Foot Locker, Inc.
FL Consumer Cyclical Q4 2025
Document 757226
Exhibit 99.1
N E W S R E L E A S E
| Contacts: | Kate Fitzsimons Investor Relations
Dana Yacyk Corporate Communications |
FOOT LOCKER, INC. REPORTS FourthQUARTER 2024 financial RESULTS;
ISSUES 2025 OUTLOOK
● Total Sales Down 5.8% Year-over-Year and Comparable Sales Up 2.6%
● Global Foot Locker and Kids Foot Locker Comparable Sales Up 3.6%
● Gross Margin Expansion of 300 Basis Points Year-over-Year
● GAAP EPS of $0.57 from Continuing Operations and Non-GAAP EPS of $0.86
● Completed 160 Store Refreshes in the Quarter, Bringing Total to Over 400 for the Year
● Issues Full-Year Sales and Non-GAAP EPS Outlook
NEW YORK, NY, March 5, 2025 – Foot Locker, Inc. (NYSE: FL) today reported financial results for its fourth quarter ended February 1, 2025.
Mary Dillon, President and Chief Executive Officer, said, "We delivered fourth quarter results above our previously revised expectations, as our investments and execution drove positive comparable sales and meaningful gross margin improvement compared to the prior year. Reflecting on 2024 overall, we made significant progress in elevating our in-store experience with our new Reimagined doors and store refresh program, enhancing our digital and mobile capabilities, expanding engagement with our FLX Rewards Program, and leaning into brand building through compelling campaigns and partnerships. Our return to positive comparable sales growth, gross margin expansion, and positive free cash flow in fiscal 2024 serve as proof points that our Lace Up Plan is working."
Ms. Dillon continued, "Looking ahead, we will continue to prioritize our customer-facing investments, keep our inventories controlled, and manage our expense base with discipline to improve our profitability. While we expect consumer and category promotional pressures to remain uncertain into 2025, especially within the first half, our Lace Up Plan strategies continue to resonate with our customers and brand partners. We started the year with one of our largest basketball activations in the company's history at NBA All-Star 2025, underscoring how we are capitalizing on our basketball leadership and our strong brand partnerships. We are confident that our strategies and actions will enable us to achieve our growth expectations in 2025 and are committed to delivering sustainable shareholder value creation."
Fourth Quarter Results
● | Total sales were down 5.8%, to $2,243 million, as compared with sales of $2,380 million in the fourth quarter of 2023. Results from 2023 included the effect of the 53rd week, which represented sales of $98 million. Excluding the effect of foreign exchange rate fluctuations, total sales for the fourth quarter decreased by 4.6%. |
● | Comparable sales increased by 2.6%, including global Foot Locker and Kids Foot Locker combined comparable sales growth of 3.6%. Notably, Champs Sports delivered its second consecutive quarter of comparable sales growth, with gains of 1.8%. |
Please refer to the Sales by Banner table below for detailed sales performance by banner and region.
● | Gross margin increased by 300 basis points as compared with the prior-year period, which was led by sequentially improved merchandise margin recapture trends relative to the third quarter of 2024 despite elevated promotions in the marketplace. Occupancy, as a percent of sales, was flat compared to the prior year period. |
● | SG&A as a percentage of sales improved by 10 basis points compared with the prior-year, driven by savings from the cost optimization program, disciplined expense management, and lower incentive compensation, partially offset by technology and brand-building investments. |
● | Net income from continuing operations was $55 million, as compared with net loss of $389 million in the prior-year period. On a non-GAAP basis, net income from continuing operations was $82 million for the fourth quarter, as compared with net income of $36 million in the corresponding prior-year period. |
● | Fourth quarter diluted earnings per share from continuing operations was $0.57, as compared with loss of $4.13 per share in the fourth quarter of 2023. Non-GAAP earnings from continuing operations were $0.86 per share in the fourth quarter, as compared with non-GAAP earnings per share of $0.38 in the corresponding prior-year period. |
See the tables below for the reconciliation of Non-GAAP measures.
Balance Sheet
At quarter-end, the Company had cash and cash equivalents of $401 million, and total debt was $446 million.
As of February 1, 2025, the Company's merchandise inventories were $1,525 million, 1.1% higher than at the end of the fourth quarter last year. Excluding the effect of foreign currency fluctuations, merchandise inventories increased by 2.5% as compared with the fourth quarter of last year.
Store Base Update
During the fourth quarter, the Company opened 7 new stores and closed 47 stores. Also during the quarter, the Company remodeled or relocated 21 stores and refreshed 160 stores to our updated design standards, which incorporate key elements of our current brand design specifications.
As of February 1, 2025, the Company operated 2,410 stores in 26 countries in North America, Europe, Asia, Australia, and New Zealand. In addition, 224 licensed stores were operating in the Middle East, Europe, and Asia.
Issuing Full-Year 2025 Sales and Non-GAAP EPS Outlook
The Company's full year 2025 outlook, representing the 52 weeks ending January 31, 2026, is summarized in the table below.
Metric | Full Year Guidance | Commentary |
| Sales Change | -1.0% to +0.5% | Includes ~1.0% expected foreign currency headwinds |
Comparable Sales Change | +1.0% to +2.5% | |
| Store Count Change | Down ~4% | |
Square Footage Change | Down ~2% | |
Licensing and Other Revenue | ~$24 million | |
Gross Margin | 29.3% to 29.7% | Improving merchandise margin |
SG&A Rate | 24.3% to 24.5% | Modest leverage excluding incentive compensation normalization |
D&A | $200 to $210 million | |
| EBIT Margin | 2.6% to 3.1% | |
Net Interest | ~$12 million | |
Non-GAAP Tax Rate | 32.5% to 33.0% | |
Non-GAAP EPS | $1.35 to $1.65 | |
| Capital Expenditures | $270 million | Focusing on customer-facing investments |
Adj. Capital Expenditures* | $300 million | Includes $30 million in technology investments reflected in operating cash flows |
* Adjusted Capital Expenditures includes Software-as-a-Service implementation costs that are amortized through operating expenses over their contract terms.
