Thursday, athletic footwear and apparel retailer Foot Locker, Inc. (FL) reported a swing to loss in the third quarter, hurt primarily by a non-cash impairment charge related to the write down of long-lived assets of its U.S. operations. Sales for the quarter came in ahead of estimates, while earnings fell short. Third quarter comparable-store sales decreased 8.2% with sales declining 7.3%.
Foot Locker reported a net loss of $6 million or $0.04 per share for the third quarter, compared to a net income of $24 million or $0.16 per share in the year-ago period.
The New York-based company's loss for the quarter was mainly due to third quarter non-cash impairment charges of $22 million or $0.14 per share incurred on a write down of long-lived assets of its U.S. operations.
The company's non-GAAP net income was $16 million or $0.10 per share, compared with $27 million, or $0.18 per share in the third quarter of 2008.
On average, twelve analysts polled by Thomson Reuters estimated earnings of $0.13 per share for the quarter. Analysts' estimates typically exclude special items.
Third quarter sales decreased 7.3% to $1.21 billion from $1.30 billion in the corresponding quarter last year. Ten Street analysts had a revenue estimate of $1.19 billion for the quarter.
Excluding the effect of foreign currency fluctuations, total sales for the thirteen-week period decreased 7.6%. Third quarter comparable-store sales decreased 8.2%.
Foot Locker's cost of sales during the quarter declined to $885 million from $954 million in the year-earlier period. Selling, general and administrative expenses declined to $274 million from $287 million year-ago. Net interest expense for the quarter was higher at $3.0 million, compared with $1.0 million in the year-ago period.
At the end of the third quarter, the company's cash and short-term investments totaled $438 million. Merchandise inventory at the end of the third quarter was $1,228 million or 2.7% less than the comparable period of last year.
Foot Locker on Wednesday declared a quarterly cash dividend of $0.15 per share, to be paid on January 29 to shareholders of record as of January 15.
The company also reported on Wednesday that its board elected Chief Executive Ken Hicks to the additional position of chairman of the board, effective January 31. Hicks succeeds Matthew Serra who will retire from the company and the board on January 30.
Foot Locker said that year-to-date it opened 33 new stores, remodeled or relocated 130 stores, and closed 73 stores. At October 31, the company operated 3,601 stores in 21 countries in North America, Europe and Australia. In addition, 20 franchised stores are currently operating in the Middle East and South Korea.
For the first nine months, Foot Locker's net income declined to $25 million or $0.16 per share from $45 million or $0.29 per share in the year-ago period. Year-to-date non-GAAP net income declined to $47 million or $0.30 per share from $66 million or $0.43 per share in the prior year period.
Year-to-date sales declined 10.0% to $3.53 billion from $3.92 billion in the prior year period.
FL closed Thursday's regular trade at $10.59, down $0.51 or 4.59%, on a volume of 3.47 million shares on the New York Stock Exchange. In after hours, the stock further declined $0.55 or 5.10%, trading at $10.04. In the last 52-week period, the stock trended in a broad range of $3.65 - $12.95, with a three-month average volume of 3.30 million shares.
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