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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
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Date of Report (Date of earliest event reported): November 18, 1999
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VENATOR GROUP, INC.
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(Exact name of registrant as specified in its charter)
New York No. 1-10299 13-3513936
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(State or other jurisdiction (Commission (IRS Employer
of incorporation) File Number) Identification No.)
233 Broadway, New York, New York 10279-0003
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(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (212) 553-2000
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Item 5. Other Events.
On November 18, 1999, the Registrant reported earnings for the third
quarter ended October 30, 1999. (See Exhibit 99, which, in its entirety, is
incorporated herein by reference.)
Item 7. Financial Statements and Exhibits.
(c) Exhibits
In accordance with the provisions of Item 601 of Regulation S-K, an
index of exhibits is included in this Form 8-K on page 3.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
the Registrant has duly caused this report to be signed on its behalf by the
undersigned being hereunto duly authorized.
VENATOR GROUP, INC.
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(Registrant)
Date: November 18, 1999 By: /s/ Bruce L. Hartman
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Bruce L. Hartman
Senior Vice President and
Chief Financial Officer
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VENATOR GROUP, INC.
INDEX OF EXHIBITS
FURNISHED IN ACCORDANCE
WITH THE PROVISIONS OF
ITEM 601 OF REGULATION S-K
<TABLE>
<CAPTION>
Exhibit No. in Item 601
of Regulation S-K Description
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<S> <C>
99 News Release dated November 18, 1999
</TABLE>
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EXHIBIT 99
NEWS RELEASE
CONTACT: Juris Pagrabs
Vice President, Investor
Relations
Venator Group, Inc.
(212) 553-7017
VENATOR GROUP REPORTS THIRD QUARTER
EARNINGS PER SHARE OF $0.09 FROM ADJUSTED OPERATIONS,
$0.07 EXCLUDING REAL ESTATE GAINS
-- GROSS MARGINS IMPROVE 320 BASIS POINTS OVER LAST YEAR --
NEW YORK, New York, November 18, 1999 - Venator Group, Inc. (NYSE: Z) today
reported that sales from adjusted operations for the 13 weeks ended October 30,
1999 were $1,068 million compared with $1,028 million in the year-earlier
period, reflecting a comparable-store sales increase of 4.6 percent. For the 39
weeks, sales from adjusted operations were $3,000 million versus $2,950 million
for the same period a year ago, reflecting a comparable-store sales increase of
1.0 percent.
Adjusted income from operations before taxes rose $89 million to $20 million for
the quarter ended October 30, 1999, which excludes a restructuring charge and
reflects the expected disposition of several businesses (noted below) as if they
had occurred at the beginning of 1998. Adjusted net income from operations was
$12 million, or $0.09 per share, for the period compared to a loss of $39
million, or $0.29 per share, a year ago. Excluding $5 million of other income,
resulting from several real estate transactions, adjusted earnings per share for
the quarter would have been $0.07. The restructuring charge in the quarter
consists of $3 million, or $0.01 per share, and reflects an adjustment to the
previous charge taken in the second quarter relating to the disposition of
several businesses.
Results are presented on an adjusted basis to facilitate comparison. Adjusted
comparisons assume that the disposition of non-core businesses, including
Afterthoughts, occurred at the beginning of 1998 and exclude the 1999
restructuring charge. The reported results are attached to this press release.
"Strategically, the third quarter was noteworthy for Venator Group, as it nears
the completion of its repositioning strategy that began in 1995," stated Dale W.
Hilpert, Venator Group's President and Chief Executive Officer. "Since August,
the Company has announced the sale of Afterthoughts and Colorado Group in
Australia, which in the aggregate are expected to total $325 million in gross
proceeds, as well as the expected disposition of eight non-core businesses.
These transactions will provide us with financial flexibility to help achieve
and sustain our financial goals and at the same time allow us to focus our
resources on our core athletic retailing businesses."
"We are encouraged to see the stronger athletic footwear trends continue at our
retail stores, particularly in the running and basketball categories, and we are
also gratified to see a significant increase in sales of basic apparel," said
Mr. Hilpert. "Our eVenator direct marketing businesses, catalog and e-commerce,
also achieved significant sales gains during the quarter fueled by strong sales
of footwear and sporting equipment, as well as sales of National Football League
product through our exclusive agreement to manage the NFL's catalog and
e-commerce business."