The Company provides earnings guidance only on a non-GAAP basis and does not provide a reconciliation of the Company's forward-looking EBIT, non-GAAP tax rate, and diluted earnings per share guidance to the most directly comparable GAAP financial measures because of the inherent difficulty in forecasting and quantifying certain amounts that are necessary for such reconciliations.
Conference Call and Webcast
The Company will host a conference call at 8:00 a.m. ET today, March 5, 2025, to review its fourth quarter 2024 results and provide an update on the business. An investor presentation will be available on the Investor Relations section of the Company's corporate website before the start of the conference call. The call may be accessed live by calling toll-free 1-844-701-1163 or international toll 1-412-317-5490, or via footlocker-inc.com. Please log on to the website 15 minutes prior to the call to register. An archived replay of the conference call will be accessible approximately one hour following the end of the call through March 19, 2025 by calling 1-877-344-7529 in the U.S., 1-855-669-9658 in Canada, and 1-412-317-0088 internationally with passcode 8678396. A webcast replay will also be available at footlocker-inc.com.
Disclosure Regarding Forward-Looking Statements
This press release 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, financial outlook, 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 regarding risks and uncertainties that may affect forward-looking statements, see “Risk Factors” disclosed in the Company's Annual Report on Form 10-K for the year ended February 3, 2024, filed on March 28, 2024. Any changes in such assumptions or factors could produce significantly different results. The Company undertakes no obligation to update the forward-looking statements, whether as a result of new information, future events, or otherwise.
Condensed Consolidated Statements of Operations
(unaudited)
Periods ended February 1, 2025 and February 3, 2024
(In millions, except per share amounts)
Fourth Quarter | Year-to-Date | |||||||||||||||
2024 | 2023 | 2024 | 2023 | |||||||||||||
Sales | $ | 2,243 | $ | 2,380 | $ | 7,971 | $ | 8,154 | ||||||||
Licensing revenue | 5 | 4 | 17 | 14 | ||||||||||||
Total revenue | 2,248 | 2,384 | 7,988 | 8,168 | ||||||||||||
| | | | | ||||||||||||
Cost of sales | 1,580 | 1,746 | 5,666 | 5,895 | ||||||||||||
Selling, general and administrative expenses | 501 | 533 | 1,920 | 1,852 | ||||||||||||
Depreciation and amortization | 49 | 51 | 202 | 199 | ||||||||||||
Impairment and other | 36 | 21 | 97 | 80 | ||||||||||||
Income from operations | 82 | 33 | 103 | 142 | ||||||||||||
| | | | | ||||||||||||
Interest expense, net | (2 | ) | (2 | ) | (8 | ) | (9 | ) | ||||||||
Other (expense) income, net | (3 | ) | (555 | ) | (44 | ) | (556 | ) | ||||||||
Income (loss) from continuing operations before income taxes | 77 | (524 | ) | 51 | (423 | ) | ||||||||||
Income tax expense (benefit) | 22 | (135 | ) | 33 | (93 | ) | ||||||||||
Net income (loss) from continuing operations | 55 | (389 | ) | 18 | (330 | ) | ||||||||||
Net loss from discontinued operations, net of tax | (6 | ) | - | (6 | ) | - | ||||||||||
Net income (loss) | $ | 49 | $ | (389 | ) | $ | 12 | $ | (330 | ) | ||||||
| | | | |||||||||||||
Diluted earnings per share | ||||||||||||||||
Earnings (loss) per share from continuing operations | $ | 0.57 | $ | (4.13 | ) | $ | 0.19 | $ | (3.51 | ) | ||||||
Net loss per share from discontinued operations, net of tax | $ | (0.06 | ) | $ | — | $ | (0.06 | ) | $ | — | ||||||
Net earnings (loss) per share | $ | 0.51 | $ | (4.13 | ) | $ | 0.13 | $ | (3.51 | ) | ||||||
Weighted-average diluted shares outstanding | 95.6 | 94.4 | 95.5 | 94.2 | ||||||||||||
Non-GAAP Financial Measures
In addition to reporting the Company's financial results in accordance with generally accepted accounting principles (“GAAP”), the Company reports certain financial results that differ from what is reported under GAAP. Non-GAAP financial measures that will be presented will exclude (i) gains or losses related to our minority investments, (ii) impairments and other, and (iii) certain tax matters that we believe are nonrecurring or unusual in nature.
Certain financial measures are identified as non-GAAP, such as sales changes excluding foreign currency fluctuations, adjusted income before income taxes, adjusted net income, and adjusted diluted earnings per share. We present certain amounts as excluding the effects of foreign currency fluctuations, which are also considered non-GAAP measures. Where amounts are expressed as excluding the effects of foreign currency fluctuations, such changes are determined by translating all amounts in both years using the prior-year average foreign exchange rates. Presenting amounts on a constant currency basis is useful to investors because it enables them to better understand the changes in our business that are not related to currency movements.
These non-GAAP measures are presented because we believe they assist investors in comparing our performance across reporting periods on a consistent basis by excluding items that we do not believe are indicative of our core business or affect comparability. In addition, these non-GAAP measures are useful in assessing our progress in achieving our long-term financial objectives and are consistent with how executive compensation is determined.
Non-GAAP Reconciliation
(unaudited)
Periods ended February 1, 2025 and February 3, 2024
(In millions, except per share amounts)
We estimate the tax effect of all non-GAAP adjustments by applying a marginal tax rate to each item. The income tax items represent the discrete amount that affected the period. The non-GAAP financial information is provided in addition, and not as an alternative, to our reported results prepared in accordance with GAAP. The various non-GAAP adjustments are summarized in the tables below.
