US: Foot Locker income dragged down by international markets
Foot Locker, the New York-based athletic retailer, has seen a fall in full year net income despite a strong end to the year.
For the fourth quarter, net income increased 7% to US$0.61 per share, or $96m, boosted in part by a credit of $0.02 per share, or $3m, from insurance proceeds related to Hurricanes Katrina, Rita and Wilma, net of related income tax expense. Also recorded in this year's fourth quarter was net income of $0.04 per share, or $6m, resulting from a reduction of the company's income tax valuation allowance primarily due to actions taken to utilize international tax loss carry forwards.
For the fourth quarter period, sales increased 1.9% to $1,564m this year compared with sales of $1,535m for the corresponding prior year period. Fourth quarter comparable-store sales increased 3.9%.
However, full year net income fell to $1.68 per share, or $264m, compared with
$1.88 per share, or $293m last year.
Full year sales increased 5.6% to $5,653m, compared with sales of $5,355m last year. Comparable-store sales increased 2.7%.
"Our financial results in 2005 reflected solid sales and profit gains posted by our combined North American businesses, which were partially offset by declines in certain international markets," said Matthew D. Serra, Foot Locker's chairman and chief executive officer.
"In total, we generated an 8.3% increase in pre-tax income and effectively continued to implement our strategic priorities. We are also encouraged that we were able to strengthen our financial position further, while also redeploying additional cash to benefit our shareholders."
For 2006, the company said it plans to focus its efforts on continuing to increase the productivity of its existing business while also pursuing its growth strategies. Capital expenditures are planned at $190m, an increase of 17% versus 2005. The company plans to open approximately 175 new stores, remodel and relocate 350 stores, and close 110 stores.
A low-to-mid single digit comparable-store sales increase is planned for 2006, which the company currently expects will contribute to an earnings increase to between $1.75 and $1.85 per share. The company currently expects its first quarter earnings to be in the range of $0.37 to $0.40 per share.
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