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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
Date of Report (Date of earliest event reported) January 7, 1999
FOOTSTAR, INC.
(Exact name of registrant as specified in its charter)
Delaware
(State or other jurisdiction of incorporation)
1-11681 22-3439443
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(Commission File Number) (IRS Employer Identification No.)
933 MacArthur Boulevard
Mahwah, New Jersey 07430
(Address of principal executive offices)
(201) 934-2000
(Registrant's telephone number, including area code)
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Item 5. Other events.
On January 7, 1999, Footstar, Inc. ("Footstar" or the "Company") reported that
comparable store sales for the five-week period ended January 2, 1999 increased
3.0%. The Company's Meldisco division generated a comparable store sales gain of
6.7%, while Footaction posted a comparable store sales decline of 3.3%.
Footstar's total sales for the five-week period rose 6.5% to $229.7 million from
$215.6 million for the prior-year period. Meldisco's total sales increased 8.7%
to $144.5 million, and Footaction's total sales increased 2.9% to $85.2 million.
For the thirteen-week period ended January 2, 1999, Footstar's comparable store
sales declined 4.5%. Meldisco's comparable store sales decreased 1.6%, while
Footaction's comparable store sales decreased 10.8%. Footstar's total sales for
the thirteen-week period declined 1.2% to $492.9 million from $498.9 million for
the prior-year period. Meldisco's total sales increased 0.5% to $333.6 million
from $331.9 million for the prior-year period, while Footaction's total sales
decreased 4.6% to $159.4 million from $167.0 million for the prior-year period.
For the fifty-two week period ended January 2, 1999, Footstar's comparable store
sales declined 0.4%. Meldisco's comparable store sales decreased 0.5%, and
Footaction's comparable store sales decreased 0.1%. Footstar's total sales for
the fifty-two week period increased 3.3% to $1,829.1 million from $1,771.5
million for the prior year. Meldisco's total sales for the fifty-two week period
were flat at $1,174.8 million, while Footaction's total sales for the same
period increased 9.6% to $654.3 million from $597.2 million for the prior year.
On January 13, 1999, the Company announced a restructuring plan designed to
increase profitability in its two footwear businesses and generate greater
long-term value for shareholders. The primary components of the plan include
closing approximately 30 under-performing Footaction stores, reconfiguring
Footaction merchandise assortments and refining store layouts to place greater
emphasis on better-performing, higher-potential categories, and exiting
Meldisco's Central European business. Footstar announced that, in conjunction
with these actions, it will record pre-tax, non-recurring charges of $34.4
million ($22.7 million after taxes), in the fourth quarter of fiscal 1998. This
will include restructuring charges, inventory markdowns and asset impairment
charges.
On January 13, 1999, the Company also said that it expects to meet current
analysts' estimates for the fourth fiscal quarter and the fiscal year ended
January 2, 1999, excluding the impact of the restructuring charges just
announced. The Company identified the consensus estimates for the fourth quarter
and the year as approximately $0.56 and $2.17, respectively.
Except for the historical information contained herein, the matters discussed in
this Current Report are forward looking statements, including without limitation
those statements regarding the Company's earnings expectations for the fourth
quarter and fiscal year. Actual final results for the year and quarter could
differ depending on a number of factors including accounting adjustments made
during the course of closing the year. These and other forward looking
statements involve a number of risks and uncertainties that may cause actual
results to differ from those expressed in any of the forward looking statements.
Such risks and uncertainties include, but are not limited to, the ability of the
Company to execute the plans and realize the estimates of value reflected in the
restructuring plan, uncertainties related to the effect of competitive products
and pricing, consumer demand for footwear, unseasonable weather, consumer
acceptance of the Company's merchandise mix and retail locations, the
availability of products and carriers of products, the effect of competitive
products and pricing, and the other risks detailed in the Company's other
Securities and Exchange Commission filings. The Company undertakes no obligation
to update forward looking statements to reflect events and circumstances after
the date made.
A copy of the Company's press release dated January 7, 1999 is attached hereto
as Exhibit 99.1.
A copy of the Company's press release dated January 13, 1999 is attached hereto
as Exhibit 99.2.
Item 7. Financial Statements and Exhibits.
(c) Exhibits
99.1. Press Release of Footstar, Inc. dated January 7, 1999
99.2. Press Release of Footstar, Inc. dated January 13, 1999
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
the registration has duly caused this report to be signed on its behalf by the
undersigned thereto duly authorized.
FOOTSTAR, INC.