Reconciliation of GAAP to non-GAAP results:
Fourth Quarter | Year-to-Date | |||||||||||||||
2024 | 2023 | 2024 | 2023 | |||||||||||||
Pre-tax income: | ||||||||||||||||
Income (loss) from continuing operations before income taxes | $ | 77 | $ | (524 | ) | $ | 51 | $ | (423 | ) | ||||||
Pre-tax adjustments excluded from GAAP: | | |||||||||||||||
Impairment and other (1) | 36 | 21 | 97 | 80 | ||||||||||||
Other expense / income (2) | — | 554 | 37 | 548 | ||||||||||||
Adjusted income before income taxes (non-GAAP) | $ | 113 | $ | 51 | $ | 185 | $ | 205 | ||||||||
After-tax income: | ||||||||||||||||
Net income (loss) | $ | 49 | $ | (389 | ) | $ | 12 | $ | (330 | ) | ||||||
After-tax adjustments excluded from GAAP: | | | ||||||||||||||
Impairment and other, net of income tax benefit of $9, $7, $22, and $18 million, respectively (1) | 27 | 14 | 75 | 62 | ||||||||||||
Other expense / income, net of income tax benefit of $-, $143, $-, and $142 million, respectively (2) | — | 411 | 37 | 406 | ||||||||||||
Net loss from discontinued operations, net of income tax benefit of $2, $-, $2, and $- million, respectively (3) | 6 | — | 6 | — | ||||||||||||
Tax reserves benefit (4) | — | — | — | (4 | ) | |||||||||||
Adjusted net income (non-GAAP) | $ | 82 | $ | 36 | $ | 130 | $ | 134 | ||||||||
Fourth Quarter | Year-to-Date | |||||||||||||||
2024 | 2023 | 2024 | 2023 | |||||||||||||
Earnings per share: | ||||||||||||||||
Earnings (loss) per share | $ | 0.51 | $ | (4.13 | ) | $ | 0.13 | $ | (3.51 | ) | ||||||
Diluted EPS amounts excluded from GAAP: | ||||||||||||||||
Impairment and other (1) | 0.29 | 0.15 | 0.80 | 0.66 | ||||||||||||
Other expense / income (2) | — | 4.36 | 0.38 | 4.31 | ||||||||||||
Net loss from discontinued operations (3) | 0.06 | — | 0.06 | — | ||||||||||||
Tax reserves benefit / charge (4) | — | — | — | (0.04 | ) | |||||||||||
Adjusted diluted earnings per share (non-GAAP) | $ | 0.86 | $ | 0.38 | $ | 1.37 | $ | 1.42 | ||||||||
Notes on Non-GAAP Adjustments:
(1) | Included in the fourth quarter of 2024 impairment and other caption were $19 million of reorganization costs primarily related to the announced closure and relocation of the Company's global headquarters and $10 million of impairment of long-lived assets and right-of-use assets accelerated tenancy charges related to the annual review of underperforming stores and the shutdown of the businesses operating in South Korea, Denmark, Norway, and Sweden. The Company will close all stores operating in those regions as it focuses on improving the overall results of its international operations. The fourth quarter also included charges related to legal and other matters totaling $7 million representing changes in estimates and loss accruals for various matters. The Company routinely monitors claims and records provisions for losses when claims become probable and the amount is estimable.
For fiscal year 2024, impairment and other included impairment charges of $32 million from a review of underperforming stores and accelerated tenancy charges on right-of-use assets primarily related to its decision to exit the underperforming operations and the closure and sublease of an unprofitable store in Europe. Additionally, the Company incurred $26 million of reorganization costs primarily related to the announced closure and relocation of the Company's global headquarters. During the third quarter, the Company recorded a $25 million write down of the atmos tradename following an impairment review. Additionally, the fiscal year reflected a charge of $14 million related to legal and other matters. |
Non-GAAP Reconciliation
(unaudited)
Periods ended February 1, 2025 and February 3, 2024
(In millions, except per share amounts)
Notes on Non-GAAP Adjustments (continued):
| Fourth quarter 2023 impairment and other included $11 million of impairment of long-lived assets and right-of-use assets and accelerated tenancy charges. These were incurred as part of the Company's annual review of underperforming stores and the planned wind down of its U.S. atmos stores, partially offset by a net benefit from the settlement of lease obligations associated with Sidestep store closures. In addition, the Company recorded intangible asset impairment of $9 million on the atmos tradename and reorganization costs of $5 million. These charges were partially offset by a $4 million reduction in the fair value of the atmos contingent consideration liability.
For fiscal year 2023, impairment and other included impairment charges of $30 million from a review of underperforming stores and accelerated tenancy charges on right-of-use assets for closures of the Sidestep banner and certain Foot Locker Asia stores. Additionally, the Company incurred transformation consulting expense of $27 million and reorganization costs of $17 million primarily related to severance and the closures of the Sidestep banner, certain Foot Locker Asia stores, and a North American distribution center. The fiscal year also included the atmos intangible asset impairment of $9 million, partially offset by the $4 million reduction in the fair value of the atmos contingent consideration. |
(2) | For fiscal year 2024, other expense / income included a $35 million impairment charge related to a minority investment. The Company evaluates the minority investment for impairment whenever events or circumstances indicate that the carrying value of the investment may not be recoverable and that impairment is other than temporary. If an indication of impairment occurs, the Company evaluates recoverability of the carrying value based on the fair value of the minority investment. If an impairment is indicated, the Company adjusts the carrying values of the investment downward, if necessary, to their estimated fair values. Other expense / income also included $2 million of the Company's share of losses related to equity method investments.
