2022
ANNUAL
REPORT
ABOUT THE COMPANY
Foot Locker, Inc. is a leading footwear and apparel retailer that unlocks the “inner sneakerhead”
in all of us. With approximately 2,700 retail stores in 29 countries across North America, Europe,
Asia, Australia, and New Zealand, and a franchised store presence in the Middle East and Asia,
Foot Locker, Inc. has a strong history of sneaker authority that sparks discovery and ignites the
power of sneaker culture through its portfolio of brands, including Foot Locker, Kids Foot Locker,
Champs Sports, WSS, and atmos. For more information visit footlocker-inc.com.
TABLE OF CONTENTS
Letter to Shareholders 1
Financial Highlights 3
Form 10-K 9
Board of Directors, Executive
Leadership, Corporate Leadership,
Divisional Leadership, and Corporate
Information IBC
This report contains forward-looking statements within the meaning of the U.S. securities laws. Other than statements of historical facts, all statements that address activities, events, or developments that the Company anticipates will or may occur in the future, including, but not limited to, such things as future capital expenditures, expansion, strategic plans, financial objectives, dividend payments, stock repurchases, growth of the Company’s business and operations, including future cash flows, revenues, earnings, and other such matters, are forward-looking statements. These forward-looking statements are based on many assumptions and factors, which are detailed in the Company’s filings with the U.S. Securities and Exchange Commission.These forward-looking statements are based largely on our expectations and judgments and are subject to a number of risks and uncertainties, many of which are unforeseeable and beyond our control. For additional discussion on risks and uncertainties that may affect forward-looking statements, see “Risk Factors” disclosed in the 2022 Annual Report on Form 10-K. Any changes in such assumptions or factors could produce significantly different results. The Company undertakes no obligation to update forward-looking statements, whether as a result of new information, future events, or otherwise. MESSAGE FROM OUR CEO
Together, we will leverage our assets to elevate the role of our
retail brand and team members, simplify our business to focus
on “all things sneakers” and invest in our infrastructure and
digital capabilities to drive the next 50 years of growth.”
DEAR FELLOW SHAREHOLDERS:
2022 was a year of significant change to our business, leadership team, and the
Company’s direction. While positioning Foot Locker, Inc. for the future, we also remained
focused on execution, and the team delivered results much better than we expected at
the beginning of the year.
Since beginning my journey as your CEO, I have been continually impressed by our
people’s passion for our customers and the category. I am incredibly honored to lead
this iconic company that has shaped sneaker culture for so many years. Next year,
we will celebrate the Foot Locker brand’s 50th anniversary – and today, we are
positioning ourselves for the next 50 years of growth. To launch that next half-century,
we recently introduced our new “Lace Up” plan built upon Foot Locker’s right to win
in the large and growing sneaker market through our brand positioning as the best-
known sneaker retailer and the capabilities we will build to become a more digital and
omni-channel retailer.
LACING UP FOR THE FUTURE
We intend to simplify, invest in, and grow our business with a clear vision and strategy
to achieve by 2026 over $9.5 billion of annual revenue and 8.5-9% EBIT margin. 2023
will be a reset year for Foot Locker, Inc., with sustainable growth in 2024 and beyond,
supported by new strategic imperatives:
u Expand Sneaker Culture. Foot Locker, Inc. plays a distinct
role in sneaker culture. We will harness our multi-branded
leadership position to expand sneaker culture by serving
more sneaker occasions, providing more sneaker choice,
and driving greater sneaker distinction to tap into the
sneakerhead in all of us.
u Power Up the Portfolio. We will create more distinction
among our banners, including relaunching the
Foot Locker brand and transforming our real estate
footprint by opening new formats, shifting off-mall,
and closing underperforming stores.
MARY N. DILLON
President and Chief Executive Officer
1
u Deepen Our Relationships with Customers. We have only begun
to realize the value of our FLX loyalty program. We will maximize
our program to attract a broader range of customers and better
understand and serve them by leveraging our customer data.
u Be Best-in-Class Omni. With an opportunity to increase our digital
mix, we will accelerate our omnichannel offense by creating key
enhancements to the customer sneaker journey. We will generate
powerful and seamless touchpoints across in-store, desktop,
and mobile experience. A multi-year investment in our technology
systems will propel discovery and engagement through a more
personalized and dynamic pre-purchase experience and drive
connectivity among channels.
Our “Lace Up” Plan is designed to create value for all of our stakeholders – customers, team members, the
communities we serve, and investors – and we are incredibly excited to begin executing against this vision.
2022 STRATEGIC HIGHLIGHTS
Even as we developed our new growth plans, we continued in 2022 to execute across dimensions vital to
our future: simplifying our banner portfolio, diversifying our brand mix, investing in distribution capabilities,
and opening new formats, including an ongoing shift to a more off-mall store footprint.
• Simplifying our Operations. We made significant progress to simplify
our operations to deliver sharper focus on our core assets. This includes
the sale of our Team Sales business and the wind down of our Eastbay
consumer business as well as the Sidestep banner in Europe. Furthermore,
we announced in early 2023 our growth plans in Asia by focusing on the
licensing business model to continue that region’s progress. We will convert
our owned stores in Singapore and Malaysia to a license model, while closing
stores in Macau and Hong Kong.
• Diversifying our Brand Mix. Non-Nike sales in our core banners grew
about 10% in 2022 as we continue to optimize our assortment to serve
consumers’ appetite for choice. As we diversify our portfolio across more
brands, we are also revitalizing our relationship with Nike to return to growth
beginning in 2024, further strengthening our offering for consumers.
• Investing in Distribution. We opened our newest distribution facility in Reno, Nevada, establishing a
three-hub regional system in the United States that allows us to cover over 95% of the country on a two-
day basis versus under 40% just three years ago.
• Opening New Formats and Shifting Off-Mall. We opened 53 new format stores in 2022, including
our Power and Community formats in 2022, boosting our new format count to 173 on the way to
attaining our target of over 400 by 2026. Our Off-Mall percent of North America square footage
increased to 34%, up from approximately 30% in 2021.
2
FINANCIAL HIGHLIGHTS
2018
2019
2020
2021
2022
Sales** ...............................................................................
$ 7,939
$ 8,005
$ 7,548
$ 8,958
$ 8,747
Sales per Gross Square Foot .............................................
$ 504
$ 510
$ 417
$ 540
$ 548
Adjusted EBIT** ...........................................................
$ 741
$ 722
$ 428
$ 1,049
$ 692
Adjusted EBIT Margin ..................................................
9.3%
9.0%
5.7%
11.7%
7.9%
Adjusted Net Income** ................................................
$ 547
$ 538
$ 296
$ 755
$ 473
Adjusted Net Income Margin .......................................
6.9%
6.7%
3.9%
8.4%
5.4%
Adjusted Diluted EPS ..................................................
$ 4.71
$ 4.93
$ 2.81
$ 7.27
$ 4.95
Return on Invested Capital...........................................
12.0%
12.5%
8.6%
16.4%
9.2%
Cash and Cash Equivalents, Net of Debt** .........................
$ 767
$ 785
$ 1,570
$ 347
$
84
* Results in this table and throughout pages 1 through 8 refer to non-GAAP, adjusted figures.
See pages 19-21 of Form 10-K for the reconciliation of GAAP to non-GAAP adjusted results.
** In Millions
TOTAL SALES in billions
$7.2
$7.4
$6.5
$7.8
$7.8
$7.9
$8.0
$7.5
$9.0
$8.7
EARNINGS PER SHARE
adjusted diluted EPS (non-GAAP)
$7.27
$4.29
$3.58
$2.87
$4.82
$4.93
$4.71
$4.95
$3.99
$2.81
2013
2014
2015
2016
2017
2018
2019
2020
2021
2022
2013
2014
2015
2016
2017
2018
2019
2020
2021
2022
SALES PER SQUARE FOOT
RETURN ON INVESTED CAPITAL %
$504
$515
$495
$504
$510
$490
$460
$540
$548
$417
15.0
15.8
15.1
14.1
16.4
12.0
12.5
11.0
8.6
9.2
2013
2014
2015
2016
2017
2018
2019
2020
2021
2022
2013
2014
2015
2016
2017
2018
2019
2020
2021
2022
3
By region, EMEA and Asia-Pacific recorded the
most significant growth, with EMEA sales up
in the high-teens in local currency, reflecting
strong tourist spend and returns on our
investments in key markets.”
While we look to the future, I am proud of the results our team achieved in 2022
amid significant changes to our business. Following 2021’s record performance,
total sales in 2022 increased another 0.9%, excluding the impact from changes in
foreign exchange rates. Including foreign exchange fluctuations, our reported total
sales declined by 2.4%.
Overall comparable-store sales declined 1.9% for the year because of tough
comparisons early in the year related to the federal fiscal stimulus in 2021.
While that dynamic produced declines in the first half, we registered second-half
improvement, including a strong 4.2% comp increase in the fourth quarter driven
by growth across all regions.
By region, EMEA and Asia-Pacific recorded the most significant growth, with EMEA
sales up in the high-teens in local currency, reflecting strong tourist spend and returns
on our investments in key markets. Asia-Pacific climbed nearly 60% in local currency,
driven by our acquisition of atmos, the loosening of COVID-19 restrictions, as well as
our investments in store, brand, and community experience. In North America, Foot
Locker and Kids Foot Locker sales for the year were flat to down slightly, although
sales rose for both in the fourth quarter. Champs Sports sales fell by low-double digits
as we reposition the banner, and WSS continued to grow stores by nearly 20%.
