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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): August 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 August 18, 1999, the Registrant reported earnings for the second
quarter ended July 31, 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.
(Registrant)
Date: August 19, 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
Exhibit No. in Item 601
of Regulation S-K Description
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99 News Release dated August 18, 1999
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<PAGE> 1
Exhibit 99
NEWS RELEASE
CONTACT: Juris Pagrabs
Vice President, Investor
Relations
Venator Group, Inc.
(212) 553-7017
VENATOR GROUP REPORTS SECOND QUARTER RESULTS
NEW YORK, New York, August 18, 1999- Venator Group, Inc. (NYSE: Z) today
reported results for the 13-week period ended July 31, 1999. Sales for the 13
weeks were $1,063 million compared with $1,043 million in the year-earlier
period. For the 26-weeks sales were $2,142 million versus $2,101 million for the
same period a year ago. Comparable-store sales for both the quarter and
year-to-date periods were flat.
As previously announced, the Company is exiting eight non-core businesses.
Excluding the impact of this restructuring charge (noted below) and the
operating losses of these businesses totaling $76 million ($46 million
after-tax), the Company reported second quarter income from continuing
operations of $5 million, or $0.04 per share, versus $10 million, or $0.07 per
share, a year ago. For the first six months of 1999, the Company reported income
from continuing operations (excluding the charge and operating losses noted
above) of $3 million, or $0.02 per share, compared with $23 million, or $0.17
per share, last year.
INCLUDING THE RESTRUCTURING, THE cOMPANY REPORTED A NET LOSS FOR THE SECOND
QUARTER OF $31 MILLION, OR $0.23 PER SHARE, AND A NET LOSS OF $42 MILLION, OR
$0.31 PER SHARE, FOR THE FIRST SIX MONTHS OF 1999. THE SECOND QUARTER NET LOSS
INCLUDES $10 MILLION, OR $0.07 PER SHARE, OF INCOME FROM DISCONTINUED OPERATIONS
REFLECTING FAVORABLE RESULTS TO DATE IN THE DISPOSITION OF SPECIALTY FOOTWEAR
PROPERTIES.
"While the results of the second quarter reflect the impact of the strategic
decision to dispose of non-core businesses that were previously announced, we
are encouraged to see improving athletic footwear trends, particularly at Foot
Locker Worldwide, and most recently at Champs Sports," stated Dale Hilpert,
President and Chief Executive Officer. "Although the environment continues to be
competitive, exclusive and proprietary product, such as the Tuned Air running
shoe and Uptempo basketball shoe, continues to drive our sales."
"Sales performance at remodeled and relocated stores continues to be very
encouraging," continued Mr. Hilpert. "Comparable-store sales for remodeled and
relocated stores opened during 1998 through the second quarter of 1999 are up
19.2 percent at Foot Locker U.S., 9.6 percent at Lady Foot Locker, 17.4 percent
at Kids Foot Locker, 36.0 percent at Foot Locker International and 51.3 percent
at Afterthoughts."
Gross margins (excluding the inventory charge noted above), as a percentage of
sales, declined 270 basis points to 26.7% for the quarter, reflecting primarily
increased occupancy costs relating to new real estate compared to last year.
While gross margins, excluding occupancy costs, during the quarter improved at
the Northern Group and Afterthoughts, they declined at the Athletic Group.
Continued competitive pressure negatively impacted athletic gross margins,
particularly at Champs Sports, as inventories were aggressively marked down to
enhance its competitiveness during the upcoming back-to-school and holiday
selling periods.
Merchandise inventories were below plan, decreasing 18% to $812 million (at
cost) compared to $995 million a year ago, reflecting a 26% decrease in
inventories per square foot. The Company's improvement in managing its
inventories, together with a lower capital expenditure program, reduced
short-term debt, net of
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cash, by $184 million compared to last year. As the Company moves into the fall
and winter seasons, it expects aggregate inventories to continue to be below
last year's reported levels.
Selling, general and administrative expenses, as a percentage of sales,
decreased 90 basis points to 23.4% for the period, reflecting continued tight
cost controls at both the corporate and divisional levels. Included in selling,
general and administrative expenses is approximately $20 million relating to the
eight businesses.
During the quarter the Company recorded in other income $23 million of gains
resulting primarily from the sale of two properties and recognized $2 million of
the deferred gain resulting from the 1998 sale and lease-back of its former
corporate headquarters building. This is in addition to the $5 million of
deferred gain relating to the building recorded in the first quarter. This
compares to other income of $19 million recorded in the first six months a year
ago, which resulted from the sale of its former six-store nursery chain.