Other expense / income for the fourth quarter of 2023 consisted of a $478 million non-cash charge on minority investments and a $75 million charge related to the partial settlement of pension plan obligations. During the fourth quarter, as part of efforts to reduce pension plan obligations, the Company transferred approximately $109 million of its U.S. Qualified pension plan registered assets and liabilities to an insurance company through the purchase of a group annuity contract, under which an insurance company is required to directly pay and administer pension payments to certain pension plan participants, or their designated beneficiaries. In connection with this transaction, the Company recorded a non-cash pretax settlement charge of $75 million. This settlement charge accelerated the recognition of previously unrecognized losses in “Accumulated Other Comprehensive Loss.” Additionally, fiscal year 2023 also included a $3 million gain from the sale of a North American corporate office property, a $3 million gain from the sale of the Singapore and Malaysian Foot Locker businesses to a license partner, and $2 million of the Company's share of losses related to equity method investments. |
| (3) | In the fourth quarter of 2024, the Company recorded a charge to discontinued operations of $8 million ($6 million after tax) related to a legal matter of a business it formerly operated. |
(4) | In the first quarter of 2023, the Company recorded a $4 million benefit related to income tax reserves due to a statute of limitations release. |
Sales by Banner
(unaudited)
Periods ended February 1, 2025 and February 3, 2024
(In millions)
Fourth Quarter | Year-to-Date | |||||||||||||||||||||||||||||||
2024 | 2023 | Constant Currencies | Comparable Sales | 2024 | 2023 | Constant Currencies | Comparable Sales | |||||||||||||||||||||||||
Foot Locker | $ | 945 | $ | 961 | (1.1 | )% | 5.5 | % | $ | 3,227 | $ | 3,205 | 0.9 | % | 3.5 | % | ||||||||||||||||
Champs Sports | 334 | 372 | (9.9 | ) | 1.8 | 1,155 | 1,304 | (11.3 | ) | (3.2 | ) | |||||||||||||||||||||
Kids Foot Locker | 207 | 214 | (3.3 | ) | 4.0 | 727 | 716 | 1.5 | 3.4 | |||||||||||||||||||||||
WSS | 178 | 182 | (2.2 | ) | (3.3 | ) | 660 | 640 | 3.1 | (3.4 | ) | |||||||||||||||||||||
Other | 1 | — | n.m. | n.m. | 2 | 1 | n.m. | n.m. | ||||||||||||||||||||||||
North America | 1,665 | 1,729 | (3.4 | ) | 3.6 | 5,771 | 5,866 | (1.4 | ) | 1.3 | ||||||||||||||||||||||
Foot Locker | 451 | 495 | (6.1 | ) | 1.9 | 1,735 | 1,697 | 2.5 | 4.4 | |||||||||||||||||||||||
Sidestep | — | — | n.m. | n.m. | — | 26 | n.m. | n.m. | ||||||||||||||||||||||||
EMEA | 451 | 495 | (6.1 | ) | 1.9 | 1,735 | 1,723 | 0.9 | 4.4 | |||||||||||||||||||||||
Foot Locker | 91 | 106 | (9.4 | ) | (7.2 | ) | 327 | 387 | (14.0 | ) | (6.6 | ) | ||||||||||||||||||||
atmos | 36 | 50 | (24.0 | ) | (8.7 | ) | 138 | 178 | (16.3 | ) | (6.8 | ) | ||||||||||||||||||||
Asia Pacific | 127 | 156 | (14.1 | ) | (7.6 | ) | 465 | 565 | (14.7 | ) | (6.7 | ) | ||||||||||||||||||||
Total | $ | 2,243 | $ | 2,380 | (4.6 | )% | 2.6 | % | $ | 7,971 | $ | 8,154 | (1.9 | )% | 1.4 | % | ||||||||||||||||
Condensed Consolidated Balance Sheets
(unaudited)
(In millions)
February 1, | February 3, | |||||||
2025 | 2024 | |||||||
ASSETS | ||||||||
Current assets: | ||||||||
Cash and cash equivalents | $ | 401 | $ | 297 | ||||
Merchandise inventories | 1,525 | 1,509 | ||||||
Assets held for sale | 10 | — | ||||||
Other current assets | 323 | 419 | ||||||
| 2,259 | 2,225 | |||||||
Property and equipment, net | 910 | 930 | ||||||
Operating lease right-of-use assets | 2,061 | 2,188 | ||||||
Deferred taxes | 143 | 114 | ||||||
Goodwill | 759 | 768 | ||||||
Other intangible assets, net | 365 | 399 | ||||||
Minority investments | 115 | 152 | ||||||
Other assets | 136 | 92 | ||||||
| $ | 6,748 | $ | 6,868 | |||||
LIABILITIES AND SHAREHOLDERS' EQUITY | ||||||||
Current liabilities: | ||||||||
Accounts payable | $ | 378 | $ | 366 | ||||
Accrued and other liabilities | 434 | 428 | ||||||
Current portion of long-term debt and obligations under finance leases | 5 | 5 | ||||||
Current portion of lease obligations | 507 | 492 | ||||||
Liabilities held for sale | 6 | — | ||||||
| 1,330 | 1,291 | |||||||
Long-term debt and obligations under finance leases | 441 | 442 | ||||||
Long-term lease obligations | 1,831 | 2,004 | ||||||
Other liabilities | 237 | 241 | ||||||
Total liabilities | 3,839 | 3,978 | ||||||
Total shareholders' equity | 2,909 | 2,890 | ||||||
| $ | 6,748 | $ | 6,868 | |||||
Condensed Consolidated Statement of Cash Flows
(unaudited)
(In millions)
($ in millions) | 2024 | 2023 | ||||||
From operating activities: | ||||||||
Net income (loss) | $ | 12 | $ | (330 | ) | |||
Adjustments to reconcile net income to net cash from operating activities: | ||||||||
Depreciation and amortization | 202 | 199 | ||||||
Non-cash impairment and other | 57 | 40 | ||||||
