This Quarterly Report on Form 10-Q 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 against us or judicial decisionsgovernment investigation that affectaffects us or our industry generally; the effects of weather; ESG risks, including, but not limited to climate change; ESG risks; 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.
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 filing. 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” of our most recent Annual Report on Form 10-K filed with the U.S. Securities and Exchange Commission 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 report, 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.
See Accompanying Notes to the Unaudited Condensed Consolidated Financial Statements.
See Accompanying Notes to the Unaudited Condensed Consolidated Financial Statements.
See Accompanying Notes to the Unaudited Condensed Consolidated Financial Statements.
See Accompanying Notes to the Unaudited Condensed Consolidated Financial Statements.
See Accompanying Notes to the Unaudited Condensed Consolidated Financial Statements.
Foot Locker, Inc., together with its consolidated subsidiaries (“Foot Locker,” “Company,” “we,” “our,” and “us”), is a leading footwear and apparel retailer. We have integrated all available shopping channels, including stores, websites, apps, and social channels. Store sales are primarily fulfilled from the store’s inventory, but may also be shipped from any of our distribution centers or from a different store location if an item is not available at the original store. Direct-to-customer orders are generally shipped to our customers through our distribution centers but may also be shipped from any store or a combination of our distribution centers and stores depending on availability of particular items. We operate in North America, Europe, and Asia Pacific, representing our operating segments. We aggregate these operating segments into one reportable segment based upon their shared customer base and similar economic characteristics.
The accompanying interim Unaudited Condensed Consolidated Financial Statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”) and the rules and regulations of the Securities and Exchange Commission. Accordingly, they do not include all of the information and notes required by U.S. GAAP for complete financial statements. In the opinion of management, all adjustments (consisting of normal recurring accruals) considered necessary for a fair presentation have been included. The results of operations for any interim period are not necessarily indicative of the results expected for the year. Additionally, the results of operations for the period ended July 29,October 28, 2023 are not necessarily indicative of the results to be expected for the full fiscal year due to the continued uncertainty of general economic conditions that may affect us for the remainder of the year. Fiscal year 2023 will include the 53-week period that ends on February 3, 2024.
The accompanying unaudited condensed consolidated financial statements should be read in conjunction with the Notes to Consolidated Financial Statements contained in our 2022 Form 10-K. Certain reclassifications have been made to prior period financial statements to conform to the current period presentation. In 2023, we separately present licensing revenue as a component of total revenue in the Condensed Consolidated Statements of Operations, as previously licensing revenue was presented within other income / (expense), net.
The table below presents sales disaggregated by sales channel, as well as licensing revenue earned from our various franchised arrangements. Sales are attributable to the channel in which the sales transaction is initiated.
Revenue is attributed to the country in which the transaction is fulfilled, and revenue by geographic area is presented in the following table.
Sales by banner and operating segment are presented in the following table.
Foot Locker, Inc. operates one reportable segment. Division profit reflects income before income taxes, impairment and other, corporate expense, other income / (expense), net, and net interest expense.
The table below provides a reconciliation of cash and cash equivalents, as reported on our Condensed Consolidated Balance Sheets, to cash, cash equivalents, and restricted cash, as reported on our Condensed Consolidated Statements of Cash Flows.
Amounts included in restricted cash primarily relate to amounts held in escrow in connection with various leasing arrangements in Europe and deposits held in insurance trusts to satisfy the requirement to collateralize part of the self-insured workers’ compensation and liability claims.
Accumulated other comprehensive loss (“AOCL”), net of tax, is comprised of the following:
NOTES TO THE UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
8. Fair Value Measurements (continued)
Long-Term Debt
The fair value of long-term debt is determined by using model-derived valuations in which all significant inputs or significant value drivers are observable in active markets and, therefore, are classified as Level 2. The carrying value and estimated fair value of long-term debt were as follows:
($ in millions) | | July 29, 2023 | | July 30, 2022 | | | October 28, 2023 | | October 29, 2022 | |
Carrying value (1) | | $ | 395 | | | $ | 394 | | | $ | 395 | | | $ | 395 | |
Fair value | | $ | 312 | | | $ | 313 | | | $ | 294 | | | $ | 308 | |
| (1) | The carrying value of debt as of both July 29,October 28, 2023 and July 30,October 29, 2022, included $5 million and $6 million of issuer’s discount and costs, respectively.costs. |
The carrying values of cash and cash equivalents, and other current receivables and payables approximate their fair value.
9. Earnings Per Share
We account for earnings per share (“EPS”) using the treasury stock method. Basic EPS is computed by dividing net income for the period by the weighted-average number of common shares outstanding at the end of the period. Diluted earnings per share reflects the weighted-average number of common shares outstanding during the period used in the basic EPS computation plus dilutive common stock equivalents. The computation of diluted earnings per share does not assume conversion, exercise, or contingent issuance of securities that would have an anti-dilutive effect on EPS. The computation of basic and diluted EPS is as follows:
| | Thirteen weeks ended | | Twenty-six weeks ended | | | Thirteen weeks ended | | Thirty-nine weeks ended | |
| | July 29, | | July 30, | | July 29, | | July 30, | | | October 28, | | October 29, | | October 28, | | October 29, | |
(in millions, except per share data) | | 2023 | | 2022 | | 2023 | | 2022 | | | 2023 | | 2022 | | 2023 | | 2022 | |
Net income / (loss) attributable to Foot Locker, Inc. | | $ | (5 | ) | | $ | 94 | | | $ | 31 | | | $ | 227 | | |
Net income attributable to Foot Locker, Inc. | | | $ | 28 | | | $ | 96 | | | $ | 59 | | | $ | 323 | |
Weighted-average common shares outstanding | | 94.2 | | | 94.1 | | | 94.0 | | | 95.1 | | | 94.3 | | | 93.4 | | | 94.1 | | | 94.6 | |
Dilutive effect of potential common shares | | — | | | 1.0 | | | 1.0 | | | 1.0 | | | 0.4 | | | 1.3 | | | 0.8 | | | 1.1 | |
Weighted-average common shares outstanding assuming dilution | | 94.2 | | | 95.1 | | | 95.0 | | | 96.1 | | | 94.7 | | | 94.7 | | | 94.9 | | | 95.7 | |
| | | | | | | | | | | | | | | | | | |
Earnings / (loss) per share - basic | | $ | (0.05 | ) | | $ | 1.00 | | | $ | 0.33 | | | $ | 2.39 | | | $ | 0.30 | | | $ | 1.02 | | | $ | 0.63 | | | $ | 3.41 | |
Earnings / (loss) per share - diluted | | $ | (0.05 | ) | | $ | 0.99 | | | $ | 0.33 | | | $ | 2.36 | | | $ | 0.30 | | | $ | 1.01 | | | $ | 0.63 | | | $ | 3.38 | |
| | | | | | | | | | | | | | | | | | |
Anti-dilutive share-based awards excluded from diluted calculation | | 2.7 | | | 2.8 | | | 2.4 | | | 2.7 | | | 3.0 | | | 2.8 | | | 2.6 | | | 2.7 | |
Performance stock units related to our long-term incentive programs of 0.8 million been excluded from diluted weighted-average shares for each of the periods ended July 29,October 28, 2023 and July 30,October 29, 2022. The issuance of these shares is contingent on our performance metrics as compared to the pre-established performance goals, which have not been achieved.
10. Pension
The components of net periodic pension benefit expense are presented in the table below. Service cost is recognized as part of SG&A expense, while the other components are recognized as part of Other income / (expense), net.
| | Thirteen weeks ended | | Twenty-six weeks ended | | | Thirteen weeks ended | | Thirty-nine weeks ended | |
| | July 29, | | July 30, | | July 29, | | July 30, | | | October 28, | | October 29, | | October 28, | | October 29, | |
($ in millions) | | 2023 | | 2022 | | 2023 | | 2022 | | | 2023 | | 2022 | | 2023 | | 2022 | |
Service cost | | $ | 2 | | | $ | 3 | | | $ | 3 | | | $ | 7 | | | $ | 2 | | | $ | 4 | | | $ | 5 | | | $ | 11 | |
Interest cost | | 7 | | | 5 | | | 13 | | | 10 | | | 7 | | | 5 | | | 20 | | | 15 | |
Expected return on plan assets | | (8 | ) | | (7 | ) | | (15 | ) | | (15 | ) | | (7 | ) | | (8 | ) | | (22 | ) | | (23 | ) |
Amortization of net loss | | 3 | | | 3 | | | 6 | | | 5 | | | 2 | | | 3 | | | 8 | | | 8 | |
Net benefit expense | | $ | 4 | | | $ | 4 | | | $ | 7 | | | $ | 7 | | | $ | 4 | | | $ | 4 | | | $ | 11 | | | $ | 11 | |
SecondThird Quarter 2023 Form 10-Q Page 11
NOTES TO THE UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
11. Share-Based Compensation
Total compensation expense, included in SG&A, and the associated tax benefits recognized related to our share-based compensation plans, was as follows:
| | Thirteen weeks ended | | Twenty-six weeks ended | | | Thirteen weeks ended | | Thirty-nine weeks ended | |
| | July 29, | | July 30, | | July 29, | | July 30, | | | October 28, | | October 29, | | October 28, | | October 29, | |
($ in millions) | | 2023 | | 2022 | | 2023 | | 2022 | | | 2023 | | 2022 | | 2023 | | 2022 | |
Options and employee stock purchase plan | | $ | 1 | | | $ | 2 | | | $ | 2 | | | $ | 3 | | | $ | 1 | | | $ | 1 | | | $ | 3 | | | $ | 4 | |
Restricted stock units and performance stock units | | 1 | | | 7 | | | 2 | | | 13 | | | 4 | | | 8 | | | 6 | | | 21 | |
Total share-based compensation expense | | $ | 2 | | | $ | 9 | | | $ | 4 | | | $ | 16 | | | $ | 5 | | | $ | 9 | | | $ | 9 | | | $ | 25 | |
| | | | | | | | | | | | | | | | | | |
Tax benefit recognized | | $ | 1 | | | $ | 1 | | | $ | 1 | | | $ | 2 | | | $ | — | | | $ | — | | | $ | 1 | | | $ | 2 | |
Valuation Model and Assumptions
We use the Black-Scholes option-pricing model to estimate the fair value of options and the stock purchase plan. The Black-Scholes option-pricing model incorporates various and subjective assumptions, including expected term and expected volatility.