The promotional environment accelerated through 2022 as inventory normalized
compared to the incredibly lean levels across the industry throughout 2021. As a
result, our gross margin declined by 250 basis points from the high levels historically
achieved in the prior year. We delevered SG&A by just over 100 basis points as
inflation pressures more than offset the early stages of our cost optimization program.
As a result, adjusted EBIT margins fell to 7.9% in 2022 from the
five-year high of 12.5% reached in 2021. Earnings on an adjusted
basis were $4.95 per share, down from the record $7.27 per
share in 2021 but in line with 2019 levels.
4
BUILDING OUR TEAM FOR THE FUTURE
In November, we strengthened our organization by separating our commercial
activities from our supply chain and IT functions. This better positions Foot Locker
to support growth and enhance operating efficiency as we invest in unleashing the
power of our leading retail banners.
On the commercial side, Frank Bracken was named Executive Vice President and Chief
Commercial Officer, which gives sharper focus for leading Foot Locker’s global retail banners,
merchandising, and marketing, as well as digital, loyalty, and e-commerce. On the Operations
side, Elliott Rodgers joined the Company as Executive Vice President and Chief Operations
Officer to oversee supply chain, information technology, procurement,
and our transformation efforts. He has more than 20 years of leadership
experience in operations planning, supply chain, logistics, information
technology, and enterprise data and analytics.
In early 2023, we continued to build our team with the additions
of Adrian Butler as our Chief Technology Officer, bringing more
than 20 years of information technology experience across
consumer sectors, as well as Kim Waldmann as our
Chief Customer Officer, with more than 10 years of digital
and marketing experience from various retailers.
5
Community and social responsibility are deeply
embedded in our culture, mission, and vision.
COMMUNITY AND ENVIRONMENTAL, SOCIAL, AND GOVERNANCE
Community and social responsibility are deeply embedded in our culture, mission, and
vision. Our initiatives span educational and economic development programs supported
by the Foot Locker Foundation and investments in the Black community through the
Leading Education & Economic Development (LEED) initiative. Through these endeavors,
we commit to empowering our team members and those who live in the communities
we serve.
• We embrace diversity and are proud of our commitment to drive an inclusive company
culture. Our board is 50% female and 80% overall diverse, after having elected our first
female director in 1974 and first Black director in 1981. Additionally, People of Color
represent approximately 90% of our field team. We source field talent into corporate
office internship positions through our Bridge program.
• Through our LEED Initiative, we have funded nearly $54 million in investments and
partnerships through year-end 2021. They include empowering Black entrepreneurs and
designers; investing in Black-led venture capital firms and Black and other underserved
communities worldwide, and supporting Black team members through education and
career development opportunities.
• Our commitment to people extends to The Foot Locker Foundation. For more
than 20 years, it has provided support for youth initiatives and programs that improve
upward mobility and empower communities. This includes the Foot Locker Scholarship
Program that awarded $560,000 in scholarships in 2022 to high school seniors and team
members. Over its 10-plus years, the program has awarded roughly 230 scholarships
that total over $4 million. In addition, the Foundation supports the mission of such
organizations as the United Negro College Fund, Two Ten Footwear Foundation, and the
Boys & Girls Clubs of America.
6
funded $54 million
in investments and
partnerships
On the Environmental front, we announced in early 2022 our new commitment
to achieve Net Zero GHG emissions by 2050 or sooner. Answering the call to limit
the global temperature rise to 1.5°C, we have committed to setting a science-based
target in line with criteria established by the SBTi partnership. Our next steps involve
setting targets in line with SBTi criteria.
To learn more about our work around ESG, please see our impact report at
https://investors.footlocker-inc.com/impactreport. We detail our various efforts
around these important issues that impact our business and the world every day.
awarded $560,000
in scholarships in 2022
7
THANK YOU
The potential for our brand is vast, and I am confident that with our winning strategy,
Foot Locker’s best days lie ahead. Together, we will leverage our assets to elevate the role of
our retail brand and team members, simplify our business to focus on “all things sneakers” and
invest in our infrastructure and digital capabilities to drive the next 50 years of growth.
Thanks to our Board of Directors for their expertise, guidance, and support as we embark
on this growth phase. I also extend a special thank you to Dick Johnson for all he has done
for our Company and this industry. I am honored to follow him and carry forward his intense
commitment to our customers and team members. Thanks, too, to our shareholders for your
ongoing support of the Company as we pursue our new strategic objectives. I look forward to
building on our strong relationship with all of you.
With a laser-sharp focus on Foot Locker’s portfolio of brands – Foot Locker, Kids Foot Locker,
Champs Sports, WSS, and atmos – we will unlock the inner sneakerhead in us all.
MARY N. DILLON
President and Chief Executive Officer
8
EXPERIENCES, CULTURE, AND AUTHENTICITY
10-K
9
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-K
(Mark One)
☒ ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended January 28, 2023
OR
☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from to
Commission File No. 1-10299
(Exact name of registrant as specified in its charter)
New York
(State or other jurisdiction of
incorporation or organization)
330 West 34th Street, New York, New York
(Address of principal executive offices)
13-3513936
(I.R.S. Employer Identification No.)
10001
(Zip Code)
Registrant’s telephone number, including area code: (212) 720-3700
Securities registered pursuant to Section 12(b) of the Act:
Title of each class
Common Stock, par value $0.01
Trading
Symbol(s)
FL
Name of each exchange on which registered
New York Stock Exchange
Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes No
Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act. Yes No
Securities registered pursuant to Section 12(g) of the Act: None
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the
preceding 12 months (or for such shorter period that the Registrant was required to file such reports), and (2) has been subject to such filing requirements for the
past 90 days. Yes No
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation
S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes No
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging
growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of
the Exchange Act.
Large accelerated filer
Emerging growth company ☐
Accelerated filer
Non-accelerated filer
Smaller reporting company ☐
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised
financial accounting standards pursuant to Section 13(a) of the Exchange Act.
Indicate by check mark whether the registrant has filed a report on and attestation to its management’s assessment of the effectiveness of its internal control over
financial reporting under Section 404(b) of the Sarbanes-Oxley Act (15 U.S.C. 7262(b)) by the registered public accounting firm that prepared or issued its audit
report. ☒
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act). Yes ☐ No ☒
The number of shares of the registrant’s Common Stock, par value $0.01 per share, outstanding as of March 20, 2023:
The aggregate market value of voting stock held by non-affiliates of the registrant computed by reference to the closing price as of
the last business day of the Registrant’s most recently completed second fiscal quarter, July 30, 2022 was approximately:
93,429,371
$1,323,542,801*
* For purposes of this calculation only (a) all non-employee directors plus six executive officers and owners of 5% or more of the registrant are deemed to be
affiliates of the registrant, and (b) shares deemed to be “held” by such persons include only outstanding shares of the registrant’s voting stock with respect to
which such persons had, on such date, voting or investment power.
Portions of the registrant’s definitive Proxy Statement (the “Proxy Statement”) to be filed in connection with the Annual Meeting of Shareholders to be held on
May 17, 2023: Parts III and IV.
DOCUMENTS INCORPORATED BY REFERENCE
TABLE OF CONTENTS
Business
PART I
Item 1.
Item 1A. Risk Factors
Item 1B. Unresolved Staff Comments
Item 2.
Item 3.
Item 4.
Item 4A. Information about our Executive Officers
Properties
Legal Proceedings
Mine Safety Disclosures
PART II
Item 5.
Market for the Company’s Common Equity, Related Shareholder Matters, and Issuer Purchases
of Equity Securities
Selected Financial Data
Management’s Discussion and Analysis of Financial Condition and Results of Operations
Item 6.
Item 7.
Item 7A. Quantitative and Qualitative Disclosures About Market Risk
Item 8.
Item 9.
Item 9A. Controls and Procedures
Item 9B. Other Information
Item 9C. Disclosure Regarding Foreign Jurisdictions that Prevent Inspections
Consolidated Financial Statements and Supplementary Data
Changes in and Disagreements with Accountants on Accounting and Financial Disclosure
PART III
Item 10.
Item 11.
Item 12.
Directors, Executive Officers, and Corporate Governance
Executive Compensation
Security Ownership of Certain Beneficial Owners and Management and Related Shareholder
Matters
Item 13.
Item 14.
Certain Relationships and Related Transactions, and Director Independence
Principal Accounting Fees and Services
PART IV
Item 15.
Item 16.
Exhibits and Financial Statement Schedules
Form 10-K Summary
INDEX OF EXHIBITS
SIGNATURES
1
3
14
14
15
15
15
16
17
18
29
29
68
68
71
71
71
71
71
71
71
71
71
72
76
CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS
This Annual Report on Form 10-K (“Annual Report”) includes “forward-looking” statements within the meaning of the
Private Securities Litigation Reform Act of 1995. Forward-looking statements can be identified by the fact that they
do not relate strictly to historical or current facts. They often include words such as “believes,” “expects,” “anticipates,”
“estimates,” “intends,” “plans,” “seeks,” “continues,” “feels,” “forecasts,” or words of similar meaning, or future or
conditional verbs, such as “will,” “should,” “could,” “may,” “aims,” “intends,” or “projects.” Statements may be forward
looking even in the absence of these particular words.