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"Sales performance at remodeled and relocated stores continues to be very
encouraging," said Mr. Hilpert. "Comparable-store sales for remodeled and
relocated stores opened for the 12 months ended October 30, 1999 are up 26.5
percent at 133 Foot Locker U.S. stores, 13.4 percent at 77 Lady Foot Locker
stores, 18.8 percent at 63 Kids Foot Locker stores and 48.2 percent at 34 Foot
Locker International stores."
Gross margins from adjusted operations, as a percentage of sales, improved 320
basis points to 27.2% for the quarter, reflecting better buying of merchandise
and fewer clearance sales compared to last year, offset by increased occupancy
costs and the continuing markdown of apparel inventories at Champs Sports to
ensure competitiveness during the upcoming holiday selling season.
"Although we expect the promotional retailing environment to continue, we are
very encouraged by our back-to-school sales momentum and market share gains,"
said Mr. Hilpert. "Our inventory levels are on plan and we are well positioned
for a strong holiday selling season."
Merchandise inventories of adjusted operations decreased 15% to $863 million
compared to $1,020 million a year ago, reflecting a 16% decrease in inventories
per square foot. The Company's improvement in managing its inventories, together
with a lower capital expenditures program and the proceeds expected from the
sale of non-core businesses, should significantly reduce its total debt
position, net of cash, by year-end. As the Company moves into the holiday
season, it expects aggregate inventories to continue to be below last year's
reported levels.
Selling, general and administrative expenses from adjusted operations, as a
percentage of sales, improved 630 basis points to 19.8% for the quarter. The
improvement reflects primarily a reduction in corporate and divisional costs and
expenses for marketing and advertising, logistics, salaries and wages, travel
and store opening expenses, as a result of having significantly fewer new store
openings this year versus the prior year.
The Company opened 26 stores and remodeled 44 stores during the quarter. The
Company also closed 33 stores to end the quarter with 4,640 stores from ongoing
operations in 15 countries in North America, Europe, Australia, and Asia.
Businesses held for sale, disposition or sold:
Afterthoughts, San Francisco Music Box, Foot Locker Outlets, Colorado,
Team Edition, Going To The Game, Randy River, Weekend Edition, Garden
Centers and Burger King Franchises.
DISCLOSURE REGARDING FORWARD-LOOKING STATEMENTS
This press release contains forward-looking statements, which reflect
management's current views of future events and financial performance. These
forward-looking statements are based on many assumptions and factors including
the effects of currency fluctuations, consumer preferences, economic conditions
worldwide and other factors detailed in the Company's filings with the
Securities and Exchange Commission. Any changes in such assumptions or factors
could produce significantly different results.
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The following adjusted results exclude 1999 restructuring charges and reflect
the disposition of several businesses (noted above) as if they had occurred at
the beginning of 1998.
VENATOR GROUP, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS - AS ADJUSTED
(In millions, except per share amounts)
<TABLE>
<CAPTION>
13 Weeks Ended 39 Weeks Ended
----------------------------------- ----------------------------------
(unaudited) October 30, 1999 October 31, 1998 October 30, 1999 October 31, 199
---------------- ---------------- ---------------- ---------------
<S> <C> <C> <C> <C>
Sales $1,068 $1,028 $3,000 $2,950
Costs and expenses:
Cost of sales 777 781 2,215 2,172
Selling, general and administrative
expenses 211 268 632 703
Depreciation and amortization 46 30 129 99
Interest expense, net 19 18 45 35
Other income (5) - (36) -
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1,048 1,097 2,985 3,009
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Adjusted income (loss) from operations before
income taxes 20 (69) 15 (59)
Income tax expense (benefit) 8 (30) 6 (30)
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Adjusted net income (loss) from operations $ 12 $ (39) $ 9 $ (29)
================ ================ ================ ===============
Diluted Adjusted Earnings Per Share:
Adjusted net income (loss) from operations $ 0.09 $(0.29) $ 0.07 $(0.21)
================ ================= ================ ================
Weighted-average common shares
outstanding assuming dilution 138.4 135.6 138.1 135.4
</TABLE>
SUPPLEMENTAL INFORMATION - AS ADJUSTED
<TABLE>
<CAPTION>
13 Weeks Ended 39 Weeks Ended
----------------------------------- ----------------------------------
(unaudited) October 30, 1999 October 31, 1998 October 30, 1999 October 31, 1998