Fair value adjustments to minority investments | 35 | 478 | ||||||
Share-based compensation expense | 21 | 13 | ||||||
Deferred income taxes | (28 | ) | (136 | ) | ||||
Pension settlement charge | — | 75 | ||||||
Fair value change in contingent consideration | — | (4 | ) | |||||
Gain on sales of businesses | — | (3 | ) | |||||
Gain on sale of property | — | (3 | ) | |||||
Change in assets and liabilities: | ||||||||
Merchandise inventories | (40 | ) | 120 | |||||
Accounts payable | 18 | (122 | ) | |||||
Accrued and other liabilities | 11 | (109 | ) | |||||
Other, net | 57 | (127 | ) | |||||
Net cash provided by operating activities | 345 | 91 | ||||||
From investing activities: | ||||||||
Capital expenditures | (240 | ) | (242 | ) | ||||
Minority investments | (1 | ) | (2 | ) | ||||
Proceeds from minority investments | 1 | — | ||||||
Proceeds from sales of businesses | — | 16 | ||||||
Proceeds from sale of property | — | 6 | ||||||
Net cash used in investing activities | (240 | ) | (222 | ) | ||||
From financing activities: | ||||||||
Payment of long-term debt and obligations under finance leases | (6 | ) | (6 | ) | ||||
Shares of common stock repurchased to satisfy tax withholding obligations | (5 | ) | (10 | ) | ||||
Payment of debt issuance costs | (4 | ) | — | |||||
Proceeds from exercise of stock options | 5 | 5 | ||||||
Treasury stock reissued under employee stock plan | 3 | 4 | ||||||
Repayment of the revolving credit facility | — | (146 | ) | |||||
Dividends paid on common stock | — | (113 | ) | |||||
Proceeds from the revolving credit facility | — | 146 | ||||||
Net cash used in financing activities | (7 | ) | (120 | ) | ||||
Effect of exchange rate fluctuations on cash, cash equivalents, and restricted cash | (2 | ) | 3 | |||||
Net change in cash, cash equivalents, and restricted cash | 96 | (248 | ) | |||||
Cash, cash equivalents, and restricted cash at beginning of year | 334 | 582 | ||||||
Cash, cash equivalents, and restricted cash at end of period | $ | 430 | $ | 334 | ||||
Store Count and Square Footage
(unaudited)
Store activity is as follows:
February 3, | February 1, | Relocations/ | ||||||||||||||||||
2024 | Opened | Closed | 2025 | Remodels | ||||||||||||||||
Foot Locker U.S. | 723 | 1 | 47 | 677 | 215 | |||||||||||||||
Foot Locker Canada | 85 | — | 1 | 84 | 34 | |||||||||||||||
Champs Sports | 404 | — | 21 | 383 | 2 | |||||||||||||||
Kids Foot Locker | 390 | 2 | 23 | 369 | 108 | |||||||||||||||
WSS | 141 | 12 | 2 | 151 | 3 | |||||||||||||||
Footaction | 1 | — | — | 1 | — | |||||||||||||||
North America | 1,744 | 15 | 94 | 1,665 | 362 | |||||||||||||||
Foot Locker Europe (1) | 637 | 10 | 39 | 608 | 97 | |||||||||||||||
EMEA | 637 | 10 | 39 | 608 | 97 | |||||||||||||||
Foot Locker Pacific | 98 | 1 | 3 | 96 | 14 | |||||||||||||||
Foot Locker Asia | 13 | — | 2 | 11 | — | |||||||||||||||
atmos | 31 | — | 1 | 30 | 5 | |||||||||||||||
Asia Pacific | 142 | 1 | 6 | 137 | 19 | |||||||||||||||
Total | 2,523 | 26 | 139 | 2,410 | 478 | |||||||||||||||
Selling and gross square footage are as follows:
February 3, 2024 | February 1, 2025 | |||||||||||||||
(in thousands) | Selling | Gross | Selling | Gross | ||||||||||||
Foot Locker U.S. | 2,401 | 4,080 | 2,337 | 3,954 | ||||||||||||
Foot Locker Canada | 259 | 426 | 261 | 428 | ||||||||||||
Champs Sports | 1,539 | 2,421 | 1,466 | 2,306 | ||||||||||||
Kids Foot Locker | 780 | 1,304 | 752 | 1,262 | ||||||||||||
WSS | 1,458 | 1,757 | 1,573 | 1,895 | ||||||||||||
Footaction | 3 | 6 | 3 | 6 | ||||||||||||
North America | 6,440 | 9,994 | 6,392 | 9,851 | ||||||||||||
Foot Locker Europe (1) | 1,208 | 2,470 | 1,172 | 2,389 | ||||||||||||
EMEA | 1,208 | 2,470 | 1,172 | 2,389 | ||||||||||||
Foot Locker Pacific | 243 | 366 | 250 | 376 | ||||||||||||
Foot Locker Asia | 52 | 98 | 45 | 88 | ||||||||||||
atmos | 28 | 48 | 28 | 47 | ||||||||||||
Asia Pacific | 323 | 512 | 323 | 511 | ||||||||||||
Total | 7,971 | 12,976 | 7,887 | 12,751 | ||||||||||||
(1) Includes 13 and 7 Kids Foot Locker stores, and the related square footage, operating in Europe for February 3, 2024 and February 1, 2025, respectively.
Document 757227
Exhibit 99.2
FOURTH QUARTER 2024
EARNINGS RESULTS
MARCH 5,2025
CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS
This investor presentation includes “forward-looking” statements within the meaning of the Private Securities Litigation Reform Act of 1995. Forward-looking statements can be identified by the fact that they do not relate strictly to historical or current facts. They often include words such as “believes,” “expects,” “anticipates,” “estimates,” “intends,” “plans,” “seeks,” “continues,” “feels,” “forecasts,” or words of similar meaning, or future or conditional verbs, such as “will,” “should,” “could,” “may,” “aims,” “intends,” or “projects.” Statements may be forward looking even in the absence of these particular words.
