Retail store news : Foot Locker's Q2 Profits Soar on 9.8 Percent Comp Gain

Foot Locker, Inc. reported earnings jumped 59.5 percent in the second quarter ended July 28, to $59 million, or 39 cents per share, compared with net income of $37 million, or 24 cents, last year. Sales increased 7.2 percent, to $1.37 billion this year, compared $1.28 billion for the corresponding prior-year period. Comparable-store sales increased 9.8 percent.  Excluding the effect of foreign currency fluctuations, total sales for the second quarter increased 10.6 percent. Gross margin increased 90 basis points in the period.

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 84 cents per share, for the corresponding period last year.  Year-to-date sales increased 8.0 percent, to $2.95 billion, compared with sales of $2.73 billion 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.   

(SportsOneSource Media)

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