The table below shows assumptions used to compute share-based compensation expense for awards granted during the twenty-sixthirty-nine weeks ended July 29,October 28, 2023 and July 30,October 29, 2022.
| | Stock Option Plans | | Stock Purchase Plan | | | Stock Option Plans | | Stock Purchase Plan | |
| | July 29, | | July 30, | | July 29, | | July 30, | | | October 28, | | October 29, | | October 28, | | October 29, | |
| | 2023 | | 2022 | | 2023 | | 2022 | | | 2023 | | 2022 | | 2023 | | 2022 | |
Weighted-average risk free rate of interest | | 3.6 | % | | 2.3 | % | | 3.1 | % | | 0.4 | % | | 3.3 | % | | 1.7 | % | | 3.8 | % | | 0.7 | % |
Expected volatility | | 49 | % | | 48 | % | | 40 | % | | 40 | % | | 46 | % | | 35 | % | | 40 | % | | 40 | % |
Weighted-average expected award life (in years) | | 5.4 | | | 5.3 | | | 1.0 | | | 1.0 | | | 5.1 | | | 3.8 | | | 1.0 | | | 1.0 | |
Dividend yield | | 3.7 | % | | 3.7 | % | | 4.6 | % | | 2.0 | % | | 3.4 | % | | 2.7 | % | | 4.7 | % | | 2.3 | % |
Weighted-average fair value | | $ | 13.53 | | | $ | 10.50 | | | $ | 5.42 | | | $ | 23.47 | | | $ | 13.53 | | | $ | 10.71 | | | $ | 6.28 | | | $ | 20.51 | |
The table below provides activity under our stock option plans for the twenty-sixthirty-nine weeks ended July 29,October 28, 2023.
| | | | Weighted- | | Weighted- | | | | | Weighted- | | Weighted- | |
| | Number | | Average | | Average | | | Number | | Average | | Average | |
| | of | | Remaining | | Exercise | | | of | | Remaining | | Exercise | |
| | Shares | | | Contractual Life | | | Price | | | Shares | | | Contractual Life | | | Price | |
| | (in thousands) | | (in years) | | (per share) | | | (in thousands) | | (in years) | | (per share) | |
Options outstanding at the beginning of the year | | 3,256 | | | | | | $ | 47.85 | | | 3,256 | | | | | | $ | 47.85 | |
Granted | | 341 | | | | | | 37.72 | | | 341 | | | | | | 37.72 | |
Exercised | | (188 | ) | | | | | 24.02 | | | (188 | ) | | | | | 24.02 | |
Expired or cancelled | | (214 | ) | | | | | 38.78 | | | (603 | ) | | | | | 47.50 | |
Options outstanding at July 29, 2023 | | 3,195 | | | 3.5 | | | $ | 48.77 | | |
Options exercisable at July 29, 2023 | | 2,710 | | | 2.5 | | | $ | 50.89 | | |
Shares available for future grant at July 29, 2023 under the 2007 Stock Incentive Plan (1) | | 11,202 | | | | | | | |
Shares available for future grant at July 29, 2023 under the employment inducement award plan (2) | | 409 | | | | | | | | |
Options outstanding at October 28, 2023 | | | 2,806 | | | 3.5 | | | $ | 48.28 | |
Options exercisable at October 28, 2023 | | | 2,384 | | | 2.5 | | | $ | 50.28 | |
Shares available for future grant at October 28, 2023 under the 2007 Stock Incentive Plan (1) | | | 11,342 | | | | | | |
Shares available for future grant at October 28, 2023 under the employment inducement award plan (2) | | | 409 | | | | | | | |
(1) | On May 17, 2023, the Company's shareholders approved the amended and restated 2007 Stock Incentive Plan, which increased shares available for grant by 10,300,000. There were no other significantmaterial modifications to the plan. |
(2) | On August 24, 2022, the Company granted options and other awards to its new President and Chief Executive Officer, Mary N. Dillon. These awards were granted outside of the 2007 Stock Incentive Plan as employment inducement awards and dodid not require shareholder approval under the rules of the New York Stock Exchange or otherwise. Shares available for future grant under this plan are reserved for the sole purpose to issue shares pursuant to her employment inducement awards. |
SecondThird Quarter 2023 Form 10-Q Page 12
NOTES TO THE UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
11. Share-Based Compensation (continued)
The total fair value of options vested for the twenty-sixthirty-nine weeks ended July 29,October 28, 2023 and July 30,October 29, 2022 was $5 million and $4 million, for both periods.respectively. There were no option exercises during the thirteen weeks ended October 28, 2023. The cash received from option exercises during the thirteen and twenty-sixthirty-nine weeks ended July 29,October 28, 2023 was $1 million and $5 million, respectively, and the related tax benefits realized from option exercises were not significant. The cash received from option exercises during the thirteen and twenty-sixthirty-nine weeks ended July 30,October 29, 2022 were $1 million and $3$4 million, respectively, and the related tax benefits realized from option exercises were not significant.
The total intrinsic value of options exercised (the difference between the market price of our common stock on the exercise date and the price paid by the optionee to exercise the option) is presented below:
| | Thirteen weeks ended | | Twenty-six weeks ended | | | Thirteen weeks ended | | Thirty-nine weeks ended | |
| | July 29, | | July 30, | | July 29, | | July 30, | | | October 28, | | October 29, | | October 28, | | October 29, | |
($ in millions) | | 2023 | | 2022 | | 2023 | | 2022 | | | 2023 | | 2022 | | 2023 | | 2022 | |
Exercised | | $ | — | | | $ | — | | | $ | 3 | | | $ | — | | | $ | — | | | $ | — | | | $ | 3 | | | $ | 1 | |
The aggregate intrinsic value for stock options outstanding, and outstanding and exercisable (the difference between our closing stock price on the last trading day of the period and the exercise price of the options, multiplied by the number of in-the-money stock options) is presented below:
| | July 29, | | July 30, | | | October 28, | | October 29, | |
($ in millions) | | 2023 | | 2022 | | | 2023 | | 2022 | |
Outstanding | | $ | 2 | | | $ | 5 | | | $ | — | | | $ | 7 | |
Outstanding and exercisable | | $ | 2 | | | $ | 3 | | | $ | — | | | $ | 5 | |
As of July 29,October 28, 2023, there was $4$3 million of total unrecognized compensation cost related to nonvested stock options which is expected to be recognized over a remaining weighted-average period of 1.71.6 years.
The table below summarizes information about stock options outstanding and exercisable at July 29,October 28, 2023.
| | Options Outstanding | | Options Exercisable | | | Options Outstanding | | Options Exercisable | |
| | | | Weighted- | | | | | | | | | | | Weighted- | | | | | | | |
| | | | Average | | Weighted- | | | | Weighted- | | | | | Average | | Weighted- | | | | Weighted- | |
| | | | Remaining | | Average | | | | Average | | | | | Remaining | | Average | | | | Average | |
Range of Exercise | | Number | | Contractual | | Exercise | | Number | | Exercise | | | Number | | Contractual | | Exercise | | Number | | Exercise | |
Prices | | Outstanding | | Life | | Price | | Exercisable | | Price | | | Outstanding | | Life | | Price | | Exercisable | | Price | |
| | (in thousands, except prices per share and contractual life) | | | (in thousands, except prices per share and contractual life) | |
$21.60 - $36.51 | | 832 | | | 5.0 | | | $ | 25.48 | | | 665 | | | $ | 23.89 | | |
$38.94 - $48.98 | | 732 | | | 5.0 | | | 42.53 | | | 428 | | | 44.97 | | |
$21.60 - $30.98 | | | | 703 | | | 4.3 | | | $ | 24.70 | | | 609 | | | $ | 24.01 | |
$36.49 - $46.64 | | | | 695 | | | 5.4 | | | 41.77 | | | 377 | | | 44.27 | |
$53.61 - $58.94 | | 465 | | | 2.9 | | | 56.73 | | | 452 | | | 56.82 | | | | 412 | | | 2.7 | | | 56.61 | | | 403 | | | 56.68 | |
$62.02 - $72.83 | | 1,166 | | | 1.9 | | | 66.16 | | | 1,165 | | | 66.16 | | | | 996 | | | 1.9 | | | 66.05 | | | 995 | | | 66.05 | |
| | 3,195 | | | 3.5 | | | $ | 48.77 | | | 2,710 | | | $ | 50.89 | | | 2,806 | | | 3.5 | | | $ | 48.28 | | | 2,384 | | | $ | 50.28 | |
Restricted Stock Units and Performance Stock Units
Restricted stock units (“RSU”) are awarded to certain officers, key employees of the Company, and nonemployee directors. Additionally, performance stock units (“PSU”) are awarded to certain officers and certain key employees in connection with our long-term incentive program. Each RSU and PSU represents the right to receive one share of our common stock, provided that the applicable performance and vesting conditions are satisfied. PSU awards granted in 2022 and 2023 also include a performance objective based on our relative total shareholder return over the performance period to a pre-determined peer group, assuming the reinvestment of dividends. The fair value of these awards is determined using a Monte Carlo simulation as of the date of the grant and share-based compensation expense will not be adjusted should the target awards vary from actual awards.