---------------- ---------------- ---------------- ----------------
<S> <C> <C> <C> <C>
ADJUSTED SALES BY SEGMENT:
Global Athletic Group $ 971 $ 931 $ 2,748 $ 2,694
Northern Group 97 97 252 256
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Total $ 1,068 $ 1,028 $ 3,000 $ 2,950
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ADJUSTED OPERATING RESULTS BY SEGMENT:
Global Athletic Group $ 40 $ (15) $ 83 $ 72
Northern Group 1 (10) (21) (26)
---------------- ---------------- --------------- ---------------
Total $ 41 $ (25) $ 62 $ 46
================ ================ =============== ===============
</TABLE>
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The following are the reported results:
VENATOR GROUP, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS - AS REPORTED
(In millions, except per share amounts)
<TABLE>
<CAPTION>
13 Weeks Ended 39 Weeks Ended
------------------------------------ ------------------------------------
(unaudited) October 30, 1999 October 31, 1998 October 30, 1999 October 31, 1998
---------------- ---------------- ---------------- ----------------
<S> <C> <C> <C> <C>
Sales $ 1,178 $ 1,122 $ 3,320 $ 3,223
Costs and expenses:
Cost of sales 848 840 2,430 2,324
Selling, general and administrative
expenses 256 302 762 827
Depreciation and amortization 47 38 138 108
Restructuring charge 3 - 55 -
Interest expense, net 17 18 45 35
Other income (5) - (36) (19)
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1,166 1,198 3,394 3,275
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Income (loss) from continuing
operations before income taxes 12 (76) (74) (52)
Income tax expense (benefit) 5 (36) (29) (26)
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Income (loss) from continuing operations 7 (40) (45) (26)
Income (loss) from discontinued operations,
net of income tax expense (benefit) of
$6, $7 and $(14), respectively - 6 10 (26)
Loss on disposal of discontinued operations,
net of tax expense of $52 - (121) - (121)
---------------- ---------------- ---------------- ----------------
Net income (loss) $ 7 $ (155) $ (35) $ (173)
================ ================ ================ ================
Diluted Earnings Per Share:
Income (loss) from continuing operations $ 0.05 $ (0.29) $ (0.33) $ (0.19)
Income (loss) from discontinued operations - (0.85) 0.07 (1.08)
================ ================ ================ ================
Net income (loss) $ 0.05 $ (1.14) $ (0.26) $ (1.27)
================ ================= ================ ================
Weighted-average common shares
Outstanding assuming dilution 138.4 135.6 137.1 135.4
</TABLE>
SUPPLEMENTAL INFORMATION - AS REPORTED
<TABLE>
<CAPTION>
13 Weeks Ended 39 Weeks Ended
------------------------------------ ------------------------------------
(unaudited) October 30, 1999 October 31, 1998 October 30, 1999 October 31, 1998
---------------- ---------------- ---------------- ----------------
<S> <C> <C> <C> <C>
SALES BY SEGMENT:
Global Athletic Group $ 1,001 $ 945 $ 2,825 $ 2,730
Northern Group 97 97 252 256
All other 80 80 243 237
---------------- ---------------- ---------------- ----------------
Total $ 1,178 $ 1,122 $ 3,320 $ 3,223
================ ================ ================ ================
OPERATING RESULTS BY SEGMENT:
Global Athletic Group $ 35 $ (16) $ (4) $ 66
Northern Group 1 (10) (21) (26)
All other (4) (4) (2) 3
================ ================ ================ ================
Total $ 32 $ (30) $ (27) $ 43
================ ================ ================ ================
</TABLE>
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VENATOR GROUP, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(In millions)
<TABLE>
<CAPTION>
October 30, 1999 October 31, 1998
(unaudited) (unaudited)
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<S> <C> <C>
ASSETS
CURRENT ASSETS
Cash and cash equivalents $ 63 $ 147
Merchandise inventories 863 1,112
Net assets of discontinued operations 85 220
Assets held for disposal 179 -
Other current assets 174 136
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1,364 1,615
Property and equipment, net 882 916
Deferred tax assets 354 332
Other assets 251 282
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$ 2,851 $ 3,145
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LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES
Short-term debt $ 300 $ 371
Accounts payable 354 386
Accrued liabilities 237 266
Current portion of reserve for
discontinued operations 87 217
Current portion of long-term debt and
obligations under capital leases 208 20
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1,186 1,260
Long-term debt and
obligations under capital leases 313 508
Other liabilities 341 375
SHAREHOLDERS' EQUITY 1,011 1,002
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$ 2,851 $ 3,145
===================== ====================
</TABLE>
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