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Mar 8, 2009
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Foot Locker beats Street, won't provide outlook

By
Reuters
Published
Mar 8, 2009

By Alexandria Sage

SAN FRANCISCO (Reuters) - Foot Locker Inc (FL.N) posted a net loss compared with a year-ago profit on Wednesday due to impairment charges and the costs of store closure, and declined to provide a 2009 outlook.



The athletic shoe retailer's shares fell more than 3 percent.

The company, whose adjusted results beat Wall Street estimates, cited the economic uncertainty as the reason for not providing an outlook and said year-ago results were restated due to an accounting error.

"The impairment charges could be a concern. The fact they're restating could be a concern and the fact that they're not giving guidance," said Susquehanna analyst Christopher Svezia.

He noted the company's shares, up 13 percent since January and which closed up nearly 6 percent on Wednesday, outperformed the market over the past two weeks.

"I think people were expecting them to beat the numbers," Svezia added.

Foot Locker's fourth-quarter net loss was $126 million, or 82 cents per share, compared with a profit of $72 million, or 46 cents per share, a year earlier.

Excluding impairment charges related to writedowns, store closing costs and income tax adjustments, Foot Locker earned 24 cents per share.

That compares with the 17 cents per share expected, on average, by analysts, according to Reuters Estimates.

Foot Locker said year-ago earnings were 6 cents per share below previously disclosed figures, due to the discovery of errors in how income tax expense was calculated.

Sales fell 11 percent in the quarter to $1.32 billion.

The retailer, which operates over 3,600 stores around the world, has seen sluggish sales as more shoppers cut back on shoe purchases in the weak global economy.

Same-store sales, a key gauge of retail performance, fell 7.3 percent in the quarter.

"Our fourth-quarter sales reflected a very challenging external environment, as consumer spending weakened and mall traffic declined," Chief Executive Matthew Serra said in a statement.

Serra cited lower operating expenses, improved gross margins and controlled inventory as positives. The retailer closed 208 stores in 2008.

Looking ahead, Foot Locker said it planned to open 25 new stores in 2009 and remodel or relocate up to 150 stores.

It said its capital expenditures would now be lowered to $100 million, but did not provide its earlier estimate and said it would further reduce operating costs and inventory.

The company's shares were down 3.5 percent at $8 in after-hours trading after closing at $8.29 on the New York Stock Exchange.

(Reporting by Alexandria Sage, editing by Leslie Gevirtz and Andre Grenon)

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