Examples of forward-looking statements include, but are not limited to, statements regarding our financial position,
business strategy, and other plans and objectives for our future operations, and generation of free cash flow. These
forward-looking statements are based on our current expectations and beliefs concerning future developments and
their potential effect on us. The forward-looking statements contained herein are largely based on our expectations
for the future, which reflect certain estimates and assumptions made by our management. These estimates and
assumptions reflect our best judgment based on currently known market conditions, operating trends, and other
factors. Although we believe such estimates and assumptions to be reasonable, they are inherently uncertain and
involve a number of risks and uncertainties that are beyond our control. As such, management’s assumptions about
future events may prove to be inaccurate.
We do not intend to publicly update or revise any forward-looking statements as a result of new information, future
events, changes in circumstances, or otherwise. These cautionary statements qualify all forward-looking statements
attributable to us, or persons acting on our behalf. Management cautions you that the forward-looking statements
contained herein are not guarantees of future performance, and we cannot assure you that such statements will be
realized or that the events and circumstances they describe will occur. Factors that could cause actual results to
differ materially from those anticipated or implied in the forward-looking statements herein include, but are not limited
to, a change in the relationship with any of our key suppliers, including the unavailability of premium products at
competitive prices, volume discounts, cooperative advertising, markdown allowances, or the ability to cancel orders
and return merchandise; our ability to fund our planned capital investments; volatility in the financial markets or other
global economic factors; our ability to access the credit markets at competitive terms; difficulties in appropriately
allocating capital and resources among our strategic opportunities; our ability to realize the expected benefits from
acquisitions; business opportunities and expansion; investments; expenses; dividends; share repurchases; liquidity;
cash flow from operations; use of cash and cash requirements; borrowing capacity under our credit facility;
repatriation of cash to the United States; supply chain issues; labor shortages and wage pressures; expectations
regarding increased wages; inflation; consumer spending levels; the effect of governmental assistance programs;,
including vaccines and safety protocols; expectations regarding increasing global taxes; the effect of increased
government regulation, compliance, and changes in law; the effect of the adverse outcome of any material litigation
against us or judicial decisions that affect us or our industry generally; the effects of weather; climate change; ESG
risks; increased competition; geopolitical events; the financial effect of accounting regulations and critical accounting
policies; credit risk relating to the risk of loss as a result of non-performance by our counterparties; and any other
factors set forth in the section entitled “Risk Factors” in this Annual Report.
All written and oral forward-looking statements attributable to us are expressly qualified in their entirety by this
cautionary statement. A forward-looking statement is neither a prediction nor a guarantee of future events or
circumstances, and those future events or circumstances may not occur. You should not place undue reliance on
forward-looking statements, which speak to our views only as of the date of this filing. Additional risks and
uncertainties that we do not presently know about or that we currently consider to be insignificant may also affect our
business operations and financial performance.
Please refer to “Item 1A. Risk Factors” in this Annual Report for a discussion of certain risks relating to our business
and any investment in our securities. Given these risks and uncertainties, you should not rely on forward-looking
statements as predictions of actual results. Any or all of the forward-looking statements contained in this report, or
any other public statement made by us, including by our management, may turn out to be incorrect.
We are including this cautionary note to make applicable, and take advantage of, the safe harbor provisions of the
Private Securities Litigation Reform Act of 1995 for forward-looking statements. We expressly disclaim any obligation
to update or revise any forward-looking statements, whether as a result of new information, future events, or
otherwise.
PART I
Item 1. Business
General
Foot Locker, Inc., incorporated under the laws of the State of New York in 1989. Foot Locker, Inc. and its subsidiaries
hereafter are referred to as the “Registrant,” “Company,” “we,” “our,” or “us.” Foot Locker, Inc. has its corporate
headquarters in New York.
Foot Locker, Inc. is a leading footwear and apparel retailer that unlocks the “inner sneakerhead” in all of us. As of
January 28, 2023, we operated 2,714 stores in 29 countries across North America, Europe, Australia, New Zealand,
and Asia, and a franchised store presence in the Middle East and Asia. Foot Locker, Inc. has a strong history of sneaker
authority that sparks discovery and ignites the power of sneaker culture through its portfolio of brands, including
Foot Locker, Kids Foot Locker, Champs Sports, WSS, and atmos.
Ensuring that our customers can engage with us in the most convenient manner for them whether in our stores, on our
website, or on our mobile application, is a high priority for us. We use our omni-channel capabilities to bridge the digital
world and physical stores, including order-in-store, buy online and pickup-in-store, and buy online and ship-from-store,
as well as e-commerce. We operate websites and mobile apps aligned with the brand names of our store banners.
These sites offer some of the largest online product selections and provide a seamless link between e-commerce and
physical stores.
The service marks, tradenames, and trademarks appearing in this report (except for Nike, Jordan, adidas, and Puma)
are owned by Foot Locker, Inc. or its subsidiaries.
Store and Operations Profile
January 29,
January 28, Relocations/
Square Footage
(in thousands)
2022
Opened Closed
2023
Foot Locker U.S. (1)
Foot Locker Canada
Kids Foot Locker
Champs Sports
WSS
Footaction (2)
North America
Foot Locker Europe
Sidestep
EMEA
Foot Locker Pacific
Foot Locker Asia
atmos
Asia Pacific
Total owned stores
Franchised stores
Grand Total
816
95
410
525
98
41
1,985
626
86
712
94
30
37
161
2,858
142
3,000
31
1
22
3
17
—
74
20
1
21
1
3
4
8
103
33
136
100
10
22
42
—
39
213
18
9
27
1
—
6
7
247
16
263
Remodels Selling Gross
4,044
412
1,306
2,809
1,435
11
10,017
2,329
186
2,515
325
233
63
621
13,153
2,362
249
772
1,792
1,138
6
6,319
1,131
97
1,228
213
126
37
376
7,923
37
4
22
6
4
—
73
24
—
24
15
—
3
18
115
747
86
410
486
115
2
1,846
628
78
706
94
33
35
162
2,714
159
2,873
(1)
Includes 14 and 6 Lady Foot Locker stores as of January 29, 2022 and January 28, 2023, respectively.
(2) We expect to close the two remaining stores in the first half of 2023.
As of January 28, 2023, we operate 173 Community and Power Stores across the geographies in which we operate.
Community Stores are off-mall stores in the heart of the community that focus on creating authentic trust with local
consumers and provide elevated shopping experiences with community spaces. Power Stores are stores that provide
an elevated, seamless, and convenient shopping journey for the full family. Both Community and Power Stores provide
pinnacle retail experiences that deliver connected customer interactions through service, experience, product, and a
sense of community.
2022 Form 10-K Page 1
The following is a brief description of each of our banners:
Foot Locker — Foot Locker is a leading global youth culture brand that connects the sneaker-obsessed consumer with
the most innovative and culturally relevant sneakers and apparel. Across all our consumer touchpoints, Foot Locker
enables consumers to fulfill their desire to be part of sneaker and youth culture. We curate special product assortments
and marketing content that supports our premium position, from leading global brands such as Nike, Jordan, adidas,
and Puma, as well as new and emerging brands in the athletic and lifestyle space. We connect emotionally with our
consumers through a combination of global brand events, highly targeted and personalized experiences in local
markets, and through our social and digital channels. Foot Locker’s 1,588 stores are located in 28 countries including
747 in the United States, Puerto Rico, U.S. Virgin Islands, and Guam, 86 in Canada, 628 in Europe, a combined 94 in
Australia and New Zealand, and 33 in Asia. Our domestic stores have an average of 3,200 selling square feet and our
international stores have an average of 2,000 selling square feet.
Kids Foot Locker — Kids Foot Locker offers a large selection of premium brand-name athletic footwear, apparel, and
accessories for children. Kids Foot Locker enables youth of all ages to participate in sneaker culture and helps their
parents shop in a curated environment with only the best assortment in stores and online. We drive a sense of
community in local markets through our newly-launched “House of Play” Community Store concept, which connects
with kids, parents, and caregivers through the power of play, offering experiences and products that celebrate the
wonder and fun of childhood. Of our 410 stores, 379 are located in the United States, and Puerto Rico, 16 in Europe,
and 15 in Canada. These stores have an average of 1,900 selling square feet.
Champs Sports — Champs Sports is a primarily mall-based specialty athletic footwear and apparel retailer in North
America focused on serving the “Active Athlete” segment that is highly connected to sport and inspired by what’s worn
in the game and on the field. Champs Sports is our lead banner for apparel, driving more head-to-toe offerings for the
consumer shopping for their performance and athleisure needs. Of our 486 stores, 454 are located in the United States,
Puerto Rico, and the U.S. Virgin Islands and 32 in Canada. The Champs Sports stores have an average of 3,700 selling
square feet.
Sidestep — We have announced our plan to wind down our Sidestep banner in 2023. We will close our 78 stores
located in Germany, Netherlands, Spain, Belgium, and Luxembourg, with select stores converting to our Foot Locker
banner. Sidestep stores have an average of 1,200 selling square feet.
WSS — Acquired in 2021, WSS is an athletic-inspired retailer focused on the large and rapidly growing Hispanic
consumer demographic, operating a fleet of 115 off-mall stores in key markets across California, Texas, Arizona, and
Nevada. WSS’s community-driven business benefits from deep relationships with customers. WSS stores have an
average of 9,900 selling square feet.
atmos — Acquired in 2021, atmos is a digitally-led, culturally-connected global brand featuring premium sneakers and
apparel, an exclusive in-house label, collaborative relationships with leading vendors in the sneaker ecosystem,
experiential stores, and a robust omni-channel platform. atmos operates 32 stores in Japan and 3 stores in the United
States, with an average of 1,100 selling square feet. The brand is also licensed to various entities across Asia.
