 2.7 million shares
for $89 million and paid a quarterly dividend
of $0.40 per share, for a total of $38
million.
Financial Outlook
Andrew Page, Executive Vice President and Chief
Financial Officer, said, "Following our solid results from the
first quarter, our strong inventory position going into the
remainder of the year, and our strengthening vendor relationships,
based on our current visibility, we now expect to achieve the upper
end of our revenue and earnings guidance for the full year.
Our balance sheet and real estate flexibility remain strategic
assets for us as we continue to navigate this dynamic industry and
serve the sport and sneaker community."
The Company's updated full-year 2022 outlook is summarized
in the table below.
Sales Change
|
Upper end of down 4% to
6%
|
Comparable Sales
Growth
|
Upper end of down 8% to
10%
|
Square Footage
Growth
|
Down 1% to
2%
|
Gross Margin
|
30.6% to
30.8%
|
SG&A
Rate
|
20.7% to
20.9%
|
D&A
|
~$214
million
|
Interest
|
~$20 million
|
Tax Rate
|
29-30%
|
Non-GAAP EPS
|
Upper end of
$4.25-$4.60
|
Capital
Expenditures
|
Up to $275
million
|
Store Base Update
During the first
quarter, the Company opened 24 new stores, remodeled or relocated
23 stores, and closed 67 stores.
As of April 30, 2022, the
Company operated 2,815 stores in 28 countries in North
America, Europe, Asia, Australia, and New Zealand. In addition,
148 franchised stores were operating in the Middle East
and Asia.
Conference Call and Webcast
The
Company is hosting a live conference call at 9:00 a.m. ET today, Friday, May 20, 2022, to review these results and
outlook and provide an update on the business. An Investor
Presentation will be available on the investor relations section of
the Company's website before the start of the conference
call. This conference call may be accessed live by calling
toll-free 1-844-701-1163 or international toll 1-412-317-5490, or
via the Investor Relations section of footlocker-inc.com
. Please log on to the website 15 minutes prior to the call
to register. An archived replay of the conference call can be
accessed approximately one hour following the end of the call at
1-877-344‑7529 in the U.S. or 1-855-669-9658 in Canada or 1-412-317-0088 internationally with
passcode 9912152 through June 3,
2022. A replay of the call will also be available via
webcast from 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 U.S. Securities and Exchange
Commission.
These forward-looking statements are based largely on
our expectations and judgments and are subject to a number of risks
and uncertainties, many of which are unforeseeable and beyond our
control. For additional discussion on risks and uncertainties that
may affect forward-looking statements, see "Risk Factors" disclosed
in the Company's Annual Report on Form 10-K for the year ended
January 29, 2022 filed on
March 24, 2022. 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.
Consolidated Statements of Operations
(unaudited)
|
|
Periods ended
April 30, 2022 and May 1, 2021
(In millions, except per share amounts)
|
|
|
|
|
|
|
|
|
|
|
First Quarter
|
|
|
|
2022
|
|
2021
|
|
Sales
|
|
$
|
2,175
|
|
$
|
2,153
|
|
Cost of
sales
|
|
|
1,435
|
|
|
1,404
|
|
Selling, general and
administrative expenses
|
|
|
463
|
|
|
418
|
|
Depreciation and
amortization
|
|
|
54
|
|
|
45
|
|
Impairment and other
charges
|
|
|
6
|
|
|
4
|
|
Income from
operations
|
|
|
217
|
|
|
282
|
|
|
|
|
|
|
|
|
|
Interest expense,
net
|
|
|
(5)
|
|
|
(2)
|
|
Other (expense) /
income, net
|
|
|
(22)
|
|
|
4
|
|
Income before income
taxes
|
|
|
190
|
|
|
284
|
|
Income tax
expense
|
|
|
58
|
|
|
82
|
|
Net income
|
|
|
132
|
|
|
202
|
|
Net loss attributable
to noncontrolling interests
|
|
|
1
|
|
|
—
|
|
Net income attributable
to Foot Locker, Inc.
