FL
$55.90
Footlocker
($.97)
(1.71%)
Earnings Details
1st Quarter April 2018
Friday, May 25, 2018 6:45:00 AM
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Summary

Footlocker Beats

Footlocker (FL) reported 1st Quarter April 2018 earnings of $1.45 per share on revenue of $2.0 billion. The consensus earnings estimate was $1.25 per share on revenue of $2.0 billion. The Earnings Whisper number was $1.27 per share. Revenue grew 1.2% on a year-over-year basis.

Foot Locker Inc is a retailer of athletically inspired shoes and apparel, operating primarily mall-based stores in the United States, Canada, Europe, Australia, and New Zealand.

Results
Reported Earnings
$1.45
Earnings Whisper
$1.27
Consensus Estimate
$1.25
Reported Revenue
$2.03 Bil
Revenue Estimate
$1.98 Bil
Growth
Earnings Growth
Revenue Growth
Power Rating
Grade
Earnings Release

Foot Locker, Inc. Reports 2018 First Quarter Results

NEW YORK, May 25, 2018 /PRNewswire/ -- Foot Locker, Inc. (NYSE: FL), the New York-based specialty athletic retailer, reported today financial results for its first quarter ended May 5, 2018.

First Quarter Results
Net income for the Company's first quarter ended May 5, 2018 was $165 million, or $1.38 per share, compared to net income of $180 million, or $1.36 per share in the same period of fiscal 2017.  This result included an incremental $12 million charge related to the Company's pension litigation.  Excluding this charge, which reduced after-tax earnings by 7 cents per share, non-GAAP earnings were $1.45 per share.

First quarter comparable-store sales decreased 2.8 percent.  Total first quarter sales increased 1.2 percent, to $2,025 million this year, compared to sales of $2,001 million for the corresponding prior-year period.  Excluding the effect of foreign exchange rate fluctuations, total sales for the first quarter decreased 1.5 percent.  

The Company's gross margin rate decreased to 32.9 percent from 34 percent a year ago, while the SG&A expense rate increased to 19 percent from 18.5 percent in the first quarter of 2017, primarily reflecting the significant investments the Company is making in its digital operations.

"The flow of premium product continues to improve, with increasing breadth and depth in the most sought after styles from our key vendors," said Richard Johnson, Chairman and Chief Executive Officer.  "This led to first quarter results which were above our expectations.  With the strength of our strategic vendor partnerships and our central position in youth culture, we continue to believe that we are poised to inflect to positive comparable-store sales growth as we progress through the year."

Financial Position
As of May 5, 2018, the Company's merchandise inventories were $1,210 million, 5.4 percent lower than at the end of the first quarter last year.  Using constant currencies, inventory decreased 7.1 percent. 

"The team did an excellent job in managing our inventories and helping to clear slow moving product in a promotional environment, giving us the flexibility to flow in fresh and exciting product," said Lauren Peters, Executive Vice President and Chief Financial Officer. "This disciplined approach positions our inventory to drive improved top and bottom line results over the balance of the year."

The Company's cash totaled $1,029 million, while the debt on its balance sheet was $125 million.  The Company spent $112 million to repurchase 2.6 million shares during the quarter and paid a quarterly dividend of $0.345 per share, spending $41 million.

Store Base Update
During the first quarter, the Company opened 11 new stores, remodeled or relocated 43 stores, and closed 37 stores.  As of May 5, 2018, the Company operated 3,284 stores in 24 countries in North America, Europe, Australia, and New Zealand.  In addition, 105 franchised Foot Locker stores were operating in the Middle East, as well as 11 franchised Runners Point stores in Germany.

The Company is hosting a live conference call at 9:00 a.m. (EDT) today, May 25, 2018, to review these results and discuss the outlook for the remainder of 2018. This conference call may be accessed live by dialing 1-866-906-4691 (U.S. and Canada) or +44 203-107-0289 (International), with the passcode 5087467, 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 register. An archived replay of the conference call can be accessed approximately two hours following the end of the call at 1-855-859-2056 (U.S. and Canada) or +1 404-537-3406 (International) with passcode 5087467 through June 8, 2018. 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 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 2017 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 May 5, 2018 and April 29, 2017

(In millions, except per share amounts)













First Quarter




2018


2017

Sales 



$

2,025


$

2,001









Cost of sales




1,359



1,321

SG&A




385



371

Depreciation and amortization




45



41

Litigation and other charges




12



Income from operations




224



268









Interest income, net




(2)



Other income




(3)



(1)

Income before income taxes




229



269

Income tax expense




64



89

Net income 



$

165


$

180









Diluted EPS



$

1.38


$

1.36

Weighted-average diluted shares outstanding




119.1



132.6

 

Foot Locker, Inc.
Non-GAAP Financial Measures
(unaudited)
Periods ended May 5, 2018 and April 29, 2017
(In millions, except per share amounts)

 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. In the following table, we have presented certain financial measures identified as non-GAAP, such as adjusted income before income taxes, adjusted net income, and adjusted diluted earnings per share. We present these non-GAAP measures 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 which affect comparability. In addition, these non-GAAP measures are useful in assessing our progress in achieving our long-term financial objectives. Also, 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 businesses that are not related to currency movements.