Competition
The athletic footwear and apparel industry is highly competitive. We compete primarily with athletic footwear specialty
stores, sporting goods stores, department stores, traditional shoe stores, mass merchandisers, and online retailers,
some of which are our suppliers.
Merchandise Purchases
Financial information concerning merchandise purchases is contained under the “Liquidity” section in “Item 7.
Management’s Discussion and Analysis of Financial Condition and Results of Operations” and under the “Business
Risk” section in the Financial Instruments and Risk Management note in “Item 8. Consolidated Financial Statements
and Supplementary Data.”
Human Capital
We had 15,200 full-time and 31,680 part-time employees as of January 28, 2023, and we consider employee relations
to be satisfactory.
2022 Form 10-K Page 2
We believe the strength of our workforce is a significant contributor to our success as a global brand that leads with
purpose. We seek to be a great place to work by cultivating and celebrating a culture that promotes diversity, inclusion,
and belonging (DIBs). Our “Live Well. Work Well.” framework enables us to provide support and resources for a variety
of needs to help our team members reach their fullest potential.
Our People Strategy includes actions surrounding “Uniting our Communities of Talent” around the world to achieve
focus and drive results as a more agile and dynamic organization. By following our DIBs strategy as part of our people
processes, we are able to attract, select, hire, grow, develop, promote, and retain valued team members with diverse
backgrounds, perspectives, and experiences. We are relentless in creating a work environment that celebrates the
differences that make us even stronger. We provide career growth and professional development through formal
learning and on-the-job experiences to advance our team members’ capabilities, confidence, and contributions.
We offer competitive compensation (including salary, incentive bonus, and equity) and benefits packages to eligible
employees in each of our locations around the globe. Our compensation program is designed to attract, retain, and
reward talented individuals who possess the skills necessary to lead and support our business objectives, achieve our
strategic goals, and create long-term value for our shareholders.
We are committed to engaging in environmental, social, and governance (ESG) initiatives that support our communities
and help us develop trusted relationships with our stakeholders. Our ESG disclosure is available at investors.footlocker-
inc.com/impactreport.
Available Information
We maintain a corporate website at www.footlocker.com/corp. Our filings with the U.S. Securities and Exchange
Commission (the “SEC”), including our annual report on Form 10-K, quarterly reports on Form 10-Q, current reports on
Form 8-K, and all amendments to those reports are available free of charge through this website as soon as reasonably
practicable after they are filed with or furnished to the SEC. The Corporate Governance section of our corporate website
contains our Corporate Governance Guidelines, Committee Charters, and the Code of Business Conduct for directors,
officers, and employees, including the Chief Executive Officer, Chief Financial Officer, and Chief Accounting Officer.
Copies of these documents may also be obtained free of charge upon written request to our Corporate Secretary at
330 West 34th Street, New York, NY 10001.
Item 1A. Risk Factors
Risks Related to Our Business and Industry
Our inability to implement our long-range strategic plan may adversely affect our future results.
Our ability to successfully implement and execute our long-range strategic plan is dependent on many factors. Our
strategies may require significant capital investment and management attention. Additionally, any new initiative is
subject to certain risks including customer acceptance of our products and renovated store designs, competition,
product differentiation, the ability to attract and retain qualified personnel, and our ability to successfully integrate our
acquisitions and implement technological initiatives. If we cannot successfully execute our strategic growth initiatives
or if the long-range plan does not adequately address the challenges or opportunities we face, our financial condition
and results of operations may be adversely affected. Additionally, failure to meet shareholder expectations, particularly
with respect to sales, supplier diversification, cost-cutting programs, operating margins, and earnings per share, would
likely result in volatility in the market value of our stock.
The retail athletic footwear and apparel business is highly competitive.
Our athletic footwear and apparel operations compete primarily with athletic footwear specialty stores, sporting goods
stores, department stores, traditional shoe stores, mass merchandisers, and online retailers, as well as our
merchandise vendor suppliers direct-to-customers channels. Although we sell an increasing proportion of our
merchandise online, a significantly faster shift in customer buying patterns to purchasing athletic footwear, athletic
apparel, and sporting goods online could have a material adverse effect on our business results. In addition, all of our
significant suppliers operate retail stores and distribute products directly through the internet and others may follow.
Should this continue to occur or accelerate, and if our customers decide to purchase directly from our suppliers, it could
have a material adverse effect on our business, financial condition, and results of operations.
2022 Form 10-K Page 3
The principal competitive factors in our markets are selection of merchandise, customer experience, reputation, store
location, advertising, and price. We cannot assure that we will continue to be able to compete successfully against
existing or future competitors. Our expansion into markets served by our competitors, and entry of new competitors or
expansion of existing competitors into our markets, could have a material adverse effect on our business, financial
condition, and results of operations.
A change in the relationship with any of our key suppliers or the unavailability of key products at competitive
prices could affect our financial health.
Our business is dependent to a significant degree upon our ability to obtain premium product and the ability to purchase
brand-name merchandise at competitive prices from a limited number of suppliers. In addition, we have negotiated
volume discounts, cooperative advertising, and markdown allowances with our suppliers, as well as the ability to cancel
orders and return excess or unneeded merchandise. We cannot be certain that such terms with our suppliers will
continue in the future.
We purchased 86% of our merchandise in 2022 from our top five suppliers and we expect to continue to obtain a
significant percentage of our athletic product from these suppliers in future periods. Approximately 65% of all
merchandise purchased in 2022 was purchased from one supplier — Nike, Inc. (“Nike”). Each of our banners are highly
dependent on Nike. Individually, they purchased approximately 50% to 70% of their merchandise from Nike during
the year. Merchandise that is high profile and in high demand is allocated by our suppliers based upon their own criteria.
We cannot be certain that our suppliers will allocate sufficient amounts to us in the future or whether our suppliers will
choose to further sell such merchandise through their own direct-to-customers channel.
Our inability to obtain merchandise in a timely manner from major suppliers as a result of business decisions by our
suppliers, or any disruption in the supply chain, could have a material adverse effect on our business, financial condition,
and results of operations. Because of the high proportion of purchases from Nike, any adverse development in Nike’s
reputation, financial condition or results of operations, or the inability of Nike to develop and manufacture products that
appeal to our target customers could also have an adverse effect on our business, financial condition, and results of
operations. We cannot be certain that we will be able to acquire merchandise at competitive prices or on competitive
terms in the future. These risks could have a material adverse effect on our business, financial condition, and results
of operations.
The industry in which we operate is dependent upon fashion trends, customer preferences, product
innovations, and other fashion-related factors.
The athletic footwear and apparel industry, especially at the premium end of the price spectrum, in which we operate,
is subject to changing fashion trends and customer preferences. In addition, retailers in the athletic industry rely on their
suppliers to maintain innovation in the products they develop. We cannot guarantee that our merchandise selection will
accurately reflect customer preferences when it is offered for sale or that we will be able to identify and respond quickly
to fashion changes, particularly given the long lead times for ordering much of our merchandise from suppliers. A
substantial portion of our highest margin sales are to young males (ages 12–25), many of whom we believe purchase
athletic footwear and athletic apparel as a fashion statement and are frequent purchasers. Our failure to anticipate,
identify or react appropriately in a timely manner to changes in fashion trends that would make athletic footwear or
athletic apparel less attractive to our customers could have a material adverse effect on our business, financial
condition, and results of operations.
If we do not successfully manage our inventory levels, our operating results will be adversely affected.
We must maintain sufficient inventory levels to operate our business successfully. However, we also must guard against
accumulating excess inventory. For example, we order most of our footwear four to six months prior to delivery to us.
If we fail to anticipate accurately either the market for the merchandise or our customers’ purchasing habits, we may
be forced to rely on markdowns or promotional sales to dispose of excess or slow-moving inventory, which could have
a material adverse effect on our business, financial condition, and results of operations.
We are affected by mall traffic and our ability to secure suitable store locations, both in malls and off-malls.
Many of our stores, especially in North America where only 26% of our locations are off-mall, are located primarily in
enclosed regional and neighborhood malls. Our sales are affected, in part, by the volume of mall traffic. Mall traffic may
be adversely affected by, among other factors, economic downturns, the closing or continued decline of anchor
department stores and/or specialty stores, and a decline in the popularity of mall shopping among our target customers.
2022 Form 10-K Page 4
Further, any terrorist act, natural disaster, public health issue, such as COVID-19, flu or other pandemics, or safety
concern that decreases the level of mall traffic, or that affects our ability to open and operate stores in such locations,
could have a material adverse effect on our business.
To take advantage of customer traffic and the shopping preferences of our customers, we need to maintain or acquire
stores in desirable locations, such as in regional and neighborhood malls, as well as high-traffic urban retail areas and
high streets. We cannot be certain that desirable locations will continue to be available at favorable rates. Some
traditional enclosed malls are experiencing significantly lower levels of customer traffic, driven by economic conditions,
public health issues, the closure of certain mall anchor tenants, and changes in customer shopping preferences, such
as online shopping. Further, some malls have closed, and others may close in the future. While we seek to obtain
suitable locations off-mall, there is no guarantee that we will be able to secure such locations.
Several large landlords dominate the ownership of prime malls and because of our dependence upon these landlords
for a substantial number of our locations, any significant erosion of their financial condition or our relationships with
them could negatively affect our ability to obtain and retain store locations. Additionally, further landlord consolidation
may negatively affect our ability to negotiate favorable lease terms.
