Financial AnalysisTerry Henderson

PRT 466April 21, 2016

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Contents

Company Profile ……………………………………………………………………………… 3

Economic Issues ……………………………………………………………………………… 4

Revenue and Expenditure Summary …………………………………………………………. 5

Assets and Liabilities ………………………………………………………………………… 6

Financial Analysis ………………………………………………………………………...... 7-8

References ……………………………………………………………………………………. 9

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Company Profile

In 1879, Frank Woolworth was able to open his first Great Five Cent Store in Utica, New York, about 4 hours away from New York City. Later on, Woolworth was able to incorporate his business to be known as F.W. Woolworth & Co. As time went on, sales kept increasing and Woolworth was able to open up the first Woolco as well. In 2001 the company changed the name to Foot Locker Inc. and has been running strong ever since. Foot Locker’s vision is “To be the leading global retailer of athletically inspired shoes and apparel.” Listed out is a few of their goals that they are aiming for in the future: be a top quartile performer, sales $10 billion, sales per gross square foot $600, Earnings before interest and taxes 12.5%, net income 8.5%, return on invested capital 17%, inventory turnover 3 times.

Today Foot Locker is a well-known store around the world that helps people that love sneakers (sneakerheads) and others obtain their favorite shoe or athletic apparel. There are a total of 3,546 stores located across the world and 44,000 associates come to work everyday to help their store maintain the success that they have been having. Foot Locker offers some of the best athletic gear that there is on the market. Shoe brands like Air Jordan, Nike, Adidas, Puma, Under Armour and many more are all available at each Foot Locker store. As an organization, they not only help to community with athletic gear, but they also host charitable events and other programs to help the community. An example of a service to the community, Foot Locker awarded $400,000 in college scholarships

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Economic Issues

One of the economic issues that really gives the sneaker business a bad name is their troubles dealing with crime. Every year, different shoes are released to the public and at shoe stores like Foot Locker, anything is likely to happen when someone walks out of the store with a pair of high-priced sneakers. In the past 20 years, sneaker related crimes has gone up a huge amount.

To the left, is a picture of a Foot Locker store in Atlanta, Georgia, that was raided and smashed by 15 burglars (AJC, 2013). Crimes like this hurts Foot Locker’s name and alters the awareness around the community for the time being. They may have to pay for any repercussions but at the end of the day it does not affect their sales (Morningstar).

Another economic issue that Foot Locker has to deal with is other people out there selling fake products. Shoes are so high in demand right now, that it has gone to the extent that people out on the streets and behind laptops will sell fake shoes and get away with doing so. The reason why this ends up hurting Foot Locker is because when a shoe comes out on a specific date, some of their usual customers will end up buying from someone who sells fake shoes because they are all sold out at the Foot Locker location.

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Revenue and Expenditure Summary

In the year of 2014, Foot Locker was able to have a phenomenal year resulting in total revenue of $6,505,000,000 and total expenses to be $1,467,000,000. In the following year of 2015, Foot Locker was still able to have a large increase on sales resulting in total revenue for that year to be $7,151,000,000 with expenses of $1,565,000,000 in addition to losses.

Revenues Expenses0

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8000

Revenues & Expenses (Millions of Dollars)

2014 2015

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Assets and Liabilities Summary

In the year of 2014, Foot Locker total assets were $3,487,000,000 and liabilities were $991,000,000. The following year in 2015 their assets were $3,577,000,000 and liabilities were $1,081,000,000.

Assets Liabilites0

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Assets & Liabilites

2014 2015

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Financial Analysis

Current = Current Assets/ Current Liabilities

This is the ability of the business to meet short-term financial obligations including their sale of inventory. The numbers shown above are good for the industries standard. In 2014 the current ratio was 3.75 and 3.53 in 2015. This means that footlocker is meeting their short-term financial obligations with extra money leftover. Some potential threats would be if these numbers started to drop finding ways to continue to cover their short-term needs.

Year Ratio Dividend2014 $2,350,000,000/$626,000,000 3.752015 $2,456,000,000/$696,000,000 3.53

Liability to Net Worth = Liabilities/Equity

The dividend between 2014 to 2015 increased by a little over .05, this was due to the increase of liabilities. The equity stayed the same over the two year spanned. In the future they need to decrease the liabilities to have a lower dividend on the year.

Year Ratio Dividend2014 ($626,000,000 +

$991,000,000)/$2,496,000,000.648

2015 ($696,000,000 + $1,081,000,000)/$2,496,000,000

.712

Assets to Sales = Total Assets/Total Sales

Well the asses to sales which is a ratio you want to be higher because that means you have performing company. Unfortunately for Foot Locker their ratio

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went down. In the future they need to increase the dividend to have a better performing overall year.

Year Ratio Dividend2014 $2,350,000,000/$867,000,000 2.712015 $2,456,000,000/$967,000,000 2.54

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References

"Fake or Authentic Sneakers: Pick the Right Website! - Hoopsvibe." Hoopsvibe. 2013. Web. 21 Apr. 2016.

Beckett, Andy. "Foot Locker: The Brand That Spells Trouble." The Guardian. Guardian News and Media, 2012. Web. 21 Apr. 2016.

Person, and Dennis Tang. "Your Sneakers or Your Life: 25 Years Later, Has Sneaker Crime Changed?" Complex. Web. 21 Apr. 2016.

"Foot Locker A Bad Fit For This Economy (FL) | Investopedia." Investopedia. 2008. Web. 21 Apr. 2016.

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