A "challenging" climate for athletic footwear and apparel in the US didn't stop Foot Locker from topping both year-ago profits and its own earnings guidance during the fourth quarter.

During the 14 weeks ended 3 February, the New York-based firm generated net income of US$113m, or 72 cents a diluted share, up 17.7% from the $96m, or 61 cents, registered during the 13 weeks of the 2005 quarter.

Earnings per share benefited 2 cents from the disposal of discontinued operations and another 11 cents from the extra week in the 2006 period.

Sales rose 5.6% to $1.65bn from $1.56bn but were down 1.6% without the additional week in 2006. Same-store sales fell 3.4% in the quarter after elimination of the effect of the extra week of selling.

Matthew Serra, chairman and chief executive officer, commented: "While the athletic footwear and apparel retail environment in the US was challenging, our domestic divisions generated a solid profit increase in the fourth quarter.

"In Europe, we continued to experience sales declines as we adjusted our merchandise assortment to be better aligned with the current fashion trend.

"A stronger gross margin rate, however, contributed to a stabilisation of our fourth quarter profit at this division which, as a percentage of sales, was in the solid double-digit level."

The company said that it would continue to pursue acquisitions of "compatible specialty retail companies in the footwear industry."

It also set first-quarter earnings per share of between 34 and 37 cents in initial guidance. Full-year EPS is projected at $1.55 to $1.65.

Foot Locker said it would expand franchise operations in the Middle East during 2007 with 15 additional stores "and research new countries where the company expects it could operate profitably."

Net income for the full year was $251m, or $1.60 a diluted share, 4.9% beneath the $264m, or $1.68, logged in 2005. Sales for the 53 weeks were $5.75bn, up 1.7% from $5.65bn in 2005. Comparable-store sales were down 1.2%.

By Arnold J Karr.