SecondThird Quarter 2023 Form 10-Q Page 13
NOTES TO THE UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
11. Share-Based Compensation (continued)
Generally, RSU awards fully vest after the passage of time, typically three years for employees and one year for nonemployee directors, provided there is continued service with the Company until the vesting date, subject to the terms of the award. PSU awards are earned only after the attainment of performance goals in connection with the relevant performance period and vest after an additional one-year period. No dividends are paid or accumulated on any RSU or PSU awards. Compensation expense is recognized over the vesting period.
RSU and PSU activity for the twenty-sixthirty-nine weeks ended July 29,October 28, 2023 is summarized as follows:
| | | | Weighted- | | | | | | | Weighted- | | | |
| | | | | | Average | | Weighted- | | | | | | Average | | Weighted- | |
| | Number | | Remaining | | Average | | | Number | | Remaining | | Average | |
| | of | | Contractual | | Grant Date | | | of | | Contractual | | Grant Date | |
| | Shares | | Life | | Fair Value | | | Shares | | Life | | Fair Value | |
| | (in thousands) | | (in years) | | (per share) | | | (in thousands) | | (in years) | | (per share) | |
Nonvested at beginning of year | | 1,992 | | | | | | $ | 37.58 | | | 1,992 | | | | | | $ | 37.58 | |
Granted | | 1,020 | | | | | | 38.24 | | | 1,195 | | | | | | 35.84 | |
Vested | | (665 | ) | | | | | 33.87 | | | (677 | ) | | | | | 34.01 | |
Performance adjustment (1) | | (757 | ) | | | | | | | (757 | ) | | | | | |
Forfeited | | (155 | ) | | | | | 40.10 | | | (233 | ) | | | | | 39.29 | |
Nonvested at July 29, 2023 | | 1,435 | | | 1.7 | | | $ | 40.91 | | |
Nonvested at October 28, 2023 | | | 1,520 | | | 1.5 | | | $ | 38.88 | |
| | | | | | | | | | | | | | |
Aggregate value ($ in millions) | | $ | 59 | | | | | | | | $ | 59 | | | | | | |
(1) | This represents adjustments made to PSUs reflecting changes in estimates based upon our current performance against predefined financial targets. |
The total value of RSU and PSU awards that vested during the twenty-sixthirty-nine weeks ended July 29,October 28, 2023 and July 30,October 29, 2022 was $23 million and $6 million, respectively. As of July 29,October 28, 2023, there was $31$28 million of total unrecognized compensation cost related to nonvested awards.
12. Legal Proceedings
Legal proceedings pending against the Company or its consolidated subsidiaries consist of ordinary, routine litigation, including administrative proceedings, incidental to the business of the Company or businesses that have been sold or discontinued by the Company in past years. These legal proceedings include commercial, intellectual property, customer, environmental, and employment-related claims. Additionally, the Company is a defendant in two purporteda consolidated class actionsaction alleging wage/hour and wage statement violations in California.
We do not believe that the outcome of any such legal proceedings pending against the Company or its consolidated subsidiaries, as described above, would have a material adverse effect on our consolidated financial position, liquidity, or results of operations, taken as a whole, based upon current knowledge and taking into consideration current accruals. Litigation is inherently unpredictable. Judgments could be rendered or settlements made that could adversely affect the Company’s operating results or cash flows in a particular period.
13. Subsequent Events
From November 3, 2023 through December 5, 2023, in order to fund working capital needs for the holiday selling season, we borrowed varying amounts under our credit facility, with $146 million of aggregate borrowings and no more than $89 million outstanding during that time. As of December 5, 2023, we had $35 million in outstanding borrowings under the credit facility and we may continue to use the facility as required by our operations.
SecondThird Quarter 2023 Form 10-Q Page 14
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations
Business Overview
Foot Locker, Inc. is a leading footwear and apparel retailer that unlocks the "inner sneakerhead" in all of us. We have a strong history of sneaker authority that sparks discovery and ignites the power of sneaker culture through our portfolio of brands, including Foot Locker, Kids Foot Locker, Champs Sports, WSS, and atmos.
Ensuring that our customers can engage with us in the most convenient manner for them whether in our stores, on our website, or on our mobile application, is a high priority for us. We use our omni-channel capabilities to bridge the digital world and physical stores, including order-in-store, buy online and pickup-in-store, and buy online and ship-from-store, as well as e-commerce. We operate websites and mobile apps aligned with the brand names of our store banners. These sites offer some of the largest online product selections and provide a seamless link between e-commerce and physical stores.
Store Count
At July 29,October 28, 2023, we operated 2,5992,607 stores as compared with 2,714 and 2,7992,794 stores at January 28, 2023 and July 30,October 29, 2022, respectively.
Franchise Operations
A total of 184190 franchised stores were operating at July 29,October 28, 2023, as compared with 159 and 148155 stores at January 28, 2023 and July 30,October 29, 2022, respectively, operating in the Middle East and Asia. These stores are not included in the operating store count above.
Results of Operations
We evaluate performance based on several factors, primarily the banner’s financial results, referred to as division profit. Division profit reflects income before income taxes, impairment and other charges, corporate expenses, non-operating income, and net interest expense.
The table below summarizes our results for the period.
| | Thirteen weeks ended | | Twenty-six weeks ended | | | Thirteen weeks ended | | Thirty-nine weeks ended | |
| | July 29, | | July 30, | | July 29, | | July 30, | | | October 28, | | October 29, | | October 28, | | October 29, | |
($ in millions) | | 2023 | | 2022 | | 2023 | | 2022 | | | 2023 | | 2022 | | 2023 | | 2022 | |
Sales | | $ | 1,861 | | | $ | 2,065 | | | $ | 3,788 | | | $ | 4,240 | | | $ | 1,986 | | | $ | 2,173 | | | $ | 5,774 | | | $ | 6,413 | |
Licensing revenue | | 3 | | 3 | | 7 | | 6 | | | 3 | | 3 | | 10 | | 9 | |
Total revenue | | $ | 1,864 | | $ | 2,068 | | $ | 3,795 | | $ | 4,246 | | | $ | 1,989 | | $ | 2,176 | | $ | 5,784 | | $ | 6,422 | |
| | | | | | | | | | | | | | | | | | |
Operating Results | | | | | | | | | | | | | | | | | | |
Division profit | | $ | 21 | | | $ | 187 | | | $ | 125 | | | $ | 450 | | | $ | 67 | | | $ | 219 | | | $ | 192 | | | $ | 669 | |
Less: Impairment and other (1) | | 14 | | | 12 | | | 53 | | | 18 | | | 6 | | | 20 | | | 59 | | | 38 | |
Less: Corporate expense (2) | | 6 | | | 33 | | | 10 | | | 70 | | | 14 | | | 39 | | | 24 | | | 109 | |
Income from operations | | 1 | | | 142 | | | 62 | | | 362 | | | 47 | | | 160 | | | 109 | | | 522 | |
Interest expense, net | | (4 | ) | | (5 | ) | | (5 | ) | | (10 | ) | | (2 | ) | | (3 | ) | | (7 | ) | | (13 | ) |
Other income / (expense), net (3) | | — | | | 6 | | | (3 | ) | | (19 | ) | | 2 | | | (14 | ) | | (1 | ) | | (33 | ) |
Income / (loss) before income taxes | | $ | (3 | ) | | $ | 143 | | | $ | 54 | | | $ | 333 | | |
Income before income taxes | | | $ | 47 | | | $ | 143 | | | $ | 101 | | | $ | 476 | |
(1) | See the Impairment and Other Charges section for further information. |
(2) | Corporate expense consists of unallocated selling, general and administrative expenses as well as depreciation and amortization related to the Company’s corporate headquarters, centrally managed departments, unallocated insurance and benefit programs, certain foreign exchange transaction gains and losses, and other items. |
(3) | Other income / (expense), net includes non-operating items, changes in fair value of minority interests measured at fair value or using the fair value measurement alternative, changes in the market value of our available-for-sale security, our share of earnings or losses related to our equity method investments, and net benefit expense related to our pension and postretirement programs excluding the service cost component. See the Other income / (expense), net section for further information. |
SecondThird Quarter 2023 Form 10-Q Page 15
Reconciliation of Non-GAAP Measures
In addition to reporting our financial results in accordance with U.S. generally accepted accounting principles (“GAAP”), we report certain financial results that differ from what is reported under GAAP. We have presented certain financial measures 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. 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. Presented below is a reconciliation of GAAP and non-GAAP.