Our business could be materially harmed if we fail to adequately integrate the operations of the businesses we
have acquired, or may acquire.
We have recently made, and may continue to make, acquisitions in the future based on available opportunities in the
market. Acquisitions involve numerous inherent challenges, such as properly evaluating acquisition opportunities,
properly evaluating risks and other diligence matters, ensuring adequate capital availability, and balancing other
resource constraints. There are risks and uncertainties related to acquisitions, including difficulties integrating
operations, personnel, and financial and other systems; unrealized sales expectations from the acquired business;
unrealized synergies and cost savings; unknown or underestimated liabilities; diversion of management attention from
running our existing businesses; and potential loss of key management or customers of the acquired business.
Our future growth may depend on our ability to expand operations in international markets.
Our future growth will depend, in part, on our ability to expand our business in additional international markets. As we
expand into new international markets, we may have only limited experience in operating our business in such markets.
In other instances, we may have to rely on the efforts and abilities of foreign business partners in such markets. In
addition, business practices in these new international markets may be unlike those in the other markets we serve, and
we may face increased exposure to certain risks. Our future growth may be materially adversely affected if we are
unsuccessful in our international expansion efforts. Our inability to expand in international markets could have a material
adverse effect on our business.
We may experience fluctuations in, and cyclicality of, our comparable-store sales results.
Our comparable-store sales have fluctuated significantly in the past, on both an annual and a quarterly basis, and we
expect them to continue to fluctuate in the future. A variety of factors affect our comparable-store sales results, including,
among others, fashion trends, product innovation, promotional events, the highly competitive retail sales environment,
economic conditions, timing of income tax refunds, changes in our merchandise mix, calendar shifts of holiday periods,
declines in foot traffic, supply chain disruptions, and weather conditions. Many of our products represent discretionary
purchases. Accordingly, customer demand for these products could decline in an economic downturn or if our
customers develop other priorities for their discretionary spending. These risks could have a material adverse effect on
our business, financial condition, and results of operations.
The effects of natural disasters, terrorism, acts of war, acts of violence, and public health issues, such as
COVID-19, may adversely affect our business.
Natural disasters, including earthquakes, hurricanes, floods, and tornadoes may affect store and distribution center
operations. In addition, acts of terrorism, acts of war, and military action both in the United States and abroad can have
a significant effect on economic conditions and may negatively affect our ability to purchase merchandise from suppliers
for sale to our customers. Any act of violence, including active shooter situations and terrorist activities, that are targeted
at or threatened against shopping malls, our stores, offices or distribution centers, could result in restricted access to
our stores and/or store closures in the short-term and, in the long-term, may cause our customers and employees to
avoid visiting our stores. The invasion of Ukraine by Russia and the retaliatory measures taken by the U.S., NATO, and
other countries have created global security concerns and economic uncertainty that could have a lasting effect on
regional and global economies.
2022 Form 10-K Page 5
Public health issues, such as COVID-19, flu, or other pandemics, whether occurring in the United States or abroad,
could disrupt our operations and result in a significant part of our workforce being unable to operate or maintain our
infrastructure or perform other tasks necessary to conduct our business. Additionally, public health issues may disrupt,
or have an adverse effect on, our suppliers’ operations, our operations, our customers, or result in significantly lower
traffic to or closure of our stores, or customer demand. Our ability to mitigate the adverse effect of these events depends,
in part, upon the effectiveness of our disaster preparedness and response planning as well as business continuity
planning. However, we cannot be certain that our plans will be adequate or implemented properly in the event of an
actual disaster.
Any significant declines in public safety or uncertainties regarding future economic prospects that affect customer
spending habits could have a material adverse effect on customer purchases of our products. We may be required to
suspend operations in some or all of our locations and incur significant costs to remediate concerns which could have
a material adverse effect on our business, financial condition, and results of operations.
Riots, vandalism, and other crimes and acts of violence may affect the markets in which we operate, our
customers, delivery of our products and customer service, and could have a material adverse effect on our
business, results of operations, or financial condition.
Our business may be adversely affected by instability, disruption, or destruction, regardless of cause, including riots,
civil insurrection or social unrest, and manmade disasters or crimes. Such events may result in property damage and
loss and may also cause customers to suspend their decisions to shop in our stores, interrupt our supply chain, and
cause restrictions, postponements, and cancellations of events that attract large crowds and public gatherings, such as
store marketing events. Additional risks and uncertainties not currently known to us or that we currently deem to be
immaterial also may adversely affect our business, financial condition or operating results.
Risks Related to Technology, Data Security, and Privacy
We are subject to technology risks including failures, security breaches, and cybersecurity risks that could
harm our business, damage our reputation, and increase our costs in an effort to protect against these risks.
Information technology is a critical part of our business operations. We depend on information systems to process
transactions, analyze customer behaviors through our loyalty program, make operational decisions, manage inventory,
operate our websites, purchase, sell and ship goods on a timely basis, and maintain cost-efficient operations. There is
a risk that we could experience a business interruption, theft of information, or reputational damage as a result of a
cyber-attack, such as an infiltration of a data center or data leakage of confidential information, either internally or
through our third-party providers. In addition, cybersecurity researchers anticipate an increase in cyberattack activity in
connection with the Russian invasion of Ukraine.
We may experience operational problems with our information systems as a result of system failures, system
implementation issues, viruses, malicious hackers, sabotage, or other causes. We invest in security technology to
protect the data stored by us, including our data and business processes, against the risk of data security breaches
and cyber-attacks. Our data security management program includes enforcement of standard data protection policies
such as Payment Card Industry compliance and other regulatory requirements. Additionally, we evaluate our major
technology suppliers and any outsourced services through accepted security assessment measures. We maintain and
routinely test backup systems and disaster recovery, along with external network security penetration testing by an
independent third party as part of our business continuity preparedness.
While we believe that our security technology and processes follow appropriate practices in the prevention of security
breaches and the mitigation of cybersecurity risks, given the ever-increasing abilities of those intent on breaching
cybersecurity measures and given the necessity of our reliance on the security procedures of third-party vendors, the
total security effort at any point in time may not be completely effective.
Failure of our systems, either internally or at our third-party providers, including failures due to cyber-attacks that would
prevent the ability of systems to function as intended, could cause transaction errors, loss of customers and sales, and
negative consequences to us, our employees, and those with whom we do business. A cyberattack on a
communications network or power grid could cause operational disruption resulting in loss of revenues. Any security
breach involving the misappropriation, loss, or other unauthorized disclosure of confidential information by us could
also severely damage our reputation, expose us to the risks of litigation and liability, increase operating costs associated
with remediation, and harm our business. While we carry insurance that would mitigate losses in connection with
security breaches and cyber incidents, insurance may be insufficient to compensate us fully for potentially significant
losses.
2022 Form 10-K Page 6
Risks associated with digital operations.
Our digital operations are subject to numerous risks, including risks related to the failure of the computer systems that
operate our websites, mobile sites, and apps and their related support systems, computer viruses, cybersecurity risks,
telecommunications or power failures, denial of service attacks, bot attacks, and similar disruptions. Also, to sustain,
keep current, or grow our digital commerce business we will need to make additional investments. Risks related to
digital commerce include those associated with credit card fraud, the need to keep pace with rapid technological
change, governmental regulation, and legal uncertainties with respect to internet regulatory compliance. If any of these
risks materialize, it could have a material adverse effect on our business.
Privacy and data security concerns and regulation could result in additional costs and liabilities.
The protection of customer, employee, and Company data is critical. The regulatory environment surrounding privacy
is demanding, with the frequent imposition of new and changing requirements. In addition, customers appear
increasingly to have a high expectation that we will adequately protect their personal information. Any actual or
perceived misappropriation or breach involving this data could cause our customers to lose confidence in our ability to
protect their data, which may cause them to potentially stop shopping with us or joining our loyalty program, attract
negative media attention, cause harm to our reputation or result in liability (including but not limited to fines, penalties
or lawsuits), any of which could have a material adverse effect on our business, operational results, financial position,
and cash flows.
Regulatory scrutiny of privacy, user data protection, use of data and data collection is increasing on a global basis. We
are subject to a number of privacy and similar laws and regulations in the countries in which we operate and these laws
and regulations will likely continue to evolve over time.
The European Union (“E.U.”) adopted a comprehensive General Data Privacy Regulation (the “GDPR”), which requires
companies to satisfy requirements regarding the handling of personal and sensitive data, including its use, protection,
and the ability of persons whose data is stored to correct or delete data about themselves. Failure to comply with GDPR,
including UK GDPR post-Brexit, requirements could result in penalties of up to 4% of worldwide revenue.
Data protection legislation and enforcement is also becoming increasingly common in the Asia Pacific region and in the
United States at both the federal and state level. For example, the State of California enacted the California Consumer
Privacy Act of 2018 (the “CCPA”), which became effective on January 1, 2020. The CCPA, among other things, requires
companies that process information of California residents to make disclosures to consumers about their data collection,
use and sharing practices, allows consumers to opt out of certain data sharing with third parties and provides a new
cause of action for data breaches. Effective starting January 1, 2023, the California Privacy Rights Act (the “CPRA”)
has revised and significantly expanded the scope of the CCPA. The CPRA, among other things, also creates a new
California data protection agency authorized to implement and enforce the CCPA and the CPRA, which could result in
increased privacy and information security enforcement. Connecticut, Utah, and Virginia have also enacted
comprehensive consumer privacy laws, and other states may follow. Additionally, the Federal Trade Commission
and many state attorneys general are interpreting federal and state consumer protection laws to impose standards for
the online collection, use, dissemination and security of data. The burdens imposed by the CCPA, CPRA, and other
similar laws that may be enacted at the federal and state level may require us to further modify our data processing
practices and policies and to incur substantial expenditures in order to comply. The laws and regulations relating to
privacy and data security are evolving, can be subject to significant change and may result in ever-increasing regulatory
and public scrutiny and escalating levels of enforcement, sanctions, and private litigation.
