Footstar, Inc (NYSE:FTS) today announced financial results for its second quarter ended July 1, 2000.

Second Quarter Results

Net income for the second quarter reached $15.4 million, or diluted earnings per share of $0.76, compared with net income of $18.5 million, or diluted earnings per share of $0.83, in the second quarter of 1999. Excluding the impact of the Just For Feet acquisition, diluted earnings per share would have been approximately $0.90 and net income would have reached $18.4 million in the second quarter period.

Operating profit for the second quarter of 2000 increased to $50.7 million, an increase of 3.5% over operating profit of $49.0 million for the second quarter of 1999.

Net sales for the 2000 second quarter increased 23.1% to $589.4 million from $479.0 million for the comparable period last year. The company's same store sales for the quarter increased 5.9%. Meldisco's same store sales increased 7.1% for the quarter, while same store sales for the athletic segment increased 3.1%.

Mickey Robinson, chairman and chief executive officer, commented: "Footstar's performance during the second quarter surpassed our expectations by every measure. The results were led by the outstanding performance of our Meldisco business, where operating profit was more than 14% higher than in the year-ago period. Also, we have seen a firming of our business at Footaction. In fact, the 3.1% same store sales increase in the athletic segment is the best quarterly performance since 1998. Footaction's operating results for the quarter marked a substantial improvement over the trends experienced in the previous two quarters. We continue to make excellent progress with the Just For Feet business and with a much improved inventory position and a lower cost structure, we are enthusiastic about the prospects for this business for the back-to-school season."

Footstar also announced that it has completed the full integration of the Just For Feet business into its shared services network, including the conversion of all merchandising and financial systems to the Footstar infrastructure. In addition, during the month of July the Company opened ten new Just For Feet superstores in three existing and two new markets. Three stores were opened in the existing markets of Dallas, Phoenix and South Florida and seven stores were opened in the new markets of Philadelphia and San Diego. All but one of these locations were previously operated by Just For Feet.

Mr Robinson commented: "Our team accomplished an amazing task with the integration of Just For Feet in a relatively short period of time. We were able to reposition the chain with fresh inventory, an efficient cost structure and high service levels, including centralized distribution, in record time, under budget and with absolutely no disruption in the business. Moreover, we have built on this solid foundation with the recent openings of ten new stores. I am very proud of our team for these tremendous achievements."

Year-to-Date Results

Net income for the six months ended July 1, 2000 reached $18.2 million, or $0.89 per diluted share, compared with net income of $27.0 million, or $1.20 per diluted share, in the first six months of 1999. Excluding the impact of the Just For Feet acquisition, diluted earnings per share would have been approximately $1.08 and net income would have reached $22.0 million in the year-to-date period. The 1999 results include the reversal of $2.9 million ($1.8 million after tax) of a restructuring charge. Excluding this reversal, net income was $25.2 million in the 1999 period, or diluted earnings per share of $1.12.

Operating profit for the first six months of 2000 was $61.2 million compared with $67.1 million in the first six months of 1999. Excluding the restructuring reversal, operating profit in the 1999 period was $64.2 million.

Net sales for the six-month period increased 12.1% to $1,029.1 million from $918.1 million for the comparable period last year. The Company's same store sales for the six-month period rose 1.4%. Meldisco's comparable store sales increased 3.7%, while sales for the athletic segment decreased 3.0%.

On March 7, 2000, Footstar acquired certain assets of Just For Feet, Inc, including 79 superstores, 23 specialty stores and the Internet business. Accordingly, results for the second quarter include those generated by the acquired assets during the period. These results have been combined with those of the company's Footaction division and are reported as a group called the athletic segment. Sales generated by the acquired assets are treated as sales of new stores and, therefore, will not be reported as comparable store sales for the athletic segment until after their first full twelve months of operation as part of Footstar. As a result, comparable store sales for the athletic segment represent only Footaction's same store sales for the indicated periods.

Share Repurchase Programs

During the second quarter of 2000, the company repurchased 205,500 shares of its stock at an average price of $32.85 per share, for an aggregate purchase amount of $6.8 million. At the end of the second quarter, 1,491,800 shares were remaining of the two million share repurchase program authorized by the company's board of directors in January 2000.

Including the second quarter repurchases, Footstar had repurchased a total of 11,218,200 shares since becoming a public company in October, 1996, representing approximately 37% of the total shares then outstanding. The average price paid per share under all the buyback programs was $28.99, for an aggregate purchase amount of $325.3 million.

Footstar Inc, headquartered in Mahwah, New Jersey, is a leading footwear retailer. As of July 1, 2000, the company's Footaction division, headquartered in Irving, Texas, near Dallas, operated 552 mostly mall-based stores in 43 states, Puerto Rico, and the US Virgin Islands. The company's Just For Feet division, headquartered in Mahwah, New Jersey, at July 1, 2000 operated 79 superstores located in the Southern half of the country. Both divisions sell branded athletic footwear and apparel. The company's Meldisco division is a leader in the discount footwear segment, operating 2,477 licensed footwear departments, primarily in Kmart stores.

Except for the historical information contained herein, the matters discussed in this release are forward looking statements that involve risks and uncertainties that may cause actual results to differ from those expressed in any of the forward looking statements. Such risks and uncertainties include, but are not limited to, the Company's ability to execute its integration plans, uncertainties related to the effect of competitive products and pricing, consumer demand for footwear, unseasonable weather, consumer acceptance of our merchandise mix and retail locations, the availability of products, and the other risks detailed in the Company's Securities and Exchange Commission filings. The Company undertakes no obligation to update forward-looking statements to reflect events or circumstances after the date such statements were made.

For comprehensive financial information please visit www.footstar.com/financial/financial_information.asp.