U.S. News

Foot Locker Sees Quarterly Loss, Hires Advisor


Specialty athletic retailer Foot Locker on Monday said it expects to post a loss in the second quarter, primarily due to increased markdowns to clear off slow moving merchandise at its U.S stores.

The largest retailer of athletic shoes and apparel also confirmed that it retained Lehman Brothers to advise on strategic alternatives, including inquiries received from private-equity firms.

The New York-based company, which could put itself up for sale according to a recent media report, is trying streamline operations and the increased markdowns were to improve its inventory position before the start of the fall season.

Apollo Management is said to be mulling an offer of $29 per share, the paper said, and Michael Ashley, the billionaire behind British retailer Sports World International, has also expressed an interest, the New York Post newspaper said.

Trade publication Women's Wear Daily reported on Monday that Foot Locker was scrapping its new Footquarters concept, and would convert the Footquarters into either Foot Locker stores or Champs Sports stores.

For the second quarter, the company now expects to post a loss of 17 cents to 20 cents a share, compared with its earlier outlook for a profit of 15 cents to 20 cents a share.

It expects same-store sales for the period to fall 7 percent to 8 percent. Analysts on average were expecting the company to earn 15 cents a share, according to Reuters Estimates.

Foot Locker also expects to close up to 250 unproductive stores in the United States in 2007, while it expands in the European and surrounding markets, where it is aiming to open up to 30 new stores.

"We expect our international units will produce a double-digit division profit increase versus last year's comparable period," Chief Executive Officer Matthew Serra said in a statement.

Sports retailers in Europe have been witnessing unfavorable weather, with Britain's biggest sporting goods retailer Sports Direct saying wet weather had hit sales leading to little expected earnings growth for this year.

Shares of the company were trading up about 1.3 percent at $19.29 in morning trade on the New York Stock Exchange.

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