|
|
$
|
133
|
|
$
|
202
|
|
|
|
|
|
|
|
|
|
Diluted earnings per
share
|
|
$
|
1.37
|
|
$
|
1.93
|
|
Weighted-average
diluted shares outstanding
|
|
|
97.2
|
|
|
105.0
|
|
Non-GAAP Financial Measures
In addition to reporting the Company's financial results
in accordance with generally accepted accounting principles
("GAAP"), the Company reports certain financial results that differ
from what is reported under GAAP. Effective with the first quarter
of 2022, the Company will exclude all gains or losses associated
with the minority investments to arrive at non-GAAP earnings,
previously only certain amounts were adjusted. Those amounts not
previously excluded from non-GAAP earnings during 2021 represented
$17 million ($12 million after tax or $0.12 per share), $27
million ($20 million after tax
or $0.19 per share), and $27 million ($20
million after tax or $0.21 per
share) for the second, third, and fourth quarters of 2021,
respectively. For the full year that represented income of
$71 million ($52 million after tax or $0.50 per share) and was primarily related to our
investment in Retailors, Ltd. Amounts recorded prior to 2021 were
not significant. Non-GAAP financial measures that will be presented
will i) exclude minority investments, ii) impairments and other
charges, and iii) certain tax matters that we believe are
nonrecurring or unusual in nature.
Certain financial measures are identified as non-GAAP,
such as sales changes excluding foreign currency fluctuations,
adjusted income before income taxes, adjusted net income, and
adjusted diluted earnings per share. We present certain amounts as
excluding the effects of foreign currency fluctuations, which are
also considered non-GAAP measures. Where amounts are expressed as
excluding the effects of foreign currency fluctuations, such
changes are determined by translating all amounts in both years
using the prior-year average foreign exchange rates. Presenting
amounts on a constant currency basis is useful to investors because
it enables them to better understand the changes in our business
that are not related to currency movements.
FOOT LOCKER,
INC.
Non-GAAP Reconciliation
(unaudited)
|
|
Periods ended
April 30, 2022 and May 1, 2021
(In millions, except per share amounts)
|
|
These non-GAAP
measures are presented because we believe they assist investors in
comparing our performance
across reporting periods on a consistent basis by excluding items
that we do not believe are indicative of our core
business or affect comparability. In addition, these non-GAAP
measures are useful in assessing our progress in
achieving our long-term financial objectives and are consistent
with how management compensation is determined.
We estimate the tax effect of all non-GAAP adjustments by applying
a marginal tax rate to each of the respective
items. The income tax items represent the discrete amount that
affected the period. The non-GAAP financial
information is provided in addition to, and not as an alternative
to, our reported results prepared in accordance with
GAAP. The various non-GAAP adjustments are summarized in the tables
below.
|
|
Reconciliation of GAAP to non-GAAP
results:
|
|
|
|
|
|
|
|
|
|
First Quarter
|
|
|
2022
|
|
2021 (1)
|
Pre-tax income:
|
|
|
|
|
|
|
Income before income
taxes
|
|
$
|
190
|
|
$
|
284
|
Pre-tax adjustments
excluded from GAAP:
|
|
|
|
|
|
|
Impairment and
other charges (2)
|
|
|
6
|
|
|
4
|
Other expense
(3)
|
|
|
24
|
|
|
—
|
Adjusted income before
income taxes (non-GAAP)
|
|
$
|
220
|
|
$
|
288
|
|
|
|
|
|
|
|
After-tax income:
|
|
|
|
|
|
|
Net income
|
|
$
|
133
|
|
$
|
202
|
After-tax adjustments
excluded from GAAP:
|
|
|
|
|
|
|
Impairment and
other charges, net of income tax benefit of $2 and $1 million,
respectively (2)
|
|
|
4
|
|
|
3
|
Other expense -
net of income tax benefit of $6 and $- million,
respectively (3)
|
|
|
18
|
|
|
—
|
Adjusted net income
(non-GAAP)
|
|
$
|
155
|
|
$
|
205
|
|
|
|
|
|
|
|
|
|
First Quarter
|
|
|
2022
|
|
2021 (1)
|
Earnings per share:
|
|
|
|
|
|
|
Diluted earnings per
share
|
|
$
|
1.37
|
|
$
|
1.93
|
Diluted EPS amounts
excluded from GAAP:
|
|
|
|
|
|
|
Impairment
and other charges (2)
|
|
|
0.05
|
|
|
0.03
|
Other expense
(3)
|
|
|
0.18
|
|
|
—
|
Adjusted diluted
earnings per share (non-GAAP)
|
|
$
|
1.60
|
|
$
|
1.96
|
|
Notes on Non-GAAP Adjustments:
|
|
(1)
|
Non-GAAP results in
the first quarter of 2021 were not affected by the change in
presentation of minority
investments discussed above.