The technology enablement of omni-channel in our business is complex.
We continue to invest in initiatives designed to deliver a high-quality, coordinated shopping experience online, in stores,
and on mobile devices, which requires substantial investment in technology, information systems, and employee
training, as well as significant management time and resources. Our omni-channel retailing efforts include the
integration and implementation of new technology, software, and processes to be able to fulfill orders from any point
within our system of stores and distribution centers, which is extremely complex and may not meet customer
expectations for timely and accurate deliveries. These efforts involve substantial risk, including risk of implementation
delays, cost overruns, technology interruptions, supply and distribution delays, and other issues that can affect the
successful implementation and operation of our omni-channel initiatives. If our omni-channel initiatives are not
successful we may not be able to provide a relevant shopping experience, or we may not realize the return on our omni-
channel investments that we anticipate, our financial performance and future growth could be materially adversely
affected.
2022 Form 10-K Page 7
Risks Related to our Operations and Supply Chain
Complications in our distribution centers and other factors affecting the distribution of merchandise may affect
our business.
We operate multiple distribution centers worldwide, as well as third-party arrangements, to support our operations in
the United States, Canada, England, Australia, New Zealand, and Asia.
If complications arise with any facility or third-party arrangements, or if any facility is severely damaged or destroyed,
our other distribution centers may be unable to support the resulting additional distribution demands. We also may be
affected by disruptions in the global transportation network caused by events including delays caused by port disruption,
port strikes, weather conditions, work stoppages, or other labor unrest. These factors may adversely affect our ability
to deliver inventory on a timely basis. We depend upon third-party carriers for shipment of merchandise. Any interruption
in service by these carriers for any reason could cause disruptions in our business, a loss of sales and profits, and other
material adverse effects.
Manufacturer compliance with our social compliance program requirements.
We require our independent manufacturers to comply with our policies and procedures, which cover many areas
including human rights policy, labor, health and safety, and environmental standards. We monitor compliance with our
policies and procedures using internal resources, as well as third-party monitoring firms. Although we monitor their
compliance with these policies and procedures, we do not control the manufacturers or their practices. Any failure of
our independent manufacturers to comply with our policies and procedures or local laws in the country of manufacture
could disrupt the shipment of merchandise to us, force us to locate alternate manufacturing sources, reduce demand
for our merchandise, or damage our reputation.
Our reliance on key management.
Future performance will depend upon our ability to attract, retain, and motivate our executive and senior management
teams. Our future performance depends, to a significant extent, both upon the continued services of our current
executive and senior management teams, as well as our ability to attract, hire, motivate, and retain additional qualified
management in the future. We have succession plans in place and our Board of Directors reviews these succession
plans. If our succession plans do not adequately cover significant and unanticipated turnover, the loss of the services
of any of these individuals, or any resulting negative perceptions or reactions, could damage our reputation and our
business.
Additionally, our success depends on the talents and abilities of our workforce in all areas of our business, especially
personnel that can adapt to complexities and grow their skillset across the changing environment. Our ability to
successfully execute our strategy depends on attracting, developing and retaining qualified talent with diverse sets of
skills, especially functional and technology specialists that directly support our strategies.
Risks associated with attracting and retaining store and field team members.
Our success depends, in part, upon our ability to attract, develop, and retain a sufficient number of qualified store and
field team members. The turnover rate in the retail industry is generally high. If we are unable to attract and retain
quality team members, our ability to meet our growth goals or to sustain expected levels of profitability may be
compromised.
We have experienced unusually low availability of workers, which we believe was primarily attributable to COVID-19
pandemic-related factors and in turn has created increased competition in labor markets. Our ability to meet our labor
needs while controlling costs is subject to external factors such as unemployment levels, prevailing wage rates,
minimum wage legislation, and overtime regulations.
Risks Related to our Investments
If our long-lived tangible assets and operating lease right-of-use assets, or goodwill become impaired, we may
need to record significant non-cash impairment charges.
We review our long-lived tangible assets, operating lease right-of-use assets, and goodwill when events indicate that
the carrying value of such assets may be impaired. Goodwill is reviewed for impairment if impairment indicators arise
and, at a minimum, annually.
2022 Form 10-K Page 8
Goodwill is not amortized but is subject to an impairment test, which consists of either a qualitative assessment on a
reporting unit level, or a quantitative impairment test, if necessary. The determination of impairment charges is
significantly affected by estimates of future operating cash flows and estimates of fair value. Our estimates of future
operating cash flows are identified from our long-range strategic plans, which are based upon our experience,
knowledge, and expectations; however, these estimates can be affected by factors such as our future operating results,
future store profitability, and future economic conditions, all of which are difficult to predict accurately. Any significant
deterioration in macroeconomic conditions could affect the fair value of our long-lived assets, operating lease right-of-
use assets, and goodwill and could result in future impairment charges, which would adversely affect our results of
operations.
We do not have the ability to exert control over our minority investments, and therefore, we are dependent on
others in order to realize their potential benefits.
At January 28, 2023 we hold $630 million of non-controlling minority investments in various entities and we may make
additional strategic minority investments in the future. Such minority investments inherently involve a lesser degree of
control over business operations, thereby potentially increasing the financial, legal, operational, and compliance risks
associated with the investments. Other investors in these entities may have business goals and interests that are not
aligned with ours or may exercise their rights in a manner in which we do not approve. These circumstances could lead
to delayed decisions or disputes and litigation with those other investors, all of which could have a material adverse
impact on our reputation, business, financial condition, and results of operations.
If our investees seek additional financing to fund their growth strategies, these financing transactions may result in
further dilution of our ownership stakes and these transactions may occur at lower valuations than the investment
transactions through which we acquired such interests, which could significantly decrease the fair values of our
investments in those entities. Additionally, if our investees are unable to obtain additional financing, those entities could
need to significantly reduce their spending in order to fund their operations or result in their insolvency. These actions
likely would result in reduced growth forecasts, which also could significantly decrease the fair values of our investments
in those entities.
Risks Related to Internal Controls, Shareholder Activism, Geopolitics, Regulations, and Other External Risks
We have identified a material weakness in our internal control over financial reporting, and if we are unable to
improve our internal controls, our financial results may not be accurately reported.
As disclosed in Item 9A, “Controls and Procedures,” we identified a material weakness in our control over financial
reporting related to our newly acquired WSS business. The material weakness did not result in any identified
misstatements to the financial statements, and there were no changes to previously issued financial results. We are
actively engaged in developing a remediation plan designed to address this material weakness; however, we cannot
guarantee that these steps will be sufficient or that we will not have a material weakness in the future. This material
weakness, or difficulties encountered in implementing new or improved controls or remediation, could prevent us from
accurately reporting our financial results, result in material misstatements in our financial statements or cause us to fail
to meet our reporting obligations. Failure to comply with Section 404 of the Sarbanes-Oxley Act of 2002 could negatively
affect our business, the price of our common stock and market confidence in our reported financial information.
We may face risks associated with shareholder activism.
Publicly-traded companies are subject to campaigns by shareholders advocating corporate actions related to matters
such as corporate governance, operational practices, and strategic direction. We may become subject in the future to
such shareholder activity and demands. Such activities could interfere with our ability to execute our business plans,
be costly and time-consuming, disrupt our operations, and divert the attention of management, any of which could have
an adverse effect on our business or stock price.
Economic or political conditions in other countries, including fluctuations in foreign currency exchange rates
and tax rates may adversely affect our operations.
A significant portion of our sales and operating income for 2022 was attributable to our operations outside of the United
States. As a result, our business is subject to the risks associated with doing business outside of the United States
such as local customer product preferences, political unrest, disruptions or delays in shipments, changes in economic
conditions in countries in which we operate, foreign currency fluctuations, real estate costs, and labor and employment
practices in non-U.S. jurisdictions that may differ significantly from those that prevail in the United States.
2022 Form 10-K Page 9
In addition, because our suppliers manufacture a substantial amount of our products in foreign countries, our ability to
obtain sufficient quantities of merchandise on favorable terms may be affected by governmental regulations, trade
restrictions, labor, and other conditions in the countries from which our suppliers obtain their product.
Fluctuations in the value of the euro and the British Pound may affect the value of our European earnings when
translated into U.S. dollars. Similarly, our earnings in other jurisdictions may be affected by the value of currencies
when translated into U.S. dollars. Except for our business in the United Kingdom (the “U.K.”), our international
subsidiaries conduct most of their business in their local currency. Inventory purchases for our U.K. business are
generally denominated in euros, which could result in foreign currency transaction gains or losses.
Our products are subject to import and excise duties and/or sales or value-added taxes in many jurisdictions.
Fluctuations in tax rates and duties and changes in tax legislation or regulation could have a material adverse effect on
our results of operations and financial condition.
Our stock price may be volatile, and the value of our common stock has declined and may continue to decline.
