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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): March 8, 2000
VENATOR GROUP, INC.
(Exact name of registrant as specified in its charter)
New York No. 1-10299 13-3513936
(State or other jurisdiction (Commission (IRS Employer
of incorporation) File Number) Identification No.)
233 Broadway, New York, New York 10279-0003
(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 March 8, 2000, the Registrant reported sales and operating results
for the quarter and full year ended January 29, 2000. (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: March 10, 2000 By: /s/ Bruce L. Hartman
--------------------
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
<S> <C>
99 News Release dated March 8, 2000
</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 FOURTH QUARTER RESULTS
-- QUARTERLY ADJUSTED PRE-TAX INCOME FROM OPERATIONS UP $21 MILLION --
-- ADJUSTED GROSS MARGINS IMPROVE 670 BASIS POINTS OVER LAST YEAR --
-- OPERATING EXPENSES IMPROVE 190 BASIS POINTS --
NEW YORK, New York, March 8, 2000 - Venator Group, Inc. (NYSE: Z) today reported
that sales from adjusted operations for the 13 weeks ended January 29, 2000 were
$1,160 million compared with $1,115 million in the year-earlier period,
reflecting a comparable-store sales increase of 5.6 percent. For the 52 weeks,
sales from adjusted operations were $4,061 million versus $3,972 million for the
same period a year ago, reflecting a comparable-store sales increase of 2.1
percent.
Adjusted income from operations before taxes rose $21 million to $24 million for
the quarter ended January 29, 2000, which excludes the $88 million, or $0.39 per
share, restructuring charge associated with the previously announced accelerated
store closings and corporate and divisional overhead consolidations. Adjusted
income from operations for the quarter also excludes $2 million of operating
losses relating to the accelerated store closings, which was approximately $2
million better than originally expected.
Adjusted net income from operations was $15 million, or $0.11 per share, for the
quarter compared to $27 million, or $0.20 per share, a year ago, which included
an $0.18 per share one-time tax benefit. Results of both periods include real
estate gains and asset impairment charges. Excluding these items and the tax
credit, adjusted net income per share would have been $0.12 for the quarter
compared to a loss of $0.22 a year ago. The real estate gains for the quarter
totaled $10 million and $82 million in 1998. The asset impairment charge for
ongoing businesses for the quarter totaled $13 million and related primarily to
underperforming stores. This compares to a $29 million asset impairment charge
in 1998.
For the year, adjusted income from operations before taxes and real estate gains
increased $127 million to $20 million from a loss of $107 million in the
previous year. Adjusted net income from operations for the year increased 273
percent to $41 million, or $0.30 per share, from $11 million, or $0.08 per share
a year ago.
Results are presented on an adjusted basis to facilitate comparison. Adjusted
comparisons exclude the operations and disposition of non-core businesses noted
below, the 1999 restructuring charges and operations of the accelerated store
closings for all periods presented. The reported results are attached to this
press release.
"We have made significant progress in fiscal 1999 to position Venator Group as a
more focused company with enhanced capabilities poised to leverage our
leadership position in the athletic industry," stated Dale W. Hilpert, Venator
Group's President and Chief Executive Officer. "We are now providing our
mall-based customers with merchandise alternatives that will drive significant
improvements in results starting in fiscal 2000." Recent accomplishments that
are expected to provide opportunities in fiscal 2000 included:
- - Reenergized the athletic footwear and apparel business, particularly at
Foot Locker, generating significant comparable-store sales gains and
market share increases;
- - Sold Afterthoughts and the Colorado Group in Australia, generating over
$280 million in net proceeds;
- - Reduced debt, net-of-cash to $327 million from $574 million last year,
significantly improving the financial condition of the Company;
- - Enhanced controls over inventory receipts and implemented M2K, our
integrated and standardized merchandising process that has improved
allocations by store;
- - Opened a new state-of-the-art fulfillment center in Europe and
consolidated the North American athletic distribution facilities;
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- - Announced the disposal of eight non-core businesses and the closing of
358 unproductive stores;
- - Increased sales of Footlocker.com, our direct-to-customer business,
21.9 percent to $195 million, which included $13 million of
Internet-only sales;
- - Realigned and strengthened key management positions throughout the
organization and reduced divisional and corporate overhead through
consolidation to focus on our athletic businesses.
Gross margins from adjusted operations, as a percentage of sales, improved 670
basis points to 27.6 percent for the quarter and 160 basis points to 26.3
percent for the year, reflecting better buying of merchandise and fewer
clearance sales compared to last year, partially offset by increased occupancy
costs and the continuing markdown of apparel inventories at Champs Sports to
ensure competitiveness in 2000.