| | Thirteen weeks ended | | Twenty-six weeks ended | | | Thirteen weeks ended | | Thirty-nine weeks ended | |
| | July 29, | | July 30, | | July 29, | | July 30, | | | October 28, | | October 29, | | October 28, | | October 29, | |
($ in millions, except per share amounts) | | 2023 | | 2022 | | 2023 | | 2022 | | | 2023 | | 2022 | | 2023 | | 2022 | |
Pre-tax income: | | | | | | | | | | | | | | | | |
Income before income taxes | | $ | (3 | ) | | $ | 143 | | | $ | 54 | | | $ | 333 | | | $ | 47 | | | $ | 143 | | | $ | 101 | | | $ | 476 | |
Pre-tax amounts excluded from GAAP: | | | | | | |
Impairment and other | | 14 | | | 12 | | | 53 | | | 18 | | | 6 | | | 20 | | | 59 | | | 38 | |
Other income / expense, net | | (2 | ) | | (6 | ) | | (1 | ) | | 18 | | | (5 | ) | | 14 | | | (6 | ) | | 32 | |
Adjusted income before income taxes (non-GAAP) | | $ | 9 | | | $ | 149 | | | $ | 106 | | | $ | 369 | | | $ | 48 | | | $ | 177 | | | $ | 154 | | | $ | 546 | |
| | | | | | | | | | | | | | | | | | |
After-tax income: | | | | | | | | | | | | | | | | |
Net income / (loss) attributable to Foot Locker, Inc. | | $ | (5 | ) | | $ | 94 | | | $ | 31 | | | $ | 227 | | | $ | 28 | | | $ | 96 | | | $ | 59 | | | $ | 323 | |
After-tax adjustments excluded from GAAP: | | | | | | |
Impairment and other, net of income tax benefit of $3, $3, $9, and $5 million, respectively | | 11 | | | 9 | | | 44 | | | 13 | | |
Other income / expense, net of income tax benefit/(expense) of $-, $(3), $-, and $3 million, respectively | | (2 | ) | | (3 | ) | | (1 | ) | | 15 | | |
Impairment and other, net of income tax benefit of $2, $5, $11, and $10 million, respectively | | | 4 | | | 15 | | | 48 | | | 28 | |
Other income / expense, net of income tax (expense)/benefit of $(1), $4, $(1), and $7 million, respectively | | | (4 | ) | | 10 | | | (5 | ) | | 25 | |
Tax reserves benefit / charge | | — | | | 5 | | | (4 | ) | | 5 | | | — | | | — | | | (4 | ) | | 5 | |
Adjusted net income (non-GAAP) | | $ | 4 | | | $ | 105 | | | $ | 70 | | | $ | 260 | | | $ | 28 | | | $ | 121 | | | $ | 98 | | | $ | 381 | |
| | | | | | | | | | | | | | | | | | |
Earnings per share: | | | | | | |
Diluted earnings per share | | $ | (0.05 | ) | | $ | 0.99 | | | $ | 0.33 | | | $ | 2.36 | | | $ | 0.30 | | | $ | 1.01 | | | $ | 0.63 | | | $ | 3.38 | |
Diluted EPS amounts excluded from GAAP: | | | | | | | | | | | | | | | | | | |
Impairment and other | | 0.12 | | | 0.09 | | | 0.47 | | | 0.14 | | | 0.04 | | | 0.16 | | | 0.51 | | | 0.29 | |
Other income / expense, net | | (0.03 | ) | | (0.03 | ) | | (0.02 | ) | | 0.16 | | | (0.04 | ) | | 0.10 | | | (0.06 | ) | | 0.26 | |
Tax reserves benefit / charge | | — | | | 0.05 | | | (0.04 | ) | | 0.05 | | | — | | | — | | | (0.04 | ) | | 0.05 | |
Adjusted diluted earnings per share (non-GAAP) | | $ | 0.04 | | | $ | 1.10 | | | $ | 0.74 | | | $ | 2.71 | | | $ | 0.30 | | | $ | 1.27 | | | $ | 1.04 | | | $ | 3.98 | |
During the thirteen and twenty-sixthirty-nine weeks ended July 29,October 28, 2023, we recorded pre-tax charges of $14$6 million and $53$59 million, respectively, classified as impairment and other. See the Impairment and Other section for further information.
SecondThird Quarter 2023 Form 10-Q Page 16
The adjustments made to other income / (expense), net primarily reflected gains or losses associated with our minority investments and gains on sales of businesses. See the Other Income / (Expense), net section for further information.
During the twenty-sixthirty-nine weeks ended July 29,October 28, 2023, we recorded a $4 million benefit related to an income tax reserves release from a statute of limitations expiration.
Segment Reporting and Results of Operations
We have determined that we have three operating segments, North America, EMEA, and Asia Pacific. Our North America operating segment includes the results of the following banners operating in the U.S. and Canada: Foot Locker, Champs Sports, Kids Foot Locker, and WSS, including each of their related e-commerce businesses. Our EMEA operating segment includes the results of the following banners operating in Europe: Foot Locker Sidestep, and Kids Foot Locker, including each of their related e-commerce businesses. Our Asia Pacific operating segment includes the results of the Foot Locker banner and its related e-commerce business operating in Australia, New Zealand, and Asia, as well as atmos, which operates primarily in Asia. We have further aggregated these operating segments into one reportable segment based upon their shared customer base and similar economic characteristics.
As reported in our Annual Report on Form 10-K, we planned to close our Sidestep banner and certain stores operating in Asia. During the second quarter of 2023, we substantially closedessentially ceased operating the Sidestep banner and closed the stores operating in Hong Kong and Macau. Additionally during the second quarter of 2023, we sold our Singapore and Malaysian businessMalaysia businesses to our license partner. Our license partner will operate those stores under a licensing agreement.
Sales
All references to comparable-store sales for a given period relate to sales of stores that were open at the period-end and had been open for more than one year. The computation of consolidated comparable sales also includes our direct-to-customers channel. Stores opened or closed during the period are not included in the comparable-store base; however, stores closed temporarily for relocation or remodeling are included. Computations exclude the effect of foreign currency fluctuations.
Sales from acquired businesses that include inventory are included in the computation of comparable-store sales after the 15th month of operations. Accordingly, both WSS and atmos are included in the computation.
For the thirteen weeks ended July 29,October 28, 2023, total sales decreased by $204$187 million, or 9.9%8.6%, to $1,861$1,986 million, as compared with the corresponding prior-year period. For the twenty-sixthirty-nine weeks ended July 29,October 28, 2023, total sales decreased by $452$639 million, or 10.7%10.0%, to $3,788$5,774 million, as compared with the corresponding prior-year period. Excluding the effect of foreign currency fluctuations, total sales decreased by $209$218 million, or 10.2%10.0%, for the thirteen weeks ended July 29,October 28, 2023, and decreased by $426$643 million, or 10.0%, for the twenty-sixthirty-nine weeks ended July 29,October 28, 2023. The information shown below represents certain sales metrics by sales channel.