Dated: January 15, 1999 By: CARLOS E. ALBERINI
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Name: Carlos E. Alberini
Title: Sr. Vice President and
Chief Financial Officer
Investor Contact: Carlos Alberini Media Contact: Wendi Kopsick
Sr. Vice President & CFO Jim Fingeroth
Footstar, Inc. Kekst and Company
(201) 760-4008 (212) 521-4800
FOR IMMEDIATE RELEASE
FOOTSTAR REPORTS DECEMBER SALES RESULTS
MAHWAH, NEW JERSEY, January 7, 1999--Footstar, Inc. (NYSE:FTS) today reported
that comparable store sales for the five-week period ended January 2, 1999
increased 3.0%. The Company's Meldisco division generated a comparable store
sales gain of 6.7%, while Footaction posted a comparable store sales decline of
3.3%. Footstar's total sales for the five-week period rose 6.5% to $229.7
million from $215.6 million for the prior-year period. Meldisco's total sales
increased 8.7% to $144.5 million, and Footaction's total sales increased 2.9% to
$85.2 million.
Mickey Robinson, Chairman and Chief Executive Officer, commented, "Our Meldisco
division achieved strong results during December, representing a significant
improvement over November's performance. Cold-weather categories, such as winter
boots and slippers, performed very well, as did all categories of women's
footwear and the Thom McAn brand for men and children. Footaction's results
continued to be negatively affected by heightened competition in the athletic
footwear industry, sluggish apparel sales and softened consumer demand in the
basketball category, in part due to the NBA strike. These factors all
contributed to increased promotional activity during the month. Despite the
difficult retail environment, we managed our business aggressively, and I am
pleased with the year-end inventory position in both divisions."
For the thirteen-week period ended January 2, 1999, Footstar's comparable store
sales declined 4.5%. Meldisco's comparable store sales decreased 1.6%, while
Footaction's comparable store sales decreased 10.8%. Footstar's total sales for
the thirteen-week period declined 1.2% to $492.9 million from $498.9 million for
the prior-year period. Meldisco's total sales increased 0.5% to $333.6 million
from $331.9 million for the prior-year period, while Footaction's total sales
decreased 4.6% to $159.4 million from $167.0 million for the prior-year period.
For the fifty-two week period ended January 2, 1999, Footstar's comparable store
sales declined 0.4%. Meldisco's comparable store sales decreased 0.5%, and
Footaction's comparable store sales decreased 0.1%. Footstar's total sales for
the fifty-two week period increased 3.3% to $1,829.1 million from $1,771.5
million for the prior year. Meldisco's total sales for the fifty-two week period
were flat at $1,174.8 million, while Footaction's total sales for the same
period increased 9.6% to $654.3 million from $597.2 million for the prior year.
As of January 2, 1999, Footstar operated 572 Footaction stores, which sell
branded athletic footwear and apparel, and 2,538 Meldisco leased footwear
departments.
Except for the historical information contained herein, the matters discussed in
this release are forward looking statements that involve risks and uncertainties
that may cause actual results to differ from those expressed in any of the
forward looking statements. Such risks and uncertainties include, but are not
limited to, uncertainties related to the effect of competitive products and
pricing, consumer demand for footwear, unseasonable weather, consumer acceptance
of our merchandise mix and retail locations, the availability of products, and
the other risks detailed in the Company's Securities and Exchange Commission
filings. The Company undertakes no obligation to update forward looking
statements to reflect events or circumstances after the date such statements
were made.
- ATTACHMENT FOLLOWS -
<PAGE>
<TABLE>
<CAPTION>
Footstar, Inc.
Same Store Sales
Change from Prior Year
Five Weeks Thirteen Weeks Fifty-Two Weeks
Ended Ended Ended
January 2, 1999 January 2, 1999 January 2, 1999
--------------- --------------- ---------------
<S> <C> <C> <C>
Footaction (3.3%) (10.8%) (0.1%)
Meldisco 6.7% (1.6%) (0.5%)
Footstar, Inc. 3.0% (4.5%) (0.4%)
</TABLE>
Investor Contact: Carlos Alberini Media Contact: Wendi Kopsick
Sr. Vice President & CFO Jim Fingeroth
Footstar, Inc Kekst and Company
(201) 760-4008 (212) 521-4800
FOR IMMEDIATE RELEASE
FOOTSTAR ANNOUNCES RESTRUCTURING PLAN
-Expects to Meet Fourth Quarter and Fiscal Year Earnings Estimates,
Excluding Restructuring Charges-
MAHWAH, NEW JERSEY, January 13, 1999--Footstar, Inc. (NYSE:FTS) today announced
a restructuring plan designed to increase profitability in its two footwear
businesses and generate greater long-term value for shareholders. The primary
components of the plan include closing approximately 30 under-performing
Footaction stores, reconfiguring Footaction merchandise assortments and refining
store layouts to place greater emphasis on better-performing, higher-potential
categories, and exiting Meldisco's Central European business. In conjunction
with these actions, Footstar will record pre-tax, non-recurring charges of $34.4
million ($22.7 million after taxes), in the fourth quarter of fiscal 1998. This
will include restructuring charges, inventory markdowns and asset impairment
charges.
