NEW YORK — Foot Locker Inc. has been clearing its inventory levels in preparation to sell itself to two private equity groups — a cleanup that sources said is impacting Puma more than other vendors.

Financial and market sources said Puma was asked to take back product on orders already shipped and that sales of back-to-school offerings are likely to be hurt by discounts at retail on Puma merchandise.

A spokeswoman for Puma USA declined comment.

Private equity sources said they expect an announcement of a deal to sell the athletic retailer to Kohlberg Kravis Roberts & Co. and Apollo Management by the end of August. The per-share price is said to be at least $30, but could be as high as $31 or $32.

An announcement of the deal was expected in early August, but was delayed due to the hiring of Evercore Partners. Private equity sources said Evercore was hired by Foot Locker to provide a “fairness opinion.” The opinion provides an evaluation of the sale prospects, as well as whether the proposed agreement with the two private equity firms is a good and fair deal for shareholders.

Meanwhile, Foot Locker has been tightening up inventory levels, according to financial sources. All of its vendors are feeling some heat in terms of being asked to take back some product. Those same sources said in some cases, the existing products in inventory are being discounted either in stores or at the retailer’s Web site. This is fueling speculation that chargeback and markdown requests will be forthcoming when future orders are placed.

Sources said Puma is getting hit the hardest, which has led to concern about the possible impact on the supplier’s earnings. Puma is set to announce second-quarter earnings this week.

In February, Europe’s second-largest activewear maker raised its operating profit forecast to at least 350 million euros, or $418.9 million at then-current exchange rates, from an earlier projection of 300 million to 330 million euros, or $359.1 million to $395 million. The company said sales were expected to increase 30 percent to 2.3 billion euros, or $2.75 billion, due to an expected boost owing to strong orders from the U.S., Europe, the Middle East and Africa.

This story first appeared in the July 31, 2006 issue of WWD. Subscribe Today.

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