|
(2)
|
During the thirteen
weeks ended April 30, 2022 and May 1, 2021, the Company recorded
pre-tax charges of
$6 million ($4 million after-tax) and $4 million ($3
million after-tax), respectively, classified as Impairment and
Other Charges. For the thirteen weeks ended April 30, 2022,
impairment and other charges included $3 million
of impairment of long-lived assets and right-of-use assets and
accelerated tenancy charges, $2 million of
acquisition and integration costs related to WSS and atmos, and
$1 million of other expenses. For the thirteen
weeks ended May 1, 2021, impairment and other charges included a
non-cash charge of $2 million related to one
of our minority investments and charges of $2 million primarily
related to severance costs in connection with the
reorganization of certain support functions.
|
(3)
|
Other expense for the
thirteen weeks ended April 30, 2022 primarily consisted of a $25
million loss on the change
in fair value of our investment in Retailors, Ltd., a
publicly-listed entity, which was partially offset by $1 million
of
dividend income and income from other various equity method
investments.
|
FOOT LOCKER,
INC.
Consolidated Balance Sheets
(unaudited)
(In millions)
|
|
|
|
|
|
|
|
|
|
April 30,
|
|
May 1,
|
|
|
2022
|
|
2021
|
ASSETS
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Current
assets:
|
|
|
|
|
|
|
Cash and
cash equivalents
|
|
$
|
551
|
|
$
|
1,963
|
Merchandise
inventories
|
|
|
1,401
|
|
|
1,021
|
Other
current assets
|
|
|
281
|
|
|
283
|
|
|
|
2,233
|
|
|
3,267
|
Property and equipment,
net
|
|
|
899
|
|
|
769
|
Operating lease
right-of-use assets
|
|
|
2,566
|
|
|
2,700
|
Deferred
taxes
|
|
|
79
|
|
|
101
|
Goodwill
|
|
|
783
|
|
|
159
|
Other intangible
assets, net
|
|
|
441
|
|
|
16
|
Minority
investments
|
|
|
759
|
|
|
342
|
Other assets
|
|
|
118
|
|
|
88
|
|
|
$
|
7,878
|
|
$
|
7,442
|
|
|
|
|
|
|
|
LIABILITIES AND SHAREHOLDERS'
EQUITY
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Current
liabilities:
|
|
|
|
|
|
|
Accounts payable
|
|
$
|
565
|
|
$
|
658
|
Accrued and other
liabilities
|
|
|
428
|
|
|
572
|
Current portion of long-term debt
and obligations under finance leases
|
|
|
6
|
|
|
101
|
Current
portion of lease obligations
|
|
|
557
|
|
|
582
|
|
|
|
1,556
|
|
|
1,913
|
Long-term debt and
obligations under finance leases
|
|
|
450
|
|
|
8
|
Long-term lease
obligations
|
|
|
2,323
|
|
|
2,470
|
Other
liabilities
|
|
|
334
|
|
|
121
|
Total
liabilities
|
|
|
4,663
|
|
|
4,512
|
Total shareholders'
equity
|
|
|
3,215
|
|
|
2,930
|
|
|
$
|
7,878
|
|
$
|
7,442
|
FOOT LOCKER,
INC.
