NEW YORK — Moderate sales growth allowed Foot Locker Inc. to report double-digit earnings growth from continuing operations in the fourth quarter.

This story first appeared in the March 13, 2003 issue of WWD. Subscribe Today.

For the three months ended Feb. 1, the New York-based footwear and sportswear retailer reported net income from continuing operations increased 14.3 percent to $48 million, or 33 cents a diluted share. By comparison, last year the company had profits of $42 million, or 28 cents. Excluding $6 million, or 4 cents, from discontinued operations a year ago, income would have grown 33.3 percent. Either way, earnings per share missed the Wall Street estimate by a penny.

Sales for the quarter advanced 5.1 percent to $1.21 billion from $1.16 billion, as comparable-store sales dipped 0.9 percent.

“The fourth quarter of 2002 represented the 14th consecutive quarter of adjusted earnings improvement versus the same period last year,” said chief executive officer Matthew Serra in a statement. “These profit improvements were largely attributable to the successful implementation of several strategic initiatives.”

The initiatives, said Serra, are significant growth of the company’s European division, profit growth at the Champs division, development of the direct-to-consumer channel, expanded private label offerings and lower costs.

More impressive was the firm’s balance sheet, where total debt, net of cash, is now zero.

“We are proud that we ended 2002 with $357 million of cash, equal to our total balance sheet debt,” said Serra. “At the beginning of 1999, our net debt balance was $574 million. This strengthened financial position allowed us to initiate our 12-cent-per-share annual shareholder dividend in the fourth quarter.”

Overall, for the full fiscal year, Foot Locker said earnings from continuing operations increased 45.9 percent to $162 million, or $1.10, versus $111 million, or 77 cents, a year ago. Last year’s results included a loss of 21 cents a share from disposed operations. Adjusted net income grew 12.7 percent to $160 million, or $1.10, from $142 million, or 98 cents. Sales increased 3 percent to $4.51 billion from $4.38 billion a year ago. Excluding $54 million in revenue from disposed operations, sales gained 4.2 percent from $4.33 billion. Full-year same-store sales inched up 0.1 percent.

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