floc20250306

floc20250306_10q.htm

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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

(Mark One)

☒

QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended: May 3, 2025

☐

TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from __________ to __________

Commission File Number: 1-10299

(Exact name of registrant as specified in its charter)

New York	13-3513936
(State or other jurisdiction of incorporation or organization)	(I.R.S. Employer Identification No.)

330 West 34th Street, New York, New York	10001
(Address of principal executive offices)	(Zip Code)

(212-720-3700)

(Registrant’s telephone number, including area code)

Title of each class	Trading Symbol(s)	Name of each exchange on which registered
Common Stock, par value $0.01	FL	New York Stock Exchange

Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of "large accelerated filer," "accelerated filer," "smaller reporting company," and "emerging growth company" in Rule 12b-2 of the Exchange Act.

Large accelerated filer ☒	Accelerated filer ☐	Non-accelerated filer ☐	Smaller reporting company ☐
Emerging growth company ☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒

Number of shares of Common Stock outstanding as of May 31, 2025: 95,277,635

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TABLE OF CONTENTS

			Page
PART I	FINANCIAL INFORMATION		1
	Item 1.	Financial Statements (Unaudited)	1
		Condensed Consolidated Balance Sheets (Unaudited)	1
		Condensed Consolidated Statements of Operations (Unaudited)	2
		Condensed Consolidated Statements of Comprehensive (Loss) Income (Unaudited)	3
		Condensed Consolidated Statements of Changes in Shareholders’ Equity (Unaudited)	4
		Condensed Consolidated Statements of Cash Flows (Unaudited)	5
		Notes to the Unaudited Condensed Consolidated Financial Statements (Unaudited)	6
	Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	17
	Item 3.	Quantitative and Qualitative Disclosures About Market Risk	26
	Item 4.	Controls and Procedures	26

PART II	OTHER INFORMATION		27
	Item 1.	Legal Proceedings	27
	Item 1A.	Risk Factors	27
	Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	29
	Item 3.	Defaults Upon Senior Securities	29
	Item 4.	Mine Safety Disclosures	29
	Item 5.	Other Information	29
	Item 6.	Exhibits	30

SIGNATURE			31

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CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS

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, the expected timing of the completion of the proposed transaction with DICK'S Sporting Goods, Inc. ("DICK'S"), 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, the occurrence of any event, change or other circumstance that could give rise to the right of us or DICK'S to terminate the Agreement and Plan of Merger by and among us, DICK'S and a wholly owned subsidiary of DICK'S ("Merger Sub") pursuant to which, among other things, Merger Sub would be merged with and into us (the "Transaction"); the outcome of any legal proceedings that may be instituted against us, including with respect to the Transaction; the possibility that the Transaction does not close when expected or at all because required regulatory or shareholder approvals or other conditions to closing are not received or satisfied on a timely basis or at all; reputational risk and potential adverse reactions of our customers, employees or other business partners; the diversion of our management's attention and time from ongoing business operations and opportunities due to the Transaction; 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 excess or unneeded merchandise; inventory management; our ability to fund our planned capital investments; execution of the Company's long-term strategic plan; a recession, volatility in the financial markets, and other global economic factors, including inflation; capital and resource allocation among our strategic opportunities; our ability to integrate the operations acquisitions; business opportunities and expansion; investments; expenses; dividends; share repurchases; cash management; liquidity; cash flow from operations; access to credit markets at competitive terms; instability in the financial markets; borrowing capacity under our credit facility; cash repatriation; supply chain issues; labor shortages and wage pressures; consumer spending levels and expectations; licensed store arrangements; the effect of certain governmental assistance programs; the success of our marketing and sponsorship arrangements; expectations regarding increasing global taxes and tariffs; the effect of increased government regulation, compliance, and changes in law; the effect of the adverse outcome of any material litigation or government investigation that affects us or our industry generally; the effects of weather; ESG risks; increased competition; geopolitical events; the financial effects of accounting regulations and critical accounting policies; counterparty credit risks; 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, as well as the updates provided in Item 1A. Risk Factors of this Form 10-Q, 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.

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PART I - FINANCIAL INFORMATION

Item 1. Financial Statements

CONDENSED CONSOLIDATED BALANCE SHEETS

(Unaudited)

	*May 3,*			*May 4,*			*February 1,*
($ in millions, except share amounts)	*2025*			*2024*			2025*
ASSETS

Current assets:
Cash and cash equivalents	$	343		$	282		$	401
Merchandise inventories		1,665			1,659			1,525
Assets held for sale		—			—			10
Other current assets		359			414			323
		2,367			2,355			2,259
Property and equipment, net		908			910			910
Operating lease right-of-use assets		2,099			2,175			2,061
Deferred taxes		41			114			143
Goodwill		661			760			759
Other intangible assets, net		230			392			365
Minority investments		115			150			115
Other assets		137			91			136
	$	6,558		$	6,947		$	6,748