Examples of forward-looking statements include, but are not limited to, statements regarding our financial position, business strategy, and other plans and objectives for our future operations, and generation of free cash flow. These forward-looking statements are based on our current expectations and beliefs concerning future developments and their potential effect on us. The forward-looking statements contained herein are largely based on our expectations for the future, which reflect certain estimates and assumptions made by our management. These estimates and assumptions reflect our best judgment based on currently known market conditions, operating trends, and other factors. Although we believe such estimates and assumptions to be reasonable, they are inherently uncertain and involve a number of risks and uncertainties that are beyond our control. As such, management’s assumptions about future events may prove to be inaccurate.
We do not intend to publicly update or revise any forward-looking statements as a result of new information, future events, changes in circumstances, or otherwise. These cautionary statements qualify all forward-looking statements attributable to us, or persons acting on our behalf. Management cautions you that the forward-looking statements contained herein are not guarantees of future performance, and we cannot assure you that such statements will be realized or that the events and circumstances they describe will occur. Factors that could cause actual results to differ materially from those anticipated or implied in the forward-looking statements herein include, but are not limited to, a change in the relationship with any of our key suppliers, including access to premium products, volume discounts, cooperative advertising, markdown allowances, or the ability to cancel orders or return merchandise; inventory management; our ability to fund our planned capital investments; a recession, volatility in the financial markets, and other global economic factors, including inflation; difficulties in appropriately allocating capital and resources among our strategic opportunities; our ability to realize the expected benefits from acquisitions; business opportunities and expansion; investments; expenses; dividends; share repurchases; cash management; liquidity; cash flow from operations; our ability to access the credit markets at competitive terms; borrowing capacity under our credit facility; repatriation of cash to the United States; supply chain issues; labor shortages and wage pressures; consumer spending levels; licensed store arrangements; the effect of certain governmental assistance programs; the success of our marketing and sponsorship arrangements; expectations regarding increasing global taxes; the effect of increased government regulation, compliance, and changes in law; the effect of the adverse outcome of any material litigation or government investigation that affects us or our industry generally; the effects of weather; ESG risks, including, but not limited to climate change; increased competition; geopolitical events; the financial effect of accounting regulations and critical accounting policies; credit risk relating to the risk of loss as a result of non-performance by our counterparties; and any other factors set forth in the section entitled “Risk Factors” of our most recent Annual Report on Form 10-K and subsequent filings.
All written and oral forward-looking statements attributable to us are expressly qualified in their entirety by this cautionary statement. A forward-looking statement is neither a prediction nor a guarantee of future events or circumstances, and those future events or circumstances may not occur. You should not place undue reliance on forward-looking statements, which speak to our views only as of the date of this investor presentation. Additional risks and uncertainties that we do not presently know about or that we currently consider to be insignificant may also affect our business operations and financial performance.
Please refer to “Item 1A. Risk Factors” in the Annual Report and subsequent filings for a discussion of certain risks relating to our business and any investment in our securities. Given these risks and uncertainties, you should not rely on forward-looking statements as predictions of actual results. Any or all of the forward-looking statements contained in this investor presentation, or any other public statement made by us, including by our management, may turn out to be incorrect.
We are including this cautionary note to make applicable, and take advantage of, the safe harbor provisions of the Private Securities Litigation Reform Act of 1995 for forward-looking statements. We expressly disclaim any obligation to update or revise any forward-looking statements, whether as a result of new information, future events, or otherwise.
Non-GAAP Measures – Amounts used in this presentation are on a Non-GAAP basis, a reconciliation is included in the Appendix.
FOURTH QUARTER
FOURTH QUARTER 2024 HIGHLIGHTS
COMP SALES +2.6% Total sales -5.8% Lapping Last Year’s 53rd Week
Comp Detail Global FL/KFL +3.6% NA +3.6% EMEA +1.9% APAC -7.6%
Gross margin +300 bps Reduced Markdowns
SG&A rate -10 bps Cost Optimization Program and Expense Discipline
Controlled Inventory Levels Headed into 1Q25 1.1% Year-over-year
GAAP EPS $0.57 Non-GAAP EPS* $0.86
* GAAP and Non-GAAP EPS reflects continuing operations. A reconciliation to GAAP is provided in the Appendix
4Q GLOBAL COMP DETAIL
Footwear Up High-Single Digits Apparel Down Mid-teens Accessories Up High-Single Digits
Down Mid-Single Digits November Up Mid-Single Digits December Up Mid-Single Digits January
Monthly comp percentages include WSS and atmos, however information by family of business excludes those businesses.
4Q COMP DETAIL
Foot Locker +5.5% Champs Sports +1.8% Kids Foot Locker +4.0% WSS -3.3% NA +3.6%
EMEA +1.9% APAC -7.6% Foot Locker -7.2% atmos -8.7%
FOURTH QUARTER 2024 GROSS MARGIN AND SG&A RATE
GROSS MARGIN (% of sales) 26.6% Q4 2023 29.6% Q4 2024
Up 300 bps Vs. Last Year Key Drivers • Merchandise Margin Expanded 300 Bps led by Reduced Markdown Levels • Occupancy as a Percent of Sales Flat compared to the Prior Year
22.4% Q4 2023 22.3% Q4 2024
Down 10 bps Vs. Last Year Key Drivers • Cost Savings, Ongoing Expense Discipline, and Lower Incentive Compensation • Partially offset by Technology and Brand-Building Investments
2025 OUT-LOOK
Metric Full Year Guidance Commentary
Total Sales -1.0% to +0.5% Includes ~1.0% expected foreign currency headwinds
Comp Sales +1.0% to +2.5%
Store Count Down ~4%
Square Footage Down ~2%
Licensing and Other Revenue ~$24 million
Gross Margin 29.3% to 29.7% Improving merchandise margin
SG&A Rate 24.3% to 24.5% Modest leverage excluding incentive compensation normalization
D&A $200 to $210 million
EBIT Margin 2.6% to 3.1%
Net Interest ~$12 million
Non-GAAP Tax Rate 32.5% to 33.0%
Non-GAAP EPS $1.35 to $1.65
Capital Expenditures $270 million Focusing on customer-facing investments
Adjusted Capital Expenditures * $300 million Includes $30 million in technology investments reflected in operating cash flows
*Adjusted Capital Expenditures includes Software-as-a-Service implementation costs that are amortized through operating expenses over their contract terms.