| | Thirteen weeks ended | | Twenty-six weeks ended | | | Thirteen weeks ended | | Thirty-nine weeks ended | |
| | July 29, | | July 30, | | July 29, | | July 30, | | | October 28, | | October 29, | | October 28, | | October 29, | |
($ in millions) | | 2023 | | 2022 | | 2023 | | 2022 | | | 2023 | | 2022 | | 2023 | | 2022 | |
Store sales | | $ | 1,572 | | | $ | 1,716 | | | $ | 3,185 | | | $ | 3,492 | | | $ | 1,649 | | | $ | 1,818 | | | $ | 4,834 | | | $ | 5,310 | |
$ Change | | | (144 | ) | | | | | | (307 | ) | | | | | | (169 | ) | | | | | | (476 | ) | | | |
% Change | | (8.4 | ) | | | | | (8.8 | ) | | | | | (9.3 | )% | | | | | (9.0 | )% | | | |
% of total sales | | 84.5 | | | 83.1 | | | 84.1 | | | 82.4 | | | 83.0 | | | 83.7 | | | 83.7 | | | 82.8 | |
% Comparable sales (decrease) / increase | | (8.6 | ) | | (6.0 | ) | | (8.0 | ) | | 0.5 | | | (8.5 | ) | | 4.7 | | (8.2 | ) | | 1.9 | |
| | | | | | | | | | | | | | | | | | | |
Direct-to-customers sales | | | 289 | | | | 349 | | | | 603 | | | | 748 | | | | 337 | | | | 355 | | | | 940 | | | | 1,103 | |
$ Change | | | (60 | ) | | | | | | (145 | ) | | | | | | (18 | ) | | | | | | (163 | ) | | | |
% Change | | (17.2 | ) | | | | | (19.4 | ) | | | | | (5.1 | )% | | | | | (14.8 | )% | | | |
% of total sales | | 15.5 | | | 16.9 | | | 15.9 | | | 17.6 | | | 17.0 | | | 16.3 | | | 16.3 | | | 17.2 | |
% Comparable sales decrease | | (13.1 | ) | | (26.7 | ) | | (14.8 | ) | | (28.3 | ) | | (5.6 | ) | | (14.5 | ) | | (12.2 | ) | | (24.2 | ) |
| | | | | | | | | | | | | | | | | | | |
Total sales | | $ | 1,861 | | | $ | 2,065 | | | $ | 3,788 | | | $ | 4,240 | | | $ | 1,986 | | | $ | 2,173 | | | $ | 5,774 | | | $ | 6,413 | |
$ Change | | | (204 | ) | | | | | | (452 | ) | | | | | | (187 | ) | | | | | | (639 | ) | | | |
% Change | | (9.9 | ) | | | | | (10.7 | ) | | | | | (8.6 | )% | | | | | (10.0 | )% | | | |
% Comparable sales decrease | | (9.4 | ) | | (10.3 | ) | | (9.2 | ) | | (6.2 | ) | |
% Comparable sales (decrease) / increase | | | (8.0 | ) | | 0.8 | | (8.9 | ) | | (3.9 | ) |
SecondThird Quarter 2023 Form 10-Q Page 17
The information shown below represents certain combined stores and direct-to-customers sales metrics for the thirteen and twenty-sixthirty-nine weeks ended July 29,October 28, 2023 as compared with the corresponding prior-year period.
| | Thirteen weeks ended | | Twenty-six weeks ended | | | Thirteen weeks | | Thirty-nine weeks | |
| | | Constant Currencies | | Comparable Sales | | Constant Currencies | | Comparable Sales | | | Constant Currencies | | Comparable Sales | | Constant Currencies | | Comparable Sales | |
Foot Locker | | (5.9 | )% | | (4.6 | )% | | (6.5 | )% | | (5.0 | )% | | (6.5 | )% | | (4.9 | )% | | (6.5 | )% | | (5.0 | )% |
Champs Sports | | (27.6 | )% | | (25.3 | )% | | (27.4 | )% | | (24.9 | )% | | (23.4 | ) | | (20.9 | ) | | (26.1 | ) | | (23.6 | ) |
Kids Foot Locker | | (5.8 | )% | | (4.7 | )% | | (6.6 | )% | | (6.3 | )% | | 4.4 | | | 5.0 | | | (2.7 | ) | | (2.4 | ) |
WSS | | 5.1 | % | | (7.9 | )% | | 6.9 | % | | (5.6 | )% | | 0.6 | | | (9.4 | ) | | 4.6 | | | (7.0 | ) |
Other (1) | | (100.0 | )% | | n.m. | | | (100.0 | )% | | n.m. | | | n.m. | | | n.m. | | | n.m. | | | n.m. | |
North America | | (13.1 | )% | | (12.4 | )% | | (13.8 | )% | | (12.6 | )% | | (10.0 | )% | | (9.5 | )% | | (12.5 | )% | | (11.5 | )% |
Foot Locker (2) | | 0.2 | % | | (1.1 | )% | | 1.9 | % | | 0.5 | % | | (5.6 | )% | | (3.9 | )% | | (0.6 | )% | | (1.3 | )% |
Sidestep | | (56.0 | )% | | (34.7 | )% | | (49.0 | )% | | (36.6 | )% | | n.m. | | | n.m. | | | (63.8 | ) | | (38.3 | ) |
EMEA | | (3.0 | )% | | (2.3 | )% | | (1.1 | )% | | (1.2 | )% | | (10.2 | )% | | (4.2 | )% | | (4.1 | )% | | (2.5 | )% |
Foot Locker | | 4.0 | % | | 5.7 | % | | 8.3 | % | | 8.5 | % | | (16.2 | )% | | (1.2 | )% | | — | % | | 6.3 | % |
atmos | | (12.5 | )% | | (10.0 | )% | | (3.1 | )% | | (1.8 | )% | | 5.0 | | | 0.8 | | | (0.7 | ) | | (2.8 | ) |
Asia Pacific | | (1.4 | )% | | 0.4 | % | | 4.5 | % | | 5.3 | % | | (10.1 | )% | | (0.5 | )% | | (0.2 | )% | | 3.4 | % |
Total sales | | (10.2 | )% | | (9.4 | )% | | (10.0 | )% | | (9.2 | )% | | (10.0 | )% | | (8.0 | )% | | (10.0 | )% | | (8.9 | )% |
(1) | Other includes sales from banners that we no longer operate and primarily represented Eastbay in the prior-year period. |
| (2) | Includes sales from 1416 and 1520 Kids Foot Locker stores operating in Europe for July 29,October 28, 2023 and July 30,October 29, 2022, respectively. |
From a product perspective for the combined channels, the sales declines in the quarter and year-to-date were across all categories of footwear, apparel and accessories.
Comparable sales decreased, both in our stores and in our direct-to-customer channels, this quarter and for the year to date period due to ongoing macroeconomic headwinds as our customers become more discerning due to inflation and other cost pressures, which affected customer traffic and conversion, as well as changing vendor mix coupled with ourthe repositioning of theour Champs Sports banner. We are repositioning the Champs Sports banner to serve the active athlete, which resulted in expected comparable sales declines due to the transition. In addition, North America sales were also negatively affected by the closure of Eastbay business, which ceased operating in late 2022. Eastbay's sales primarily represent the other category, in the above table, and excluding those sales the decline for North America would have been 10.7%8.8% and 10.9%10.5%, on a constant currency basis, for the quarter and year-to-date period of 2023, respectively. Within EMEA, constant currency sales for the Foot Locker banners increased, led by our operationsdecreased in France and Italythe region, due to macroeconomic factors as tourism has increasedwell as compared with last year, partially offsetting this was the decline in sales in ourfrom the closure of the Sidestep banner due to the planned closure. banner. For our Asia Pacific operating segment, for both the quarter and the year-to-date period, Asia Pacific's sales increased indecreased primarily as a result of our operations in Australia and South Korea, while our sales in New Zealand were relatively flat. As previously announced, we have closeddecision to close our operations in Hong Kong and Macau which negatively affected sales. During the second quarter, we soldand our businesses operating instrategic decision to sell our Singapore and Malaysia operations to our licensing partner. Within Asia Pacific, comparable sales for our operations in Australia and New Zealand were essentially flat for the third quarter, while Australia's year-to-date results generated positive comparable sales. Our sales ofoperations in South Korea, while flat for the quarter did generate an increase in the year-to-date period. Sales in our atmos banner increased by 0.8% and decreased by 10.0% and 1.8%2.8% on a comparable basis,basis, for the quarter and year-to-date period,periods, respectively, as this banner was affected negativelytourism gained traction in the third quarter, offset by the lack of certain key styles from adidas that were available in the marketplace last year.
Gross Margin
| | Thirteen weeks ended | | Twenty-six weeks ended | | | Thirteen weeks ended | | Thirty-nine weeks ended | |
| | July 29, | | July 30, | | July 29, | | July 30, | | | October 28, | | October 29, | | October 28, | | October 29, | |
| | 2023 | | 2022 | | 2023 | | 2022 | | | 2023 | | 2022 | | 2023 | | 2022 | |
Gross margin rate | | 27.1 | % | | 31.7 | % | | 28.6 | % | | 32.9 | % | | 27.3 | % | | 32.0 | % | | 28.1 | % | | 32.6 | % |
Basis point decrease in the gross margin rate | | (460 | ) | | | | | (430 | ) | | | | | (470 | ) | | | | | (450 | ) | | | |
Components of the change: | | | | | | | | | | | | | | |
Merchandise margin rate decline | | (300 | ) | | | | | (280 | ) | | | | | (370 | ) | | | | | (310 | ) | | | |
Higher occupancy and buyers’ compensation expense rate | | (160 | ) | | | | | (150 | ) | | | | | (100 | ) | | | | | (140 | ) | | | |
Gross margin is calculated as sales minus cost of sales. Cost of sales includes: the cost of merchandise, freight, distribution costs including related depreciation expense, shipping and handling, occupancy and buyers’ compensation. Occupancy costs include rent (including fixed common area maintenance charges and other fixed non-lease components), real estate taxes, general maintenance, and utilities.
SecondThird Quarter 2023 Form 10-Q Page 18
The gross margin rate decreased to 27.1%27.3% for the thirteen weeks ended July 29,October 28, 2023, as compared with the corresponding prior-year period, reflecting a 300-basis370-basis point decrease in the merchandise margin rate, and a 160-basis100-basis point deleverage in the occupancy and buyers' compensation rate. For the twenty-sixthirty-nine weeks ended July 29,October 28, 2023, gross margin rate decreased by 430 basis points,to 28.1%, reflecting a 280-basis310-basis point decrease in the merchandise margin rate and a 150-basis140-basis point deleverage in the occupancy and buyers' compensation rate. The declines in merchandise margin rate reflected higher promotional activity in the current marketplace, higher costs of merchandise, and increased shrink. The deleverage in the occupancy and buyers' compensation rate for both periods was primarily related to the fixed nature of these costs in relation to the decline in sales.
