Foot Locker : 08/24/18 FOOT LOCKER, INC. REPORTS 2018 SECOND QUARTER RESULTS

Contact: James R. Lance
Vice President,
Corporate Finance and Investor Relations
Foot Locker, Inc.
[phone]

FOOT LOCKER, INC. REPORTS 2018 SECOND QUARTER RESULTS

• Net Income of $88 Million, or $0.75 Per Share
• Comparable-Store Sales Increased 0.5 Percent

NEW YORK, NY, August 24, 2018 - Foot Locker, Inc. (NYSE: FL), the New York-based specialty athletic retailer, reported today financial results for its second quarter ended August 4, 2018.

Second Quarter Results

Net income for the Company's second quarter ended August 4, 2018 was $88 million, or $0.75 per share, compared to net income of $51 million, or $0.39 per share in the same period of fiscal 2017.

Second quarter comparable store sales increased 0.5 percent. Total second quarter sales increased 4.8 percent, to $1,782 million this year, compared to sales of $1,701 million for the corresponding prior-year period. Excluding the effect of foreign exchange rate fluctuations, total sales for the second quarter increased 3.9 percent. The Company's gross margin rate increased to 30.2 percent from 29.6 percent a year ago, while the SG&A expense rate increased to 21.3 percent from 19.9 percent in the second quarter of 2017.

'Our performance reflects the work we are doing on several fronts to position the Company to succeed in a rapidly evolving retail environment,' said Richard Johnson, Chairman and Chief Executive Officer. 'We remain optimistic that our improving product flow and depth in premium styles positions us to deliver stronger comparable sales growth in the second half of 2018.'

Lauren Peters, Executive Vice President and Chief Financial Officer, added 'We are encouraged by the results we delivered, including a return to growth on the top line combined with gross margin expansion. We maintained our disciplined approach to inventory management in the second quarter, which is enabling us to flow improving merchandise assortments into the business for back-to-school and the holidays.'

Non-GAAP Adjustments

During the second quarter, the Company recorded an incremental $3 million pre-tax charge related to the Company's previously-disclosed pension litigation. The Company also recorded $2 million of tax benefits related to 1) an adjustment to the levy for the deemed repatriation of offshore earnings, and 2) changes in regulations which required the Company to record a reduction in tax expense related to foreign currency translation gains and losses of foreign businesses operated as branches. Excluding these items, the Company earned $0.75 per share during the second quarter on a non-GAAP basis, a 21 percent increase over the non-GAAP earnings of $0.62 per share in the comparable 13-week period in 2017. A reconciliation of GAAP to non-GAAP results is included in the tables below.

Year-To-Date Results

Net income for the Company's first six months of the year increased to $253 million, or $2.14 per share on a GAAP basis, compared to net income of $231 million, or $1.74 per share, for the corresponding period in 2017. On a non-GAAP basis, earnings per share for the six-month period totaled $2.21, a 12 percent increase compared to the same period in 2017. Year-to-date sales were $3,807 million, an increase of 2.8 percent compared to sales of $3,702 million in the corresponding six-month period of 2017. Year-to-date comparable store sales decreased 1.2 percent, while total year-to-date sales, excluding the effect of foreign currency fluctuations, increased 0.9 percent.

Financial Position

As of August 4, 2018, the Company's merchandise inventories were $1,254 million, 2.8 percent lower than at the end of the second quarter last year. Using constant currencies, inventory decreased 2.4 percent.

The Company's cash totaled $950 million, while the debt on its balance sheet was $124 million. The Company repurchased approximately 1.8 million shares for $93 million during the quarter and paid a quarterly dividend of $0.345 per share, spending $40 million.

Store Base Update

During the second quarter, the Company opened 13 new stores, remodeled or relocated 33 stores, and closed 21 stores. As of August 4, 2018, the Company operated 3,276 stores in 24 countries in North America, Europe, Australia, and New Zealand. In addition, 107 franchised Foot Locker stores were operating in the Middle East, as well as 10 franchised Runners Point stores in Germany.

The Company is hosting a live conference call at 9:00 a.m. (EDT) today, August 24, 2018, to review these results and discuss the outlook for the remainder of 2018. This conference call may be accessed live by dialing 1-800-936-2724 (U.S. and Canada) or [phone] (International), with the passcode 2282987, 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 [phone] (International) with passcode 2282987 through September 7, 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.

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Foot Locker, Inc. 330 West 34th Street, New York, NY 10001