The market price of our common stock may be highly volatile and may fluctuate or decline substantially as a result of a
variety of factors, some of which are beyond our control, including without limitation:
•
•
•
•
•
•
•
•
•
•
•
•
a change in the relationship with any of our key suppliers or the unavailability of key products at competitive
prices;
actual or anticipated fluctuations in our financial condition or results of operations;
variance in our financial performance from expectations of securities analysts and securities analysts may
issue unfavorable research about us;
changes in our projected operating and financial results;
announcements by us or our competitors of significant business developments, acquisitions, or new
offerings;
significant data breaches;
material litigation;
future sales of our common stock by us or our shareholders, or the perception that such sales may occur;
changes in senior management or key personnel;
the trading volume of our common stock;
changes in the anticipated future size and growth rate of our market; and
general macroeconomic, geopolitical, and market conditions beyond our control.
Broad market and industry fluctuations, as well as general economic, political, regulatory, and market conditions, such
as recessions, interest rate changes, or international currency fluctuations, may also negatively affect the market price
of our common stock. In the past, companies that have experienced volatility in the market price of their securities have
been subject to securities class action litigation. We may be the target of this type of litigation in the future, which could
result in substantial expenses and divert our management’s attention.
Macroeconomic developments may adversely affect our business.
Our performance is subject to global economic conditions and the related effects on consumer spending levels.
Continued uncertainty about global economic conditions, including the COVID-19 pandemic, poses a risk as consumers
and businesses may postpone spending in response to tighter credit, unemployment, negative financial news, and/or
declines in income or asset values, which could have a material negative effect on demand for our products. The
invasion of Ukraine by Russia has created global security concerns and economic uncertainty.
As a retailer that is dependent upon consumer discretionary spending, our results of operations are sensitive to changes
in macroeconomic conditions. Our customers may have less money for discretionary purchases as a result of job
losses, foreclosures, bankruptcies, increased fuel and energy costs, higher interest rates, higher taxes, reduced access
to credit, and lower home values. These and other economic factors could adversely affect demand for our products,
which could adversely affect our financial condition and operating results.
2022 Form 10-K Page 10
Significant developments stemming from the U.K.’s withdrawal from the E.U. could have a material adverse
effect on the Company.
The U.K. formally exited the European Union on January 31, 2020 (commonly referred to as “Brexit”) and entered into
a new trade agreement with the European Union on December 24, 2020. Despite the U.K.’s December 2020 trade
agreement, many potential future effects of Brexit remain unclear and could adversely affect certain areas of our
business, including, but not limited to, an increase in duties and delays in the delivery of products, and adverse effects
to our suppliers.
We have significant operations in both the U.K. and the E.U., and we are highly dependent on the free flow of labor and
goods in those regions. In response to Brexit, in February 2020 we engaged with a third-party logistics provider within
England to mitigate supply chain risks. Uncertainty surrounding Brexit could cause a slowdown in economic activity in
the U.K., Europe or globally, which could adversely affect our operating results and growth prospects. In addition, Brexit
could lead to legal uncertainty and potentially divergent national laws and regulations as the U.K. determines which
E.U. laws to replace or replicate, including data protection regulation. Compliance with any new laws and regulations
may be cumbersome, difficult, or costly.
There remains substantial uncertainty surrounding the ultimate effect of Brexit and outcomes could disrupt the markets
we serve and the tax jurisdictions in which we operate. This uncertainty creates challenges (particularly in the near
term) with respect to trading relationships between our U.K. subsidiary and other E.U. nations. These possible effects
of Brexit could adversely affect our business, results of operations, and financial condition.
Imposition of tariffs and export controls on the products we buy may have a material adverse effect on our
business.
A significant portion of the products that we purchase, including the portion purchased from U.S.-based suppliers, as
well as most of our private brand merchandise, is manufactured abroad. We may be affected by potential changes in
international trade agreements or tariffs, such as new tariffs imposed on certain Chinese-made goods imported into the
U.S. Furthermore, China or other countries may institute retaliatory trade measures in response to existing or future
tariffs imposed by the U.S. that could have a negative effect on our business. If any of these events occur as described,
we may be obligated to seek alternative suppliers for our private brand merchandise, raise prices, or make changes to
our operations, any of which could have a material adverse effect on our sales and profitability, results of operations,
and financial condition.
Increasing inflation could adversely affect our business, financial condition, results of operations, or cash
flows.
Inflation, as well as some of the measures taken by or that may be taken by the governments in countries where we
operate in an attempt to curb inflation, may have negative effects on the economies of those countries generally. If the
United States or other countries where we operate experience substantial inflation in the future, our business may be
adversely affected. Fewer customers may shop as these purchases may be seen as discretionary, and those who do
shop may limit the amount of their purchases. Any reduced demand or changes in customer purchasing behavior may
lead to lower sales, higher markdowns and an overly promotional environment or increased marketing and promotional
spending. This could have a material adverse effect on our business, financial condition, results of operations, or cash
flows.
Instability in the financial markets may adversely affect our business.
The global macroeconomic environment could be negatively affected by, among other things, instability in global
economic markets, disruptions to the banking system and financial market volatility resulting from bank failures,
increased U.S. trade tariffs and trade disputes with other countries, instability in the global credit markets, supply chain
weaknesses, instability in the geopolitical environment as a result of Brexit, the Russian invasion of the Ukraine and
other political tensions, and foreign governmental debt concerns. Such challenges have caused, and may continue to
cause, uncertainty and instability in local economies and in global financial markets.
The phase out of LIBOR could cause market volatility or disruption and may adversely affect our access to the capital
markets and cost of funding. The Federal Reserve Board adopted a final rule in December 2022 that replaces LIBOR
in certain financial contracts after June 30, 2023. Our revolving credit agreement provides for alternative methods of
calculating the interest rate payable on indebtedness thereunder.
2022 Form 10-K Page 11
This volatility may affect our future access to the credit and debt security markets, leading to higher borrowing costs,
or, in some cases, the inability to obtain additional financing. Although we currently have a revolving credit agreement
in place until July 14, 2025, tightening of credit markets could make it more difficult for us to access funds, refinance
our existing indebtedness, enter into agreements for new indebtedness, or obtain funding through the issuance of the
Company’s securities.
Material changes in the market value of the securities we hold may adversely affect our results of
operations and financial condition.
At January 28, 2023 our cash and cash equivalents totaled $536 million. The majority of our investments were short-
term deposits in highly-rated banking institutions. We regularly monitor our counterparty credit risk and mitigate our
exposure by making short-term investments only in highly-rated institutions and by limiting the amount we invest in any
one institution. We continually monitor the creditworthiness of our counterparties. At January 28, 2023, all investments
were in investment grade institutions. Despite an investment grade rating, it is possible that the value or liquidity of our
investments may decline due to any number of factors, including general market conditions and bank-specific credit
issues.
Our U.S. pension plan trust holds assets totaling $509 million at January 28, 2023. The fair values of these assets held
in the trust are compared to the plan’s projected benefit obligation to determine the pension funding liability. We attempt
to mitigate funding risk through asset diversification, and we regularly monitor investment risk of our portfolio through
quarterly investment portfolio reviews and periodic asset and liability studies. Despite these measures, it is possible
that the value of our portfolio may decline in the future due to any number of factors, including general market conditions
and credit issues. Such declines could affect the funded status of our pension plan and future funding requirements.
Our financial results may be adversely affected by tax rates or exposure to additional tax liabilities.
We are a U.S.-based multinational company subject to tax in multiple U.S. and foreign tax jurisdictions. Our provision
for income taxes is based on a jurisdictional mix of earnings, statutory rates, and enacted tax rules, including transfer
pricing. Significant judgment is required in determining our provision for income taxes and in evaluating our tax positions
on a worldwide basis. Our effective tax rate could be adversely affected by a number of factors, including shifts in the
mix of pretax results by tax jurisdiction, changes in tax laws or related interpretations in the jurisdictions in which we
operate, and tax assessments and related interest and penalties resulting from income tax audits. Further, many
countries continue to consider changes in their tax laws by implementing new taxes such as the digital service tax and
initiatives such as the Organization for Economic Co-operation and Development’s Pillar II global minimum tax. Various
countries are in the process of incorporating the Pillar II framework within their tax laws.
Changes in employment laws or regulation could harm our performance.
Various foreign and domestic labor laws govern our relationship with our employees and affect our operating costs.
These laws include, but are not limited to, minimum wage requirements, overtime, sick, and premium pay, paid time
off, work scheduling, healthcare reform and the Patient Protection and Affordable Care Act, and the Protecting the Right
to Organize Act, unemployment tax rates, workers’ compensation rates, European works council requirements, and
union organization.
A number of factors could adversely affect our operating results, including additional government-imposed increases in
minimum wages, overtime, sick, and premium pay, paid leaves of absence, mandated health benefits, and changing
regulations from the National Labor Relations Board or other agencies. Complying with any new legislation or
interpretation of law, or reversing changes implemented under existing law could be time-intensive and expensive and
may affect our business.
Legislative or regulatory initiatives related to climate change concerns may negatively affect our business.
Greenhouse gases may have an adverse effect on global temperatures, weather patterns, and the frequency and
severity of extreme weather and natural disasters. Global climate change could result in certain types of natural
disasters occurring more frequently or with more intense effects. Such events could make it difficult or impossible for
us to deliver products to our customers, create delays, and inefficiencies in our supply chain. Following an interruption
to our business, we could require substantial recovery time, experience significant expenditures to resume operations,
and lose significant sales. Concern over climate change may result in new or additional legal, legislative, regulatory,
and compliance requirements to reduce or mitigate the effects of climate change on the environment, which could result
in future tax, transportation, and utility increases, which could adversely affect our business.