Selling, General and Administrative Expenses (SG&A)
| | Thirteen weeks ended | | Twenty-six weeks ended | | | Thirteen weeks ended | | Thirty-nine weeks ended | |
| | July 29, | | July 30, | | July 29, | | July 30, | | | October 28, | | October 29, | | October 28, | | October 29, | |
($ in millions) | | 2023 | | 2022 | | 2023 | | 2022 | | | 2023 | | 2022 | | 2023 | | 2022 | |
SG&A | | $ | 442 | | | $ | 452 | | | $ | 873 | | | $ | 915 | | | $ | 446 | | | $ | 467 | | | $ | 1,319 | | | $ | 1,382 | |
$ Change | | $ | (10 | ) | | | | | $ | (42 | ) | | | | | $ | (21 | ) | | | | | $ | (63 | ) | | | |
% Change | | (2.2 | )% | | | | | (4.6 | )% | | | | | (4.5 | )% | | | | | (4.6 | )% | | | |
SG&A as a percentage of sales | | 23.8 | % | | 21.9 | % | | 23.0 | % | | 21.6 | % | | 22.5 | % | | 21.5 | % | | 22.8 | % | | 21.5 | % |
SG&A decreased by $10$21 million, or $14 $28 million excluding the effect of foreign currency fluctuations, for the thirteen weeks ended July 29,October 28, 2023, as compared with the corresponding prior-year period. For the year-to-date period, SG&A decreased by $42$63 million, or $39 million $67 million excluding the effect of foreign currency fluctuations. As a percentage of sales, SG&A increased by 190100 basis points and 140130 basis points for the thirteen and twenty-sixthirty-nine weeks ended July 29,October 28, 2023, respectively, primarily reflecting deleverage from the decline in sales, coupled with pressures from inflation and investments in front-line wages and technology aimed at improving the omnichannel experience and improving customer data analytics. Partially offsetting these increases waswere lower incentive compensation due to the Company's underperformance relative to targets and savings from our cost optimization program.
Depreciation and Amortization
| | Thirteen weeks ended | | Twenty-six weeks ended | | | Thirteen weeks ended | | Thirty-nine weeks ended | |
| | July 29, | | July 30, | | July 29, | | July 30, | | | October 28, | | October 29, | | October 28, | | October 29, | |
($ in millions) | | 2023 | | 2022 | | 2023 | | 2022 | | | 2023 | | 2022 | | 2023 | | 2022 | |
Depreciation and amortization | | $ | 50 | | | $ | 51 | | | $ | 101 | | | $ | 105 | | | $ | 47 | | | $ | 52 | | | $ | 148 | | | $ | 157 | |
$ Change | | $ | (1 | ) | | | | | $ | (4 | ) | | | | | $ | (5 | ) | | | | | $ | (9 | ) | | | |
% Change | | (2.0 | )% | | | | | (3.8 | )% | | | | | (9.6 | )% | | | | | (5.7 | )% | | | |
Depreciation and amortization expense decreased by $1$5 million and $4$9 million for the thirteen and twenty-sixthirty-nine weeks ended July 29,October 28, 2023, respectively, as compared with the corresponding prior-year periods. Excluding the effect of foreign currency fluctuations, depreciation and amortization decreased by $2 million and $4 million for the thirteen and twenty-six weeks ended July 29, 2023, respectively. These declines are primarily related to operating fewer stores and the effect from impairments recorded in the prior year.
Impairment and Other
For the thirteen and twenty-sixthirty-nine weeks ended July 29,October 28, 2023, we incurred $7$1 million and $26$27 million of transformation consulting expense, respectively, as compared with $9$17 million and $10$27 million in the corresponding prior-year periods. WeFor the thirteen weeks ended October 28, 2023, we recorded a $3 million net benefit from the settlement of lease obligations associated with Sidestep stores, partially offset by impairment on atmos U.S. assets of $1 million, as compared to no impairment in the prior year period. For the thirty-nine weeks ended October 28, 2023, we recorded impairment chargesexpense of $3$19 million and $21 million, respectively, primarily driven by accelerated tenancy charges on right-of-use assets for the closures of the Sidestep banner and Foot Locker Asia stores, as compared with impairment of $2 million and $5 million in the prior year periods,period, mainly from the closure of Footaction stores. Additionally, we recorded reorganization costs of $3$7 million and $5$12 million for the thirteen and twenty-sixthirty-nine weeks ended July 29,October 28, 2023, respectively, related to the announced closure of the Sidestep banner, Foot Locker Asia stores, and a North American distribution center, as well as $1compared with reorganization costs, primarily severance, of $2 million in other charges.for each of the prior year periods. In the comparative periods ended July 30,October 29, 2022, we incurred $1 million and $3$4 million of acquisition integration costs related to WSS and atmos.
SecondThird Quarter 2023 Form 10-Q Page 19
Corporate Expense
| | Thirteen weeks ended | | Twenty-six weeks ended | | | Thirteen weeks ended | | Thirty-nine weeks ended | |
| | July 29, | | July 30, | | July 29, | | July 30, | | | October 28, | | October 29, | | October 28, | | October 29, | |
($ in millions) | | 2023 | | 2022 | | 2023 | | 2022 | | | 2023 | | 2022 | | 2023 | | 2022 | |
Corporate expense | | $ | 6 | | | $ | 33 | | | $ | 10 | | | $ | 70 | | | $ | 14 | | | $ | 39 | | | $ | 24 | | | $ | 109 | |
$ Change | | $ | (27 | ) | | | | | $ | (60 | ) | | | | | $ | (25 | ) | | | | | $ | (85 | ) | | | |
Corporate expense consists of unallocated general and administrative expenses as well as depreciation and amortization related to our corporate headquarters, centrally managed departments, unallocated insurance and benefit programs, certain foreign exchange transaction gains and losses, and other items.
Corporate expense decreased by $27$25 million and $60$85 million for the thirteen and twenty-sixthirty-nine weeks ended July 29,October 28, 2023, as compared with the corresponding prior-year periods. Depreciation and amortization included in corporate expense waswas $9 million and $10$10 million for the thirteen weeks ended July 29,October 28, 2023 and July 30,October 29, 2022, respectively, and $18 $27 million and $19$29 million for the year-to-date periods, respectively. Corporate expense decreased primarily due to an increase in the allocation of corporate expense to the banners in 2023 and lower incentive compensation, including share-based compensation that is tied to performance, partially offset by our ongoing investments in information technology.
Operating Results
| | Thirteen weeks ended | | Twenty-six weeks ended | | | Thirteen weeks ended | | Thirty-nine weeks ended | |
| | July 29, | | July 30, | | July 29, | | July 30, | | | October 28, | | October 29, | | October 28, | | October 29, | |
($ in millions) | | 2023 | | 2022 | | 2023 | | 2022 | | | 2023 | | 2022 | | 2023 | | 2022 | |
Division profit | | $ | 21 | | | $ | 187 | | | $ | 125 | | | $ | 450 | | | $ | 67 | | | $ | 219 | | | $ | 192 | | | $ | 669 | |
Division profit margin | | 1.1 | % | | 9.1 | % | | 3.3 | % | | 10.6 | % | | 3.4 | % | | 10.1 | % | | 3.3 | % | | 10.4 | % |
Division profit margin, as a percentage of sales, decreased to 1.1%3.4% and 3.3% for the thirteen and twenty-sixthirty-nine weeks ended July 29,October 28, 2023, respectively, with both channels experiencing declines in sales coupled with lower gross margins due to the promotional environment and deleveraging expenses.
Interest Expense, Net
| | Thirteen weeks ended | | Twenty-six weeks ended | | | Thirteen weeks ended | | Thirty-nine weeks ended | |
| | July 29, | | July 30, | | July 29, | | July 30, | | | October 28, | | October 29, | | October 28, | | October 29, | |
($ in millions) | | 2023 | | 2022 | | 2023 | | 2022 | | | 2023 | | 2022 | | 2023 | | 2022 | |
Interest expense | | $ | (6 | ) | | $ | (6 | ) | | $ | (11 | ) | | $ | (12 | ) | | $ | (6 | ) | | $ | (6 | ) | | $ | (17 | ) | | $ | (18 | ) |
Interest income | | 2 | | | 1 | | | 6 | | | 2 | | | 4 | | | 3 | | | 10 | | | 5 | |
Interest (expense) / income, net | | $ | (4 | ) | | $ | (5 | ) | | $ | (5 | ) | | $ | (10 | ) | | $ | (2 | ) | | $ | (3 | ) | | $ | (7 | ) | | $ | (13 | ) |
Interest expense for both the quarter and year-to-date period decreased primarily due to an increase in interest income earned on our cash and cash equivalents related to higher interest rates and, with respect to the year-to-date period, income from our cross-currency swap.