Mickey Robinson, Chairman and Chief Executive Officer, commented, "Several
months ago we initiated an analysis of our business to identify steps to enhance
productivity and address underperforming areas of our operations. By taking the
actions announced today, we expect to increase Footstar's profitability and
long-term value by exiting those operations that do not contribute meaningfully
to our bottom line and focusing on opportunities that offer the greatest
potential. As we pursue our strategies, we continue to have the benefit of
Meldisco's strong cash-generating power and the Company's solid balance sheet."
Following a review of Footaction's store base, the Company has determined it
will close approximately 30 stores that have not met performance targets. The
closings are expected to take place over the course of 1999. In addition,
recognizing the recent aggressive square footage growth by several athletic
footwear retailers, including Footaction, the Company will scale back expansion
plans for Footaction and be more selective in converting smaller stores to the
large-store prototype. The Company now plans to complete a total of 20 to 30 new
store openings and conversions in 1999 versus its previous plan of 50 to 70 new
stores and conversions.
At the same time, the Company plans to adjust Footaction merchandise assortments
and make refinements in store layout at approximately 150 of the Company's
larger Footaction stores, to refocus on categories offering higher profit
potential. A primary component of this effort will be to place footwear,
including women's and children's merchandise, in more highly visible positions
in the stores, while improving the productivity of the space dedicated to
apparel categories. In conjunction with these plans, the Company will make
refinements in store fixturing and layout to highlight key product categories
and increase the sales pace of footwear merchandise through improved displays.
The third major element of the restructuring consists of exiting Meldisco's
European business, through which the Company operates 20 leased footwear
departments in Tesco stores in the Czech and Slovak republics, Hungary and
Poland. The Company concluded that, based on current returns in this business
and the need for significant infrastructure investment to support future growth,
it will wind down its European business prior to the 1999 Christmas selling
season.
"All in all, these steps will strengthen Footstar's operations, complement other
actions we have taken to enhance productivity and provide for increased
profitability in the years ahead. We have two excellent businesses with
industry-leadership positions, and we intend to maximize their potential over
the long term. We will also continue to pursue strategic opportunities to grow
our business, while maintaining a strict eye on cost control," Mr. Robinson
concluded.
The Company also said today that it expects to meet current analysts' estimates
for the fourth fiscal quarter and the fiscal year ended January 2, 1999,
excluding the impact of the restructuring charges announced today. The consensus
estimates for the fourth quarter and the year are approximately $0.56 and $2.17,
respectively.
Over the past year, Footstar has implemented several initiatives to increase
operating efficiencies. These include consolidating the Company's distribution
networks and establishing shared accounting operations for both the Meldisco and
Footaction businesses. In addition, Meldisco implemented a new inventory
management system that has improved inventory flow and turnover and Footaction
intends to take similar steps. Lastly, the Company is in the process of
implementing Shareholder Value Management company-wide.
As of January 2, 1999, Footstar operated 572 Footaction stores, which sell
branded athletic footwear and apparel, and 2,538 Meldisco leased footwear
departments.
Except for the historical information contained herein, this release includes
forward looking statements, specifically including those relating to the
Company's earnings expectations for the fourth quarter and fiscal year. These
statements involve risks and uncertainties that may cause actual results to
differ from those expressed in any of the forward looking statements. Actual
final results for the year and quarter could differ depending on a number of
factors including accounting adjustments made during the course of closing the
year. Such risks and uncertainties include, but are not limited to,
uncertainties related to the effect of competitive products and pricing,
consumer demand for footwear, unseasonable weather, consumer acceptance of our
merchandise mix and retail locations, the availability of products, and the
other risks detailed in the Company's Securities and Exchange Commission
filings. The Company undertakes no obligation to update forward looking
statements to reflect events or circumstances after the date such statements
were made.