"While the fourth quarter environment remained promotional, we are encouraged
with our ability to generate significant improvements in gross margin
contributions through enhanced product offerings at full margin, including
proprietary brand and value priced merchandise," said Mr. Hilpert. "Sales trends
last quarter and for the first six weeks of fiscal 2000 suggest that this
strategy, together with a very focused and deep merchandise assortment, is
making a real impact on our business allowing us to generate improved sales and
market share gains."
"We ended the year with our inventories being on plan and its aging improved,
which positions us well for the start of fiscal 2000," said Mr. Hilpert.
Merchandise inventories decreased 4 percent to $739 million compared to $768
million from ongoing operations a year ago, reflecting a 3 percent decrease in
inventories per square foot. The Company's improvement in managing its
inventories, together with a focused capital expenditures program and the
proceeds received from the sale of non-core businesses, significantly reduced
total debt, net of cash, at year-end. As of March 7, 2000, the Company retired
$109 million of its 7 percent $200 million debentures payable June 2000 and has
allocated the funds to purchase or retire the remaining balance.
Selling, general and administrative expenses from adjusted operations, as a
percentage of sales, improved 190 basis points to 21.8 percent for the quarter
and 270 basis points to 20.2 percent for the year after funding Internet
investment costs of $2.7 million for the quarter and $4.3 million for the year.
The improvement reflects the successful implementation of cost reduction
initiatives, primarily for corporate and divisional costs and expenses for
marketing and advertising, logistics, salaries and wages and travel.
"We are also encouraged with the progress we have made with our repositioning of
the Northern Group," said Mr. Hilpert. "During the quarter we exited 208
underperforming stores, significantly reduced our inventories and downsized and
realigned the management team to provide a narrower focus, which resulted in
quarterly adjusted operating profits increasing to $20 million, $12 million
better than last year. Fiscal 2000 is off to a strong start, validating our
progress towards our objective of returning the division to a historical
operating profit of 8 to 10 percent."
The Company opened 160 stores and remodeled 197 stores during fiscal 1999. The
Company also closed 306 stores to end the year with 4,529 stores from ongoing
operations in 14 countries in North America, Europe and Australia.
Businesses disposed or held for disposal:
Afterthoughts, San Francisco Music Box, Foot Locker Outlets, Colorado,
Team Edition, Going To The Game, Randy River, Weekend Edition, Garden
Centers, Burger King Franchises, Foot Locker Japan, Northern Getaway US
and Northern Elements US.
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 the disposition and operations of several
businesses (noted above) and exclude the 1999 restructuring charges of the
accelerated store closings for all periods presented.
VENATOR GROUP, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS - AS ADJUSTED
(In millions, except per share amounts)
<TABLE>
<CAPTION>
13 Weeks Ended 52 Weeks Ended
----------------------------------- ----------------------------------
January 29, 2000 January 30, January 29, January 30,
(unaudited) 1999 2000 1999
----------------- --------------- --------------- ----------------
<S> <C> <C> <C> <C>
Sales $1,160 $1,115 $4,061 $3,972
Costs and expenses:
Cost of sales 840 882 2,994 2,989
Selling, general and administrative 253 264 820 908
expenses
Depreciation and amortization 41 39 170 138
Interest expense, net 12 9 57 44
Other income (10) (82) (46) (82)
----------------- --------------- --------------- ----------------
1,136 1,112 3,995 3,997
----------------- --------------- --------------- ----------------
Adjusted income (loss) from operations before
income taxes 24 3 66 (25)
Income tax expense (benefit) 9 (24) 25 (36)
----------------- --------------- --------------- ----------------
Adjusted net income from operations $ 15 $ 27 $ 41 $ 11
================= =============== =============== ================
Diluted Adjusted Earnings Per Share:
Adjusted net income from operations $ 0.11 $ 0.20 $ 0.30 $0.08
================= =============== =============== ================
Weighted-average common shares
outstanding assuming dilution 138.2 135.6 138.2 135.9
</TABLE>
SUPPLEMENTAL INFORMATION - AS ADJUSTED
<TABLE>
<CAPTION>
13 Weeks Ended 52 Weeks Ended
----------------------------------- ----------------------------------
January 29, January 30, January 29, January 30,
(unaudited) 2000 1999 2000 1999
---------------- ---------------- ---------------- ----------------
<S> <C> <C> <C> <C>
ADJUSTED SALES BY SEGMENT:
Global Athletic Group:
Retail Stores $ 966 $ 931 $ 3,506 $ 3,441
Direct to Customer 56 44 195 160
---------------- ---------------- ---------------- ----------------
