MARCH 03, 2004 -- Foot Locker reported Q4 net income from continuing operations of $0.47 per share and $1.40 per share for its full year ended January 31, 2004. The company also reported a substantially enhanced financial position, with a year-end cash balance of $448 million, up 25% from the 2002 year-end cash balance of $357 million.
Income from continuing operations for Q4 increased 48% to $71 million, or $0.47 per share, compared to $48 million, or $0.33 per share, last year. Sales for this year's Q4 increased 9.9%, to $1,334 million, as compared with $1,214 million last year, reflecting a comparable-store increase of 3.9%.
Income from continuing operations for the full year increased 29% to $209 million, or $1.40 per share, as compared with $162 million, or $1.10 per share, last year. Sales for the full year increased 6.0%, to $4,779 million as compared with sales of $4,509 million last year, reflecting a comparable-store decrease of 0.5%.
"Over the past five years, we significantly increased our earnings and strengthened our financial position," stated Matthew Serra, COB/CEO. "We are particularly pleased with our fourth quarter results which exceeded our expectations. During this recent quarter, our comparable store sales strengthened versus earlier in the year and we benefited from a higher gross margin rate and more efficient expense structure."
The company continued to utilize its cash flow to reduce its debt, increase its cash balance and enhance its financial position. At year-end, the company's cash balance grew to $448 million. Net of debt, its cash position increased $112 million versus last year.
During 2003, Foot Locker continued to focus on maximizing its store base's productivity, in the process opening 113 new stores, remodeling/relocating 250 stores, and closing 128 stores. At January 31, 2004, it operated 3,610 stores in 16 countries in North America, Europe and Australia.
"Continuing to strengthen our financial position remains a high priority for our company, as we strive to attain an investment grade credit rating," Serra said. "During the past five years we increased our cash, net of debt position by $686 million. As a result, our net interest expense declined significantly by $33 million, to $18 million in 2003 as compared with $51 million in 1999. This strengthened financial position allowed us to initiate a shareholder dividend program in 2002, and enabled the company to double the amount of its quarterly dividend payout beginning in the fourth quarter of 2003."
The company expects to generate a mid-to-high single digit total sales increase during 2004, and continue to improve, as compared with the prior year, its gross margin rate and SG&A expenses, as a percentage of sales. As a result, EPS growth of 10%-20% is currently expected for the full year. A similar EPS growth rate of 10%-20% is currently anticipated for Q1. The company's capital expenditure program is planned at $165 million for 2004, and includes the opening of 110 new stores, the roll-out of a new point-of-sale system in the Foot Locker stores in the US and an expansion of the European distribution center.
"We remain confident that our business will continue to grow and produce meaningful annual earnings increases over the next several years," commented Serra. "The economic environment in the US is improving and the retail climate, including mall traffic and promotional climate, has stabilized. Our merchandise inventory is well positioned for 2004, and additional expense leveraging is expected to result from infrastructure enhancements and our cost reduction efforts."
In January 2004, Footlocker.com entered into a six-year agreement with the US Olympic Committee providing the company with the exclusive rights to sell USOC-licensed products through catalogs and via a new E-commerce site.