The non-GAAP financial information is provided in addition to, and not as an alternative to, our reported results prepared in accordance with GAAP.

Reconciliation of GAAP to non-GAAP results:














First Quarter


2018


2017



Sales

$

2,025


$

2,001







Pre-tax income:






Income before income taxes

$

229


$

269

Pre-tax adjustments excluded from GAAP:






Litigation charge (1)


12



Adjusted income before income taxes (non-GAAP)

$

241


$

269







After-tax income:






Net income

$

165


$

180

After-tax adjustments excluded from GAAP:






Litigation charge, net of income tax benefit of $3 and $- million, respectively (1)


9



Adjusted net income (non-GAAP)

$

174


$

180







Earnings per share:






Diluted EPS

$

1.38


$

1.36

Diluted EPS amounts excluded from GAAP:






Litigation charge (1)


0.07



Adjusted diluted EPS (non-GAAP)

$

1.45


$

1.36


Notes on Non-GAAP Adjustments:



(1)

The Company recorded a pre-tax charge of $12 million in connection with its U.S. retirement plan litigation during the first quarter of 2018. As disclosed in the Company's Annual Report on Form 10-K, the Company must reform the pension plan and the amount accrued will continue to increase with interest until paid, as required by the provisions of the required plan reformation. Accordingly, the Company recorded a charge of $4 million representing this increase. Additionally, the amount accrued was increased by $7 million reflecting updated estimates of the cost of reformation.  Finally, we incurred $1 million in administrative costs associated with the reformation.
                                                         

The Company applied a marginal tax rate on the non-GAAP adjustment.

 

Foot Locker, Inc.

Condensed Consolidated Balance Sheets

(unaudited)

(In millions)











May 5,


April 29,



2018


2017

ASSETS














Current assets:







Cash and cash equivalents


$

1,029


$

1,049

Merchandise inventories



1,210



1,279

Other current assets



301



294




2,540



2,622

Property and equipment, net



843



792

Deferred taxes



104



162

Other assets



476



301



$

3,963


$

3,877








LIABILITIES AND SHAREHOLDERS' EQUITY














Current liabilities:







Accounts payable


$

344


$

208

Accrued and other liabilities



309



327




653



535

Long-term debt



125



127

Other liabilities



642



393

Total liabilities



1,420



1,055

Total shareholders' equity



2,543



2,822



$

3,963


$

3,877

 

Foot Locker, Inc.

Store and Square Footage

(unaudited) 


Store activity is as follows:











February 3,



May 5,

Relocations/



2018

Opened

Closed

2018

Remodels

Foot Locker US


910

7

903

14

Foot Locker Europe


636

5

2

639

14

Foot Locker Canada


111

3

108

2

Foot Locker Asia Pacific


98

2

1

99

4

Kids Foot Locker


436

1

4

433

1

Lady Foot Locker


85

5

80

Champs Sports


541

1

5

537

5

Footaction


260

5

255

3

Runners Point


118

2

3

117

Sidestep


83

1

82

SIX:02


32

1

31

Total


3,310

11

37

3,284

43


Selling and gross square footage are as follows:

















February 3, 2018


May 5, 2018

(in thousands)


Selling

Gross


Selling

Gross

Foot Locker US


2,430

4,225


2,425

4,216

Foot Locker Europe


957

2,071


963

2,084

Foot Locker Canada


264

431


262

426

Foot Locker Asia Pacific


140

230


144

236

Kids Foot Locker


747

1,285


745

1,281

Lady Foot Locker


115

195


108

185

Champs Sports


1,934

2,994


1,926

2,982

Footaction


829

1,374


818

1,359

Runners Point


150

258


148

256

Sidestep


76

131


76

129

SIX:02


65

109


63

106

Total


7,707

13,303


7,678

13,260

 

 Contact:

James R. Lance


Vice President,


Corporate Finance and Investor Relations


Foot Locker, Inc.


(212) 720-3882

Cision View original content:http://www.prnewswire.com/news-releases/foot-locker-inc-reports-2018-first-quarter-results-300654778.html

SOURCE Foot Locker, Inc.