Foot Locker, Inc. (NYSE:FL) Q3 2019 Earnings Conference Call - Final Transcript

Nov 22, 2019 • 09:00 am ET


Foot Locker, Inc. (NYSE:FL) Q3 2019 Earnings Conference Call - Final Transcript


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Good morning, ladies and gentlemen, and welcome to Foot Locker's Third Quarter 2019 Financial Results Conference Call. At this time, all participants are in a listen-only mode. Later we will conduct a question-and-answer session.

This conference call may contain forward-looking statements that reflect management's current views of future events and financial performance. Management undertakes no obligation to update these forward-looking statements which are based on many assumptions and factors, including the effects of currency fluctuations customer preferences, economic and market conditions worldwide and other risks and uncertainties described more fully in the Company's press releases and in reports filed with the SEC, including the most recently filed Form 10-K or Form 10-Q. Any changes in such assumptions or factors could produce significantly different results and actual results may differ materially from those contained in the forward-looking statements. Please note that this conference is being recorded. [Operator Instructions]

I will now turn the call over to Jim Lance, Vice President, Corporate Finance and Investor Relations, Mr. Lance, you may begin.

James R. Lance

Thanks, operator. Welcome everyone to Foot Locker Inc's Third Quarter Earnings Conference Call. As reported in today's earnings release, the Company reported a strong quarter with net income of $125 million or $1.16 per share in the third quarter, compared to net income of $130 million or $1.14 per share last year.

Included in this year's GAAP results is a pre-tax gain of $4 million in connection with the acquisition of a Canadian distribution center lease and related assets, partially offset by an incremental $1 million charge related to the pension matter that we have spoken about in the past. Last year's results included a $2 million charge related to the same pension matter, offset by $23 million of tax benefits related to US tax reform. On a non-GAAP basis, third quarter earnings were $122 million or $1.13 per share, a 19% increase from $108 million or $0.95 per share last year.

Unless otherwise noted the figures and rates mentioned during our call today will be based on non-GAAP results. A reconciliation of GAAP to non-GAAP results is included in this morning's press release.

We'll begin our remarks with Lauren Peters, Foot Locker's Executive Vice President and Chief Financial Officer, who will provide details on our third quarter performance along with our financial outlook for the fourth quarter. Dick Johnson, Chairman and Chief Executive Officer will then provide highlights from our third quarter performance along with an update on our strategic initiatives in our product pipeline, Lauren?

Lauren B. Peters

Thank you, Jim and good morning everyone. We are very pleased to report strong sales and earnings growth for our third quarter. Our team executed well this quarter, delivering a comparable sales increase of 5.7% combined with improvement in both our gross margin and SG&A rates, collectively, this led to the double-digit increases in non-GAAP net income and earnings per share. Total reported sales rose 3.9%, similar to the second quarter of 2019, the impact of foreign currencies, reduced sales by about $23 million. On