LIABILITIES AND SHAREHOLDERS’ EQUITY

Current liabilities:
Accounts payable	$	504		$	515		$	378
Accrued and other liabilities		433			389			434
Current portion of debt and obligations under finance leases		5			5			5
Current portion of lease obligations		499			496			507
Liabilities held for sale		—			—			6
		1,441			1,405			1,330
Long-term debt and obligations under finance leases		440			441			441
Long-term lease obligations		1,890			1,984			1,831
Other liabilities		179			231			237
Total liabilities		3,950			4,061			3,839
Commitments and contingencies
Shareholders’ equity:
Common stock and paid-in capital: 95,560,582; 94,939,866; and 95,094,263 shares issued, respectively		808			787			802
Retained earnings		2,131			2,490			2,494
Accumulated other comprehensive loss		(325	)		(385	)		(383	)
Less: Treasury stock at cost: 312,977; 231,467; and 148,137 shares, respectively		(6	)		(6	)		(4	)
Total shareholders' equity		2,608			2,886			2,909
	$	6,558		$	6,947		$	6,748

The balance sheet at February 1, 2025 has been derived from the previously reported audited consolidated financial statements at that date, but does not include all of the information and footnotes required by U.S. generally accepted accounting principles for complete financial statements. For further information, refer to the consolidated financial statements and footnotes thereto included in Foot Locker, Inc.’s Annual Report on Form 10-K for the year ended February 1, 2025.

See Accompanying Notes to the Unaudited Condensed Consolidated Financial Statements.

First Quarter 2025 Form 10-Q Page 1

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CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(Unaudited)

	*Thirteen weeks ended*
	*May 3,*			*May 4,*
($ in millions, except per share amounts)	*2025*			*2024*
Sales	$	1,788		$	1,874
Other revenue		6			5
Total revenue		1,794			1,879

Cost of sales		1,280			1,335
Selling, general and administrative expenses		458			461
Depreciation and amortization		51			51
Impairment and other		276			14
(Loss) income from operations		(271	)		18

Interest expense, net		(2	)		(1	)
Other income (expense), net		3			(4	)
(Loss) income before income taxes		(270	)		13
Income tax expense		93			5
Net (loss) income	$	(363	)	$	8

Basic (loss) earnings per share	$	(3.81	)	$	0.09
Weighted-average shares outstanding		95.3			94.7

Diluted (loss) earnings per share	$	(3.81	)	$	0.09
Weighted-average shares outstanding, assuming dilution		95.3			95.3

See Accompanying Notes to the Unaudited Condensed Consolidated Financial Statements.

First Quarter 2025 Form 10-Q Page 2

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CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE (LOSS) INCOME

(Unaudited)

	*Thirteen weeks ended*
	*May 3,*			*May 4,*
($ in millions)	*2025*			*2024*
Net (loss) income	$	(363	)	$	8
Other comprehensive (loss) income, net of income tax

Foreign currency translation adjustment:
Translation adjustment arising during the period, net of income tax benefit of $- and $-, respectively		61			(19	)

Hedges contracts:
Change in fair value of derivatives, net of income tax benefit of $(1) and $(1), respectively		(3	)		(1	)

Pension and postretirement adjustments:
Amortization of net actuarial loss included in net periodic benefit costs, net of income tax expense of $1 and $1, respectively		—			1
Comprehensive (loss) income	$	(305	)	$	(11	)

See Accompanying Notes to the Unaudited Condensed Consolidated Financial Statements.

First Quarter 2025 Form 10-Q Page 3

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CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS’ EQUITY

(Unaudited)

	Additional Paid-In													Accumulated
	Capital &													Other			Total
Thirteen weeks ended	Common Stock				Treasury Stock						Retained			Comprehensive			Shareholders'
(shares in thousands, $ in millions)	Shares		Amount		Shares			Amount			Earnings			Loss			Equity
Balance at February 1, 2025		95,094	$	802		(148	)	$	(4	)	$	2,494		$	(383	)	$	2,909
Restricted stock issued		467		—														—
Share-based compensation expense				6														6
Shares of common stock used to satisfy tax withholding obligations						(165	)		(2	)								(2	)
Net loss												(363	)					(363	)
Translation adjustment, net of tax															61			61
Change in hedges, net of tax															(3	)		(3	)
Balance at May 3, 2025		95,561	$	808		(313	)	$	(6	)	$	2,131		$	(325	)	$	2,608

Balance at February 3, 2024		94,284	$	776		(60	)	$	(2	)	$	2,482		$	(366	)	$	2,890
Restricted stock issued		417		—														—
Issued under director and stock plans		239		5														5
Share-based compensation expense				6														6
Shares of common stock used to satisfy tax withholding obligations						(171	)		(4	)								(4	)
Net income												8						8
Translation adjustment, net of tax															(19	)		(19	)
Change in hedges, net of tax															(1	)		(1	)
Pension and postretirement adjustments, net of tax															1			1

SEC Form 10-Q filed by Foot Locker Inc.