This excerpt taken from the FL 8-K filed Jul 31, 2007.
FOOT LOCKER, INC. ANNOUNCES STRATEGIC INITIATIVES
NEW YORK, NY, July 30, 2007 Foot Locker, Inc. (NYSE: FL), the New York-based specialty athletic retailer, today announced that it initiated several steps during the second quarter that are designed to strengthen its business operations. Among those actions are:
Foot Locker, Inc. updated its financial forecast for its second quarter 2007 primarily to reflect the impact of the merchandise inventory clearance activity. As a result of that and other actions, the Company currently expects to report a loss in a range of $0.17 -to-$0.20 per share. This range reflects increased markdowns in the Companys U.S. stores of approximately $55 million at cost, or approximately $0.22 per share, versus the same period last year to liquidate slow-selling merchandise. The Companys estimate for the second quarter that was provided at the beginning of the period was net income of $0.15 -to-$0.20 per share. The Company also updated its financial forecast for the second quarter to reflect that its comparable-store sales are expected to decrease 7-to-8 percent.
During the second quarter, we made the strategic decision to liquidate slower-selling merchandise in our U.S. stores more aggressively than we had planned at the beginning of the quarter, with an objective of improving our inventory position before the start of the fall season, stated Matthew D. Serra, Foot Locker, Inc.s Chairman and Chief Executive Officer. The financial impact of implementing this important strategy was the primary reason for the projected net loss for the second quarter of 2007. We expect our international units will produce a double-digit division profit increase versus last years comparable period.
The Companys financial position continued to strengthen during the second quarter, as its cash position, net of debt, is expected to increase by approximately $50 million from the same time last year. Merchandise inventory at the end of the second quarter is expected to be lower than at the same period last year. During the first six months of the year, the Company repurchased 2.3 million shares of its common stock for $50 million under a three-year $300 million share repurchase program. Additional shares may be purchased this year based on market conditions and other factors.
Through an extensive review of its store base, the Company identified a number of unproductive domestic stores that it is pursuing to close over the next several months. Depending on the success in negotiating settlements with its landlords, a total of up to 250 stores will be closed in 2007. This is approximately twice the number of stores that the Company had originally planned to close in 2007 and, as a result of this action, it is expected that the profitability of the Companys U.S. store base will be enhanced, beginning in 2008.
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