OUR LACE UP PLAN
We continue to make progress against our Lace-Up Pillars in Q4
Expand Sneaker Culture Increase our array of brands to expand sneaker culture EXCLUSIVES % OF sales 15% 2023 Q4 15% 2024 Q4 20% 2026 Target
Create Value for All Stakeholders Create lasting value for our communities, team members, and investors EBIT SAVINGS Cumulative $ From cost optimization $35M 2024 Q4 $100M 2024 $350M 2026 Target
Power Up Our Portfolio Elevate store footprint experience up to brand standard through remodels and Reimagined. Off-Mall % OF SQ FT (NA Only) 39% 2023 Q4 42% 2024 Q4 50% 2026 Target Brand Standard % OF SQ FT 44% 2024 Q4 65% 2026 Target
Deepen Our Relationship with Customers Drive deeper customer engagement, and utilize data to better serve our customers Loyalty Penetration (NA) 21% 2023 Q4 49% 2024 Q4 50% 2026 Target
Be Best-in-class Omni Make the customer journey more dynamic, personalized, and seamless Digital % OF Sales (ALL BANNER) 19.5% 2023 Q4 21.8% 2024 Q4 25% 2026 Target
Reimagining Retail with Reimagined Concept Stores
The Reimagined Concept is the Go-Forward Store Expression for the Foot Locker Brand and is Anchored in Key Pillars:
Customer-centric Design Elevated Brand Storytelling Immersive and Communal Experiences Enhanced Technology Tools Supportive Striper Experience
We ended 2024 with eight Reimagined locations across a variety of store sizes in North America, Europe, and Asia-Pacific.
We plan to open approximately 80 Reimagined doors in 2025, primarily through conversions or relocations of existing locations. Based upon 2025 performance relative to our hurdle rate, we would expect to maintain or accelerate the pace of rollout of the concept over the next few years.
Reimagined Financials ~$4 to ~$5 million Year 1 Sales ~20% Year 1 EBITDA Margin
Average store size: ~6,500 gross square feet Average Capital Expenditure per Door: ~$1.0 to $1.2 million Payback Period: ~2 years Net Inventory: ~$0.53MM Cash on Cash Returns (1): ~50%
(1) Returns calculation on a pre-tax basis. Return metrics based on pro-forma deal structure; actuals may vary.
Optimizing Fleet with Extensive Refresh Program
Refresh Program Inspired by the Reimagined Concept and Anchored in:
Elevated and consistent global experience Enhanced brand storytelling Ease of customer shopping experience.
We executed 407 refreshes in 2024 and are planning for 300 refreshes in 2025.
In combination with Reimagined doors, we expect ~2/3 of our global Foot Locker and Kids Foot Locker footage to be at brand standard by end of 2026.
Refresh Financials +Low- to Mid- Single Digit Sales Productivity Lift Annualized Year 1 Sales Productivity Lift Post-Refresh +Mid- Single Digit Merchandise Profit Dollar Lift Annualized Gross Profit Dollar Lift Post-Refresh
Average Capital Expenditure per Refresh: ~$150K Payback period: ~2-3 years Cash on Cash Returns(1): ~35%-45%
(1) Returns calculation on a pre-tax basis
Enhanced FLX Rewards Program Resonating with Customers
~3.2 million New loyalty members in North America added in 4Q24 +295% increase in new members added YoY
~49% Of 4Q24 sales in North America were made by loyalty members Up ~28 points to last year
MISSION Foot Locker unlocks the “inner sneakerhead” in all of us
VISION To be known as the go-to destination for discovering and buying sneakers globally
Bring the best of sneaker culture to all Recruit the next generation Head-to-toe sport style Celebrate the Hispanic community Share and celebrate Japanese street and sneaker culture
Our Lace Up Plan
EXPAND SNEAKER CULTURE POWER UP OUR PORTFOLIO DEEPEN OUR RELATIONSHIP WITH CUSTOMERS BE BEST-IN-CLASS OMNI
CREATE VALUE FOR ALL STAKEHOLDERS (CUSTOMERS, BRAND PARTNERS, COMMUNITY, TEAM MEMBERS, & INVESTORS)
APPENDIX
GAAP to Non-GAAP Reconciliations
Fourth Quarter Year-to-Date
2024 2023 2024 2023
Pre-tax income:
Income (loss) from continuing operations before income taxes $ 77 $ (524 ) $ 51 $ (423 )
Pre-tax adjustments excluded from GAAP:
Impairment and other (1) 36 21 97 80
Other expense / income (2) — 554 37 548
Adjusted income before income taxes (non-GAAP) $ 113 $ 51 $ 185 $ 205
After-tax income:
Net income (loss) $ 49 $ (389 ) $ 12 $ (330 )
After-tax adjustments excluded from GAAP:
Impairment and other, net of income tax benefit of $9, $7, $22, and $18 million, respectively (1) 27 14 75 62
Other expense / income, net of income tax benefit of $-, $143, $-, and $142 million, respectively (2) — 411 37 406
Net loss from discontinued operations, net of income tax benefit of $2, $-, $2, and $- million, respectively (3) 6 — 6 —
Tax reserves benefit (4) — — — (4 )
Adjusted net income (non-GAAP) $ 82 $ 36 $ 130 $ 134
GAAP to Non-GAAP Reconciliations (cont.)