The Company opened 49 stores and remodeled 82 stores during the quarter. The
Company also closed 83 stores to end the quarter with 5,915 stores in 15
countries in North America, Europe, Australia, and Asia.
Details of the restructuring charge:
o Restructuring charges of $52 million ($32 million after-tax)
associated primarily with leasehold and real estate disposition
expenses.
o Inventory markdowns of $12 million ($7 million after-tax), which are
included in cost of sales.
o Quarterly and six months after-tax operating losses from the eight
businesses totaling $7 million ($0.05 per share) and $16 million
($0.12 per share), respectively.
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
world-wide 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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VENATOR GROUP, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
(In millions, except per share amounts)
<TABLE>
<CAPTION>
13 Weeks Ended 26 Weeks Ended
---------------------------------- ---------------------------------
(unaudited) July 31, 1999 August 1, July 31, 1999 August 1,
1998 1998
--------------- --------------- -------------- ---------------
<S> <C> <C> <C> <C>
Sales $1,063 $1,043 $2,142 $2,101
Costs and expenses:
Cost of sales * 791 736 1,582 1,484
Selling, general and
administrative 249 254 506 525
expenses
Depreciation and amortization 46 36 91 70
Restructuring charge 52 - 52 -
Interest expense, net 17 7 28 17
Other income (25) - (31) (19)
---------------- ---------------- ---------------- ----------------
1,130 1,033 2,228 2,077
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Income (loss) from continuing
operations before income taxes (67) 10 (86) 24
Income tax expense (benefit) (26) 4 (34) 10
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Income (loss) from continuing operations (41) 6 (52) 14
Income (loss) from discontinued operations,
net of income tax expense (benefit)
of $7, $(11), $7 and $(20), respectively
10 (19) 10 (32)
---------------- ---------------- ---------------- ----------------
Net loss $ (31) $ (13) $ (42) $ (18)
================ ================ ================ ================
Diluted Earnings Per Share:
Income (loss) from continuing operations $(0.30) $ 0.04 $ (0.38) $ 0.10
Income (loss) from discontinued operations
0.07 (0.13) 0.07 (0.23)
================ ================ ================ ================
Net loss $(0.23) $(0.09) $ (0.31) $(0.13)
================ ================ ================ ================
Weighted-average common shares
Outstanding assuming dilution 137.3 136.0 137.0 136.2
</TABLE>
* Includes $12 million for inventory markdowns related to businesses held for
disposal for both the 13 and 26 weeks ended July 31, 1999.
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VENATOR GROUP, INC.
SUPPLEMENTAL INFORMATION
(In millions)
<TABLE>
<CAPTION>
13 Weeks Ended 26 Weeks Ended
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(unaudited) July 31, 1999 August 1, 1998 July 31, 1999 August 1, 1998
--------------- ---------------- ---------------- ----------------
<S> <C> <C> <C> <C>
SALES BY SEGMENT:
Athletic Group $ 874 $ 870 $1,788 $1,769
Northern Group 86 85 155 159
All Other 52 45 102 88
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1,012 1,000 2,045 2,016
Disposed and held for disposal 51 43 97 85
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Total $1,063 $1,043 $2,142 $2,101
=============== ================ ================ ================
OPERATING RESULTS BY SEGMENT:
Athletic Group $ 14 $ 38 $ 43 $ 87
Northern Group (6) (7) (22) (16)
All Other 5 - 10 (2)
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13 31 31 69
Disposed and held for disposal (11) (7) (26) 4
=============== ================ ================ ================
Total $ 2 $ 24 $ 5 $ 73
=============== ================ ================ ================
</TABLE>
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VENATOR GROUP, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(In millions)
<TABLE>
<CAPTION>
July 31, 1999 August 1, 1998
(unaudited) (unaudited)
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<S> <C> <C>
ASSETS
CURRENT ASSETS
Cash and cash equivalents $ 66 $ 1
Merchandise inventories 812 995
Net assets of discontinued operations 105 621
Assets held for disposal 101 -
Other current assets 164 217
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1,248 1,834
Property and equipment, net 941 787
Deferred tax assets 354 334
Other assets 256 280
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$ 2,799 $ 3,235
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LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES
Short-term debt $ 332 $ 451
Accounts payable and accrued liabilities 599 605
Current portion of long-term debt and
obligations under capital leases 206 20
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1,137 1,076
Long-term debt and
obligations under capital leases 313 509
Other liabilities 349 387
SHAREHOLDERS' EQUITY 1,000 1,263
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$ 2,799 $ 3,235
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</TABLE>
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