Store Count and Square Footage
(unaudited)
|
|
Store activity is as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
January 29,
|
|
|
|
|
|
April 30,
|
|
Relocations/
|
|
|
2022
|
|
Opened
|
|
Closed
|
|
2022
|
|
Remodels
|
Foot Locker
U.S.
|
|
802
|
|
3
|
|
19
|
|
786
|
|
8
|
Foot Locker
Europe
|
|
626
|
|
4
|
|
5
|
|
625
|
|
6
|
Foot Locker
Canada
|
|
95
|
|
1
|
|
3
|
|
93
|
|
—
|
Foot Locker
Pacific
|
|
94
|
|
—
|
|
—
|
|
94
|
|
2
|
Foot Locker
Asia
|
|
30
|
|
—
|
|
—
|
|
30
|
|
—
|
Kids Foot
Locker
|
|
410
|
|
12
|
|
5
|
|
417
|
|
1
|
Lady Foot
Locker
|
|
14
|
|
—
|
|
3
|
|
11
|
|
—
|
Champs
Sports
|
|
525
|
|
1
|
|
10
|
|
516
|
|
3
|
Footaction
|
|
41
|
|
—
|
|
19
|
|
22
|
|
—
|
Sidestep
|
|
86
|
|
—
|
|
3
|
|
83
|
|
—
|
WSS
|
|
98
|
|
1
|
|
—
|
|
99
|
|
1
|
atmos
|
|
37
|
|
2
|
|
—
|
|
39
|
|
2
|
Total
|
|
2,858
|
|
24
|
|
67
|
|
2,815
|
|
23
|
Selling and gross square footage are as
follows:
|
|
|
|
|
|
|
|
|
|
|
|
May 1, 2021
|
April 30, 2022
|
(in
thousands)
|
|
Selling
|
|
Gross
|
|
Selling
|
|
Gross
|
Foot Locker
U.S.
|
|
2,389
|
|
4,172
|
|
2,374
|
|
4,103
|
Foot Locker
Europe
|
|
1,007
|
|
2,146
|
|
1,085
|
|
2,256
|
Foot Locker
Canada
|
|
258
|
|
421
|
|
253
|
|
417
|
Foot Locker
Pacific
|
|
168
|
|
265
|
|
192
|
|
299
|
Foot Locker
Asia
|
|
95
|
|
171
|
|
114
|
|
199
|
Kids Foot
Locker
|
|
733
|
|
1,256
|
|
760
|
|
1,292
|
Lady Foot
Locker
|
|
42
|
|
68
|
|
19
|
|
31
|
Champs
Sports
|
|
1,903
|
|
2,975
|
|
1,903
|
|
2,980
|
Footaction
|
|
727
|
|
1,187
|
|
59
|
|
104
|
Sidestep
|
|
90
|
|
163
|
|
101
|
|
191
|
WSS
(1)
|
|
—
|
|
—
|
|
972
|
|
1,223
|
atmos
(2)
|
|
—
|
|
—
|
|
38
|
|
65
|
Total
|
|
7,412
|
|
12,824
|
|
7,870
|
|
13,160
|
|
(1) The Company
acquired 93 existing WSS stores in September 2021.
|
(2) The Company
acquired 38 existing atmos stores in November 2021.
|
Contact:
Robert Higginbotham
Vice President, Investor Relations
robert.higginbotham@footlocker.com
(212) 720-4600
View original
content:https://www.prnewswire.com/news-releases/foot-locker-inc-reports-2022-first-quarter-results-updates-2022-outlook-301551780.html
SOURCE Foot Locker IR