Fourth Quarter Year-to-Date
2024 2023 2024 2023
Earnings per share:
Earnings (loss) per share $ 0.51 $ (4.13 ) $ 0.13 $ (3.51 )
Diluted EPS amounts excluded from GAAP:
Impairment and other (1) 0.29 0.15 0.80 0.66
Other expense / income (2) — 4.36 0.38 4.31
Net loss from discontinued operations (3) 0.06 — 0.06 —
Tax reserves benefit / charge (4) — — — (0.04 )
Adjusted diluted earnings per share (non-GAAP) $ 0.86 $ 0.38 $ 1.37 $ 1.42
Notes on Non-GAAP Adjustments:
(1) Included in the fourth quarter of 2024 impairment and other caption were $19 million of reorganization costs primarily related to the announced closure and relocation of the Company's global headquarters and $10 million of impairment of long-lived assets and right-of-use assets accelerated tenancy charges related to the annual review of underperforming stores and the shutdown of the businesses operating in South Korea, Denmark, Norway, and Sweden. The Company will close all stores operating in those regions as it focuses on improving the overall results of its international operations. The fourth quarter also included charges related to legal and other matters totaling $7 million representing changes in estimates and loss accruals for various matters. The Company routinely monitors claims and records provisions for losses when claims become probable and the amount is estimable. For fiscal year 2024, impairment and other included impairment charges of $32 million from a review of underperforming stores and accelerated tenancy charges on right-of-use assets primarily related to its decision to exit the underperforming operations and the closure and sublease of an unprofitable store in Europe. Additionally, the Company incurred $26 million of reorganization costs primarily related to the announced closure and relocation of the Company's global headquarters. During the third quarter, the Company recorded a $25 million write down of the atmos tradename following an impairment review. Additionally, the fiscal year reflected a charge of $14 million related to legal and other matters.
Fourth quarter 2023 impairment and other included $11 million of impairment of long-lived assets and right-of-use assets and accelerated tenancy charges. These were incurred as part of the Company's annual review of underperforming stores and the planned wind down of its U.S. atmos stores, partially offset by a net benefit from the settlement of lease obligations associated with Sidestep store closures. In addition, the Company recorded intangible asset impairment of $9 million on the atmos tradename and reorganization costs of $5 million. These charges were partially offset by a $4 million reduction in the fair value of the atmos contingent consideration liability. For fiscal year 2023, impairment and other included impairment charges of $30 million from a review of underperforming stores and accelerated tenancy charges on right-of-use assets for closures of the Sidestep banner and certain Foot Locker Asia stores. Additionally, the Company incurred transformation consulting expense of $27 million and reorganization costs of $17 million primarily related to severance and the closures of the Sidestep banner, certain Foot Locker Asia stores, and a North American distribution center. The fiscal year also included the atmos intangible asset impairment of $9 million, partially offset by the $4 million reduction in the fair value of the atmos contingent consideration.
GAAP to Non-GAAP Reconciliations (cont.)
(2) For fiscal year 2024, other expense / income included a $35 million impairment charge related to a minority investment. The Company evaluates the minority investment for impairment whenever events or circumstances indicate that the carrying value of the investment may not be recoverable and that impairment is other than temporary. If an indication of impairment occurs, the Company evaluates recoverability of the carrying value based on the fair value of the minority investment. If an impairment is indicated, the Company adjusts the carrying values of the investment downward, if necessary, to their estimated fair values. Other expense / income also included $2 million of the Company's share of losses related to equity method investments. Other expense / income for the fourth quarter of 2023 consisted of a $478 million non-cash charge on minority investments and a $75 million charge related to the partial settlement of pension plan obligations. During the fourth quarter, as part of efforts to reduce pension plan obligations, the Company transferred approximately $109 million of its U.S. Qualified pension plan registered assets and liabilities to an insurance company through the purchase of a group annuity contract, under which an insurance company is required to directly pay and administer pension payments to certain pension plan participants, or their designated beneficiaries. In connection with this transaction, the Company recorded a non-cash pretax settlement charge of $75 million. This settlement charge accelerated the recognition of previously unrecognized losses in “Accumulated Other Comprehensive Loss.” Additionally, fiscal year 2023 also included a $3 million gain from the sale of a North American corporate office property, a $3 million gain from the sale of the Singapore and Malaysian Foot Locker businesses to a license partner, and $2 million of the Company's share of losses related to equity method investments.
(3) In the fourth quarter of 2024, the Company recorded a charge to discontinued operations of $8 million ($6 million after tax) related to a legal matter of a business it formerly operated.
(4) In the first quarter of 2023, the Company recorded a $4 million benefit related to income tax reserves due to a statute of limitations release.
The Company provides earnings guidance only on a non-GAAP basis and does not provide a reconciliation of the Company’s forward-looking guidance to the most directly comparable GAAP financial measures because of the inherent difficulty in forecasting and quantifying certain amounts that are necessary for such reconciliations.
GAAP to Non-GAAP Reconciliations (cont.)
Free Cash Flow Reconciliation
In addition to net cash provided by operating activities, we use free cash flow as a useful measure of performance and as an indication of our financial strength and our ability to generate cash. We define free cash flow as net cash provided by operating activities less capital expenditures (which is classified as an investing activity). We believe the presentation of free cash flow is relevant and useful for investors because it allows investors to evaluate the cash generated from underlying operations in a manner similar to the method used by management. Free cash flow is not defined under U.S. GAAP. Therefore, it should not be considered a substitute for income or cash flow data prepared in accordance with U.S. GAAP and may not be comparable to similarly titled measures used by other companies. It should not be inferred that the entire free cash flow amount is available for discretionary expenditures. The following table presents a reconciliation of net cash flow provided by operating activities, the most directly comparable U.S. GAAP financial measure, to free cash flow.
($ in millions) 2024 2023 2022
Net cash provided by operation activities $ 345 $ 91 $ 173
Capital expenditures (240) (242) (285)
Free cash flow $ 105 $ (151) $ (112)
The Company provides earnings guidance only on a non-GAAP basis and does not provide a reconciliation of the Company’s forward-looking guidance to the most directly comparable GAAP financial measures because of the inherent difficulty in forecasting and quantifying certain amounts that are necessary for such reconciliations.