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This excerpt taken from the FL 10-K filed Mar 29, 2005. 2004 compared with 2003 Direct-to-Customers sales were $366 million in both
2004 and 2003. The growth of the Internet business continued to drive sales in 2004. Internet sales increased by 11.0 percent to $212 million from $191
million in 2003. Catalog sales decreased by 12.0 percent to $154 million in 2004 from $175 million in 2003. Management believes that the decrease in
catalog sales which was substantially offset by the increase in Internet sales resulted as customers continue to browse and select products through its
catalogs, then make their purchases via the Internet. The Company continues to implement new initiatives to increase this business, including new
marketing arrangements and strategic alliances with well-known third parties. During the fourth quarter of 2004, a new agreement was reached with ESPN
whereby the Company manages the ESPN Shop — an ESPN-branded direct mail catalog and e-commerce destination where fans can purchase athletic
footwear, apparel and equipment.
The Direct-to-Customers business generated division
profit of $45 million in 2004, as compared with $53 million in 2003. The decrease in division profit is a result of expanded catalog circulation
expenses in 2004. Division profit, as a percentage of sales, decreased to 12.3 percent from 14.5 percent, however, the Direct-to-Customer business
remains more profitable than the Company’s Athletic Stores segment.
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