Other Income / (Expense), Net
| | Thirteen weeks ended | | Twenty-six weeks ended | | | Thirteen weeks ended | | Thirty-nine weeks ended | |
| | July 29, | | July 30, | | July 29, | | July 30, | | | October 28, | | October 29, | | October 28, | | October 29, | |
($ in millions) | | 2023 | | 2022 | | 2023 | | 2022 | | | 2023 | | 2022 | | 2023 | | 2022 | |
Other income / (expense), net | | $ | — | | | $ | 6 | | | $ | (3 | ) | | $ | (19 | ) | | $ | 2 | | | $ | (14 | ) | | $ | (1 | ) | | $ | (33 | ) |
This caption includes non-operating items, including changes in fair value of minority investments measured at fair value or using the fair value measurement alternative, changes in the market value of our available-for-sale security, our share of earnings or losses related to our equity method investments, and net benefit / (expense) related to our pension and postretirement programs excluding the service cost component.
The thirteen and twenty-six weeks ended July 29,October 28, 2023 reflected expensea gain of $2 million and $4 million, respectively,from the resolution of working capital related to our pension and postretirement programs, offset by a $2 million gain on the sale of our Foot Locker Singapore and Malaysia businesses to our license partner in the second quarter.quarter and a $3 million gain on the sale of a corporate office property in North America. This was partially offset by expense of $2 million related to our pension and postretirement programs. The corresponding prior-year periodsperiod primarily represented a decrease in the fair value of our former minority investment in Retailors, Ltd., offset by an $18 million gain on the divestiture of the Eastbay Team Sales business.
SecondThird Quarter 2023 Form 10-Q Page 20
For the thirty-nine weeks ended October 28, 2023, other income / (expense), net included expense of $6 million related to our pension and postretirement programs, offset by a $4 million gain from the previously mentioned business divestiture and $3 million gain on the sale of a corporate office property. The corresponding prior-year period primarily represented a $52 million decrease in the fair value of our former minority investment in Retailors, Ltd., offset by a $19 million gain on the divestiture of the Eastbay Team Sales business.
Income Taxes
| | Thirteen weeks ended | | Twenty-six weeks ended | | | Thirteen weeks ended | | Thirty-nine weeks ended | |
| | July 29, | | July 30, | | July 29, | | July 30, | | | October 28, | | October 29, | | October 28, | | October 29, | |
($ in millions) | | 2023 | | 2022 | | 2023 | | 2022 | | | 2023 | | 2022 | | 2023 | | 2022 | |
Provision for income taxes | | $ | 2 | | | $ | 49 | | | $ | 23 | | | $ | 107 | | | $ | 19 | | | $ | 47 | | | $ | 42 | | | $ | 154 | |
Effective tax rate | | (98.5 | )% | | 34.5 | % | | 42.7 | % | | 32.1 | % | | 39.4 | % | | 33.0 | % | | 41.1 | % | | 32.4 | % |
Our current year interim provision for income taxes was measured using an estimated annual effective tax rate, which represented a blend of federal, state, and foreign taxes and included the effect of certain nondeductible items as well as changes in our mix of domestic and foreign earnings or losses, adjusted for discrete items that occurred within the periods presented.
We regularly assess the adequacy of our provisions for income tax contingencies in accordance with applicable authoritative guidance on accounting for income taxes. As a result, we may adjust the reserves for unrecognized tax benefits considering new facts and developments, such as changes to interpretations of relevant tax law, assessments from taxing authorities, settlements with taxing authorities, and lapses of statutes of limitation.
During the twenty-sixthirty-nine weeks ended July 29,October 28, 2023, we recorded a $4 million reserve release from a statute of limitations expiration on our foreign income taxes. Excluding this item, and other insignificant reserve releases due to settlements of international tax examinations, the effective tax rate for the current year period increased, as compared with the corresponding prior-year period, primarily due to the decline in income before tax and a change in geographic mix of earnings.
Liquidity and Capital Resources
Liquidity
Our primary source of liquidity has been cash flow from operations, while the principal uses of cash have been to fund inventory and other working capital requirements; finance capital expenditures related to store openings, store remodelings, internet and mobile sites, information systems, and other support facilities; make retirement plan contributions, quarterly dividend payments, and interest payments; and fund other cash requirements to support the development of our short-term and long-term operating strategies, including strategic investments.
We generally finance real estate with operating leases. We believe our cash, cash equivalents, future cash flow from operations, and amounts available under our credit agreement will be adequate to fund these requirements.requirements. From November 3, 2023 through December 5, 2023, in order to fund working capital needs for the holiday selling season, we borrowed varying amounts under our credit facility, with $146 million of aggregate borrowings and no more than $89 million outstanding during that time. As of December 5, 2023, we had $35 million in outstanding borrowings under the credit facility and we may continue to use the facility as required by our operations.
The Company may also repurchase its common stock or seek to retire or purchase outstanding debt through open market purchases, privately negotiated transactions, or otherwise. Share repurchases and retirement of debt, if any, will depend on prevailing market conditions, liquidity requirements, contractual restrictions, strategic considerations, and other factors. The amounts involved may be material. As of July 29,October 28, 2023, approximately $1,103 million remained available under our current $1.2 billion share repurchase program.
Our expected full-year capital spending is expected$255 million, with cash capital expenditures currently estimated to be $265 million.lower due to timing of projects and payments. The forecast includes $200$198 million related to the remodeling or relocation of approximately 200135 existing stores and the opening of approximately 80 new stores, including 25 WSS stores. Additionally, we expect to spend $65$57 million for the development of information systems, websites, and infrastructure, including supply chain initiatives. We also expect to spend an additional $25$20 million in software-as-a-service contracts related to our technology initiatives.
On August 15,October 27, 2023, the Board of Directors declaredCompany paid a quarterly cash dividend on our common stock of $0.40 per share which will be payable on October 27, 2023 to shareholders onof record as of October 13, 2023. The Board of Directors regularly reviews the Company's dividend policy and rate. Givenpolicy. As previously announced, the current environment andCompany has paused dividends to increase balance sheet flexibility in order to provide us with flexibility, the Boardsupport of Directors has decided to pause the dividend program at this time.longer-term strategic initiatives.
SecondThird Quarter 2023 Form 10-Q Page 21
Any material adverse change in customer demand, fashion trends, competitive market forces, or customer acceptance of our merchandise mix, retail locations and websites, uncertainties related to the effect of competitive products and pricing, our reliance on a few key suppliers for a significant portion of our merchandise purchases and risks associated with global product sourcing, economic conditions worldwide, the effects of currency fluctuations, as well as other factors listed under the headings “Disclosure Regarding Forward-Looking Statements,” and “Risk Factors” could affect our ability to continue to fund our needs from business operations.
Operating Activities
| | Twenty-six weeks ended | | | Thirty-nine weeks ended | |
| | July 29, | | July 30, | | | October 28, | | October 29, | |
($ in millions) | | 2023 | | | 2022 | | | 2023 | | | 2022 | |
Net cash used in operating activities | | $ | (184 | ) | | $ | (102 | ) | | $ | (98 | ) | | $ | (32 | ) |
$ Change | | $ | (82 | ) | | | | | $ | (66 | ) | | | |
Operating activities reflects net income adjusted for non-cash items and working capital changes. Adjustments to net income for non-cash items include impairment charges, other charges, fair value adjustments to minority investments, depreciation and amortization, deferred income taxes, and share-based compensation expense.
The decrease in cash from operating activities reflected lower net income, partially offset by timing of merchandise purchases and payments of accounts payable, and accrued and other liabilities, as compared with the same period last year. The prior-year merchandise purchases were affected by the supply chain disruptions that occurred in the preceding year.
Investing Activities
| | Twenty-six weeks ended | | | Thirty-nine weeks ended | |
| | July 29, | | July 30, | | | October 28, | | October 29, | |
($ in millions) | | 2023 | | 2022 | | | 2023 | | 2022 | |
Net cash used in investing activities | | $ | (96 | ) | | $ | (113 | ) | | $ | (145 | ) | | $ | (182 | ) |
$ Change | | $ | 17 | | | | | | $ | 37 | | | | |
The change in investing activities primarily reflected lower capital expenditures in the current year. For the twenty-sixthirty-nine weeks ended July 29,October 28, 2023, capital expenditures decreased by $51$53 million to $105$165 million, as compared with the corresponding prior-year period. The prior year amount was elevated as several large projects related to 2021 were paid in the first quarter of 2022. This was partially offset by a decrease in proceeds from theother investing activities related to sales of businesses.property and businesses, payments in the prior year totaling $18 million related to the WSS and atmos acquisitions, and activity related to minority investments. During the second quarter of 2023, we sold our businesses operating in Singapore and Malaysia for total cash consideration of $23 million and received proceeds of $18$24 million, or $10$16 million net of cash. The amounts are subject to$8 million of cash in the finalization ofbusiness. We received $18 million in the second quarter and an additional $6 million in the third quarter, after net working capital.capital adjustments to finalize the purchase price. During the thirty-nine weeks ended October 28, 2023, we also sold a corporate office property in North America for proceeds of $6 million. The prior year amount represented the divestiture of Team Sales for total proceeds of $47 million.
