Foot Locker 2008 Annual Report Download - page 28

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• Merchandise inventories at January 31, 2009 were $1,120 million, which represents a reduction of $161 million.
Excluding the effect of foreign currency fluctuations and the additional inventory associated with our recent
acquisition, inventories declined by approximately 10 percent.
• Repaid the remaining $88 million of our outstanding balance on the 5-year term loan.
• Purchased and retired $6 million of the $200 million 8.50 percent debentures payable in 2022, bringing the
outstanding amount to $123 million as of January 31, 2009.
• Dividends totaling $93 million were declared and paid.
Looking ahead to 2009, we are focused on ensuring our balance sheet and cash position remain strong; continuing
to manage our cost structure and inventory levels aggressively; strengthening and enhancing our brands to ensure they
are relevant; and positioning our Company for long-term success.
The following table represents a summary of sales and operating results, reconciled to (loss) income from
continuing operations before income taxes.
2008 2007 2006
(in millions)
Sales
Athletic Stores ............................................ $4,847 $5,071 $5,370
Direct-to-Customers ........................................ 390 364 380
Family Footwear ........................................... — 2 —
$ 5,237 $ 5,437 $ 5,750
Operating Results
Athletic Stores(1) ........................................... $ (59) $ (27) $ 405
Direct-to-Customers ........................................ 43 40 45
Family Footwear(2) .......................................... — (6) —
Division (loss) profit ........................................ (16) 7 450
Restructuring income (charge)(3) ............................... — 2 (1)
Total division (loss) profit ................................. (16) 9 449
Corporate expense ......................................... (87) (59) (68)
Total operating (loss) profit .................................. (103) (50) 381
Other income ............................................. 8 1 14
Interest expense, net ....................................... 5 1 3
(Loss) income from continuing operations before income taxes ....... $(100) $ (50) $ 392
(1) The year ended January 31, 2009 includes a $241 million charge representing long-lived store asset impairment, goodwill and other
intangibles impairment and store closing costs related to the Company’s U.S. operations. The year ended February 2, 2008 includes a $128
million charge representing impairment and store closing costs related to the Company’s U.S. operations. The year ended February 3, 2007
included a $17 million non-cash impairment charge related to the Company’s European operations.
(2) During the first quarter of 2007, the Company launched a new family footwear concept, Footquarters. The concept’s results did not meet
the Company’s expectations and, therefore, the Company decided not to invest further in this business. These stores were converted to the
Company’s other formats. Included in the operating loss of $6 million was approximately $2 million of costs associated with the removal of
signage and the write-off of unusable fixtures.
(3) During 2007, the Company adjusted its 1993 Repositioning and 1991 Restructuring reserve by $2 million primarily due to favorable lease
terminations. During 2006, the Company recorded a restructuring charge of $1 million, which represented a revision to the original estimate
of the lease liability associated with the guarantee of The San Francisco Music Box Company distribution center. These amounts are included
in selling, general and administrative expenses in the Consolidated Statements of Operations.
Sales
All references to comparable-store sales for a given period relate to sales from stores that are open at the period-
end, that have been open for more than one year, and exclude the effect of foreign currency fluctuations. Accordingly,
stores opened and closed during the period are not included. Sales from the Direct-to-Customer segment, excluding
CCS sales, are included in the calculation of comparable-store sales for all periods presented. Sales from acquired
businesses that include the purchase of inventory are included in the computation of comparable-store sales after
15 months of operations. Accordingly, CCS sales have been excluded in the computation of comparable-store sales.