1,022 975 3,701 3,601
Northern Group 138 140 360 371
---------------- ---------------- ---------------- ----------------
Total $ 1,160 $ 1,115 $ 4,061 $ 3,972
================ ================ ================ ================
ADJUSTED OPERATING RESULTS BY SEGMENT:
Global Athletic Group:
Retail Stores $ 30 $ (48) $ 117 $ 30
Direct to Customer - - 3 2
---------------- ---------------- ---------------- ----------------
30 (48) 120 32
Northern Group 20 8 16 (5)
---------------- ---------------- ---------------- ----------------
Total $ 50 $ (40) $ 136 $ 27
================ ================ ================ ================
</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>
(unaudited) 13 Weeks Ended 52 Weeks Ended
---------------------------------- ----------------------------------
January 29, January 30, January 29, January 30,
2000 1999 2000 1999
---------------- --------------- --------------- ----------------
<S> <C> <C> <C> <C>
Sales $1,327 $1,332 $4,647 $4,555
Costs and expenses:
Cost of sales 951 1,009 3,381 3,333
Selling, general and administrative 319 339 1,078 1,166
expenses
Depreciation and amortization 44 44 182 152
Restructuring charge 89 - 144 -
Interest expense, net 12 9 57 44
Other income (187) (82) (223) (101)
---------------- --------------- --------------- ----------------
1,228 1,319 4,619 4,594
---------------- --------------- --------------- ----------------
Income (loss) from continuing
operations before income taxes 99 13 28 (39)
Income tax expense (benefit) 39 (16) 11 (42)
---------------- --------------- --------------- ----------------
Income from continuing operations 60 29 17 3
Loss from discontinued operations, net of income tax
benefit of $14 - - - (26)
Income (loss) on disposal of discontinued
operations, net of income tax expense of $8, $5,
$14 and $57, respectively 13 8 23 (113)
Cumulative effect of accounting change, net
of income tax expense of $5 million - - 8 -
Net income (loss) $ 73 $ 37 $ 48 $ (136)
================ =============== =============== ================
Diluted Earnings Per Share:
Income from continuing operations $ 0.44 $ 0.21 $ 0.13 $ 0.02
Income (loss) from discontinued operations 0.09 0.06 0.16 (1.02)
Cumulative effect of accounting change - - 0.06 -
---------------- --------------- --------------- ----------------
Net income (loss) $ 0.53 $ 0.27 $ 0.35 $(1.00)
================ =============== =============== ================
Weighted-average common shares
Outstanding assuming dilution 138.2 135.6 138.2 135.9
</TABLE>
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VENATOR GROUP, INC.
SUPPLEMENTAL INFORMATION - AS REPORTED
(In millions)
<TABLE>
<CAPTION>
13 Weeks Ended 52 Weeks Ended
----------------------------------- ----------------------------------
January 29, January 30, January 29, January 30,
(unaudited) 2000 1999 2000 1999
---------------- ---------------- ---------------- ----------------
<S> <C> <C> <C> <C>
SALES BY SEGMENT:
Global Athletic Group:
Retail Stores $ 1,019 $ 979 $ 3,705 $ 3,593
Direct to Customer 56 44 195 160
---------------- ---------------- ---------------- ----------------
1,075 1,023 3,900 3,753
Northern Group 155 159 407 415
Other 97 150 340 387
---------------- ---------------- ---------------- ----------------
Total $ 1,327 $ 1,332 $ 4,647 $ 4,555
================ ================ ================ ================
OPERATING RESULTS BY SEGMENT:
Global Athletic Group:
Retail Stores $ 21 $ (54) $ 14 $ 10
Direct to Customer - - 3 2
---------------- ---------------- ---------------- ----------------
21 (54) 17 12
Northern Group (42) - (63) (26)
Other 176 24 174 27
---------------- ---------------- ---------------- ----------------
Total $ 155 $ (30) $ 128 $ 13
================ ================ ================ ================
</TABLE>
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VENATOR GROUP, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(In millions)
<TABLE>
<CAPTION>
January 29, January 30,
2000 1999
(unaudited) (audited)
---------------- ----------------
ASSETS
<S> <C> <C>
CURRENT ASSETS
Cash and cash equivalents $ 162 $ 193
Merchandise inventories 739 837
Net assets of discontinued operations 13 97
Assets held for disposal 61 -
Other current assets 114 148
---------------- ----------------
1,089 1,275
Property and equipment, net 809 974
Deferred tax assets 317 358
Other assets 300 269
---------------- ----------------
$ 2,515 $ 2,876
================ ================
LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES
Short-term debt $ 71 $ 250
Accounts payable 233 245
Accrued liabilities 254 285
Current portion of reserve for
restructuring and discontinued operations 113 178
Current portion of long-term debt and
obligations under capital leases 106 6
---------------- ----------------
777 964
Long-term debt and
obligations under capital leases 312 511
Other liabilities 287 363
SHAREHOLDERS' EQUITY 1,139 1,038
---------------- ----------------
$ 2,515 $ 2,876
================ ================
</TABLE>
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