We have invested $2 million and $5 million in minority investments during the thirty-nine weeks ended October 28, 2023 and October 29, 2022, respectively, with various limited partner venture capital funds managed by Black fund managers, who are committed to advancing diverse-led businesses as part of our Leading in Education and Economic Development (LEED) initiative. Additionally, in the prior year we liquidated one minority investment for proceeds of $12 million.
Financing Activities
| | Twenty-six weeks ended | | | Thirty-nine weeks ended | |
| | July 29, | | July 30, | | | October 28, | | October 29, | |
($ in millions) | | 2023 | | 2022 | | | 2023 | | 2022 | |
Net cash used in financing activities | | $ | (80 | ) | | $ | (199 | ) | | $ | (120 | ) | | $ | (237 | ) |
$ Change | | $ | 119 | | | | | | $ | 117 | | | | |
Third Quarter 2023 Form 10-Q Page 22
Cash used in financing activities was primarily related to our return to shareholders initiatives as follows:
| | Twenty-six weeks ended | | | Thirty-nine weeks ended | |
| | July 29, | | July 30, | | | October 28, | | October 29, | |
($ in millions) | | 2023 | | 2022 | | | 2023 | | 2022 | |
Dividends paid on common stock | | $ | 75 | | | $ | 76 | | | $ | 113 | | | $ | 113 | |
Share repurchases | | — | | | 129 | | | — | | | 129 | |
Total returned to shareholders | | $ | 75 | | | $ | 205 | | | $ | 113 | | | $ | 242 | |
During the twenty-sixthirty-nine weeks ended July 29,October 28, 2023, we did not repurchase any shares under our share repurchase program, whereas in the prior year we spent $129 million to repurchase shares. We declared and paid $75$113 million in dividends representing a quarterly rate of $0.40 per share in both the twenty-six weeks of 2023 and 2022.2022 periods. We paid $10 million and $1 million during the twenty-sixthirty-nine weeks ended July 29,October 28, 2023 and July 30,October 29, 2022, respectively, to satisfy tax withholding obligations related to vesting of share-based equity awards.
Second Quarter 2023 Form 10-Q Page 22
Critical Accounting Policies and Estimates
There have been no significant changes to our critical accounting policies and estimates from the information provided in Item 7, “Management’s Discussion and Analysis of Financial Condition and Results of Operations,” within the 2022 Form 10‑K.
Recent Accounting Pronouncements
Descriptions of the recently issued and adopted accounting principles are included in Item 1. “Financial Statements” in Note 1, Summary of Significant Accounting Policies, to the Condensed Consolidated Financial Statements.
Item 3. Quantitative and Qualitative Disclosures About Market Risk
There have been no significant changes in our primary risk exposures or management of market risks from the information provided in Part II, Item 7A, Quantitative and Qualitative Disclosures About Market Risk within the 2022 Form 10-K.
Item4. Controls and Procedures
Evaluation of Disclosure Controls and Procedures
During the quarter, the Company’s management performed an evaluation, under the supervision and with the participation of the Company’s Chief Executive Officer (“CEO”) and Chief Financial Officer (“CFO”), of the effectiveness of the design and operation of the Company’s disclosure controls and procedures (as that term is defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as amended (the “Exchange Act”)). The term "disclosure controls and procedures" means controls and other procedures of a company that are designed to ensure that information required to be disclosed by a company in the reports that it files or submits under the Exchange Act is recorded, processed, summarized and reported, within the time periods specified in the SEC’s rules and forms. Disclosure controls and procedures include, without limitation, controls and procedures designed to ensure that information required to be disclosed by a company in the reports that it files or submits under the Exchange Act is accumulated and communicated to the issuer's management, including its principal executive and principal financial officers, or persons performing similar functions, as appropriate to allow timely decisions regarding required disclosure.
Based on that evaluation, our CEO and CFO concluded that as of April 29,October 28, 2023, our disclosure controls and procedures were not effective due to the un-remediated material weaknesses in internal control over financial reporting related to certain ineffective general information technology controls over logical access and change management at our WSS business, which was previously disclosed in the Company's Annual Report on Form 10-K for the year ended January 28, 2023. For additional information, please refer to Part II - Item 9A. of the Company's Annual Report on Form 10-K for the year ended January 28, 2023.
Remediation
Management is in the process of implementing measures designed to ensure that the control deficiencies contributing to the material weaknesses are remediated, such that these controls are designed, implemented, and operating effectively. The remediation actions include: (i) designing and implementing controls related to deprovisioning, privileged access, and user access reviews, (ii) developing an enhanced risk assessment process to evaluate logical access, and (iii) improving the existing training program associated with control design and implementation. We believe that these actions will remediate the material weaknesses. Management begancontinues to implement certain of these remedial steps during the first and second quarters ofthirty-nine weeks ended October 28, 2023. The material weaknesses will not be considered remediated, however, until the applicable controls operate for a sufficient period of time and management has concluded, through testing, that these controls are operating effectively. We expect that the remediation of these material weaknesses will be completed prior to the end of 2023.
Third Quarter 2023 Form 10-Q Page 23
Changes in Internal Control Over Financial Reporting
Other than the ongoing remediation efforts described above, there were no changes in our internal control over financial reporting (as defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act), during the quarter ended July 29,October 28, 2023, that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.
Second Quarter 2023 Form 10-Q Page 23
Limitations on Effectiveness of Controls and Procedures
Because of its inherent limitations, management does not expect that our disclosure controls and procedures or our internal control over financial reporting will prevent or detect all error and fraud. Any control system, no matter how well designed and operated, is based upon certain assumptions and can provide only reasonable, not absolute, assurance that its objectives will be met. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate. Further, no evaluation of controls can provide absolute assurance that misstatements due to error or fraud will not occur or that all control issues and instances of fraud, if any, within the Company have been detected.
PART II - OTHER INFORMATION
Item 1. Legal Proceedings
Information regarding the Company’s legal proceedings is contained in the Legal Proceedings note under Item 1. “Financial Statements” in Part I.
Item 1A. Risk Factors
In addition to the other information discussed in this report, the factors described in Part I, Item 1A. “Risk Factors” in our 2022 Annual Report on Form 10-K filed with the SEC on March 27, 2023 should be considered as they could materially affect our business, financial condition, or future results.
There have not been any significant changes with respect to the risks described in our 2022 Form 10-K.
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds
The table below provides information with respect to shares of the Company’s common stock for the thirteen weeks ended July 29,October 28, 2023.
| | | | | | Total Number of | | Dollar Value of | | | | | | | Total Number of | | Dollar Value of | |
| | Total | | Average | | Shares Purchased as | | Shares that may | | | Total | | Average | | Shares Purchased as | | Shares that may | |
| | Number | | Price | | Part of Publicly | | yet be Purchased | | | Number | | Price | | Part of Publicly | | yet be Purchased | |
| | of Shares | | Paid Per | | Announced | | Under the | | | of Shares | | Paid Per | | Announced | | Under the | |
Date Purchased | | Purchased (1) | | | Share (1) | | | Program | | | Program | | | Purchased (1) | | | Share (1) | | | Program | | | Program | |
April 30 to May 27, 2023 | | — | | | $ | — | | | — | | | $ | 1,103,814,042 | | |
May 28 to July 1, 2023 | | 193 | | | | 24.79 | | | — | | | | 1,103,814,042 | | |
July 2 to July 29, 2023 | | 5,426 | | | 25.74 | | | — | | | 1,103,814,042 | | |
July 30 to August 26, 2023 | | | 3,566 | | | $ | 25.76 | | | — | | | $ | 1,103,814,042 | |
August 27 to September 30, 2023 | | | 1,406 | | | | 19.07 | | | — | | | | 1,103,814,042 | |
October 1 to October 28, 2023 | | | — | | | — | | | — | | | 1,103,814,042 | |
| | 5,619 | | | $ | 25.71 | | | — | | | | | | 4,972 | | | $ | 23.87 | | | — | | | | |
(1) | These columns include shares acquired in satisfaction of the tax withholding obligations of holders of restricted stock unit,units, which vested during the quarter. |
Item 3. Defaults Upon Senior Securities
Not applicable.
Item 4. Mine Safety Disclosures
Not applicable.
Item 5. Other Information
During the quarter ended July 29,October 28, 2023, no director or officer (as defined in Rule 16a-1(f) promulgated under the Exchange Act) of the Company adopted or terminated a "Rule 10b5-1 trading arrangement" or a "non-Rule 10b5-1 trading arrangement" (as each term is defined in Item 408 of Regulation S-K).
SecondThird Quarter 2023 Form 10-Q Page 24
Item 6. Exhibits
* Filed herewith
** Furnished herewith
SecondThird Quarter 2023 Form 10-Q Page 25
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the Company has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.
Date: SeptemberDecember 6, 2023 | FOOT LOCKER, INC. |
| |
| |
| /s/ Michael Baughn |
| MICHAEL BAUGHN |
| Executive Vice President and Chief Financial Officer |
SecondThird Quarter 2023 Form 10-Q Page 26