2022 Form 10-K Page 12
There is also increased focus, including by investors, customers, and other stakeholders, on these and other
sustainability matters, such as worker safety, the use of plastic, energy consumption, and waste.
We face reputational, regulatory, human capital, and business development risks from a perceived or actual
failure to effectively manage our material ESG risks and opportunities.
Our reputation could be damaged if we do not, or are perceived to not, act responsibly with respect to ESG matters,
which could adversely affect our business, results of operations, cash flows, and financial condition. Our global ESG
program is focused on the following four pillars through which we believe we may significantly impact our stakeholders,
or which may pose a material risk or opportunity for our business: (1) Leveraging the Power of Our People and
Communities, (2) Strengthening the Sustainability of Our Supply Chain, (3) Managing and Reducing Our Environmental
Impacts, and (4) Operating Ethically and Transparently. These focus areas could prove to be the wrong focus areas,
or not the most material focus areas, for our business.
In light of increasing regulatory, customer, team member, investor, and societal scrutiny of businesses’ management
of material ESG issues, we may face a number of related risks, including making insufficient progress on or failing to
identify all material ESG issues, resulting in potentially significant negative impacts on our stakeholders and related
reputational harm; being perceived as having a superficial commitment to ESG without meaningfully addressing
stakeholder impacts, risks, and opportunities, thereby potentially reducing important stakeholders’ willingness to be
associated with, do business with, or be employed by us; an inability to control or avoid stakeholders politicizing our
ESG positions, causing potential reputational harm among segments of our important stakeholders; or failing to comply
with rapidly developing regulation on ESG in various jurisdictions, which may compromise our credibility, cause
reputational harm, or lead to legal proceedings against us.
Increasing attention to ESG matters may also cause certain institutional investors to be discouraged from investing in
us. Investor advocacy groups, certain institutional investors, investment funds, and other influential investors are also
increasingly focused on ESG practices and, in recent years, have placed increasing importance on the implications and
social cost of their investments. Regardless of the industry, investors’ increased focus and activism related to ESG and
similar matters may hinder access to capital, as investors may decide to reallocate capital or to not commit capital as a
result of their assessment of a company’s ESG practices. Companies which do not adapt to or comply with investor or
stakeholder expectations and standards, which are evolving, or which are perceived to have not responded
appropriately to the growing concern for ESG issues, regardless of whether there is a legal requirement to do so, may
suffer from reputational damage, and the business, financial condition, and/or stock price of such a company could be
materially and adversely affected. In addition, the importance of ESG scoring evaluations is becoming more broadly
accepted by shareholders. Certain organizations have developed scores and ratings to evaluate companies based
upon certain ESG metrics. Many shareholders focus on positive ESG business practices and scores when making
investments and may consider a company’s score as a reputational or other factor in making an investment decision.
In addition, certain investors, particularly institutional investors, use these scores to benchmark companies against their
peers and if a company is perceived as lagging, these investors may engage with companies to require improved ESG
disclosure or performance. We may face reputational damage in the event our ESG procedures or standards do not
meet the standards set by various constituencies. A low score could result in a negative perception of us, or exclusion
of our common stock from consideration by certain investors. In addition, the cost of compliance to receive high ESG
scores may be considerable.
We may be adversely affected by regulatory and litigation developments.
We are exposed to the risk that federal or state legislation may negatively affect our operations. Changes in federal or
state wage requirements, employee rights, health care, social welfare or entitlement programs, including health
insurance, paid leave programs, or other changes in workplace regulation could increase our cost of doing business or
otherwise adversely affect our operations. Additionally, we are regularly involved in litigation, including commercial, tort,
intellectual property, customer, employment, wage and hour, data privacy, anti-corruption, and other claims, including
purported class action lawsuits. The cost of defending against these types of claims against us or the ultimate resolution
of such claims, whether by settlement, mediation, arbitration, or adverse court or agency decision, may harm our
business.
2022 Form 10-K Page 13
We operate in many different jurisdictions and we could be adversely affected by violations of the U.S.
Foreign Corrupt Practices Act and similar worldwide anti-corruption laws.
The U.S. Foreign Corrupt Practices Act (“FCPA”) and similar worldwide anti-corruption laws, including the U.K. Bribery
Act of 2010, which is broader in scope than the FCPA, generally prohibit companies and their intermediaries from
making improper payments to government officials for the purpose of obtaining or retaining business. Our internal
policies mandate compliance with these anti-corruption laws. Despite our training and compliance programs, we cannot
be assured that our internal control policies and procedures will always protect us from reckless or criminal acts
committed by our employees or agents. Our continued expansion outside the United States, including in developing
countries, could increase the risk of FCPA violations in the future. Violations of these laws, or allegations of such
violations, could have a material adverse effect on our results of operations or financial condition.
International intellectual property protection can be uncertain and costly.
Uncertainty in intellectual property protection can result from conducting business outside the United States, particularly
in jurisdictions that do not have comparable levels of protection for our assets such as intellectual property, copyrights,
and trademarks. Continuing to operate in such foreign jurisdictions where the ability to enforce intellectual property
rights is limited increases our exposure to risk.
Risks Related to our Indebtedness and our Credit Facility
Our debt may cause an adverse effect on our business.
During 2021, we completed the sale of $400 million of 4% Senior Notes due 2029. Our inability to generate sufficient
cash flow to satisfy our debt obligations or to refinance our debt obligations could adversely affect our business, financial
condition, results of operations, and other corporate requirements. This could require us to direct a substantial portion
of our future cash flow toward payments on our indebtedness, which would reduce the amount of cash flow available
to fund working capital, capital expenditures, and other corporate requirements, thereby limiting our ability to respond
to business opportunities.
We may be unable to draw on our credit facility in the future.
Borrowings and letters of credit under our credit facility are not permitted to exceed a borrowing base, which is tied to
our level of inventory. Therefore, reductions in the value of our inventory would result in a reduction in our borrowing
base, which would reduce the amount of financial resources available to meet our operating requirements. Also, if we
do not comply with our financial covenants and we do not obtain a waiver or amendment from our lenders, the lenders
may elect to cause any amounts then owed to become immediately due and payable, or they may decline to renew our
credit facility. In that event, we would seek to establish a replacement credit facility with one or more other lenders,
including lenders with which we have an existing relationship, potentially on less desirable terms. There can be no
guarantee that replacement financing would be available at commercially reasonable terms, if at all.
Item 1B. Unresolved Staff Comments
None
Item 2. Properties
Our properties consist of land, leased stores, administrative facilities, and distribution centers. Gross square footage
and total selling area for our store locations at the end of 2022 were approximately 13.15 and 7.92 million square feet,
respectively. These properties, which are primarily leased, are located in the United States and its territories, Canada,
various European countries, Asia, Australia, and New Zealand.
As of January 28, 2023, we operated eight distribution centers, of which two are owned and six are leased, occupying
an aggregate of 3.85 million square feet. Six of these distribution centers are in the United States, one in Canada, and
one in the Netherlands. Additionally, we utilize the services of third-party providers for our operations in the U.K.,
Australia, New Zealand, and Asia. In connection with the closure of the Eastbay business, its distribution center will be
closed in early 2023. We also own a manufacturing facility and operate a leased warehouse in the United States, which
support our Team Edition apparel business.
We believe that all leases of properties that are material to our operations may be renewed, or that alternative properties
are available, on terms similar to existing leases.
2022 Form 10-K Page 14
Item 3. Legal Proceedings
Information regarding the Company’s legal proceedings is contained in the Legal Proceedings note under “Item 8.
Consolidated Financial Statements and Supplementary Data.”
Item 4. Mine Safety Disclosures
Not applicable.
Item 4A. Information about our Executive Officers
The following table provides information with respect to all persons serving as executive officers as of March 27, 2023,
including business experience for the last five years.
Name
Mary N. Dillon
Franklin R. Bracken
Sheilagh M. Clarke
Rosalind Reeves
Elliott D. Rodgers
Position
Chief Executive Officer since September 2022. Previously, Ms. Dillon served
as Chief Executive Officer of Ulta Beauty, Inc. from July 2013 through June
2021.
Executive Vice President and Chief Commercial Officer since December
2022. Previously, he served as Executive Vice President and Chief Operating
Officer from November 2021 through December 2022, Executive Vice
President and Chief Executive Officer — North America from July 2020
through November 2021, Senior Vice President and General Manager Foot
Locker U.S., Lady Foot Locker, and Kids Foot Locker from October 2017
through July 2020, and Vice President General Manager of Foot Locker
Canada from February 2016 through October 2017.
Executive Vice President, General Counsel and Secretary since March 2022.
Previously, she served as Senior Vice President, General Counsel and
Secretary from June 2014 through March 2022.
Executive Vice President and Chief Human Resource Officer since
December 2022. Previously, she served as Vice President, Talent, Diversity
& Organizational Capability from December 2021 through December 2022,
and Vice President, Field Human Resources from July 2020 through
December 2021. From March 2020 through July 2020, she was a founding
partner of AgileHR Services. Prior to this, she served as VP, Employment
Practice and Compliance of AMC Theaters from January 2019 through
August 2019 and Vice President, Benefits and Employment Practices from
January 2017 through December 2018.
Executive Vice President and Chief Operations Officer since December
2022. Previously, Mr. Rodgers served as Chief People Officer for Project 44
from October 2021 through November 2022. He served various roles at Ulta
Beauty, Inc., including Chief Information Officer from September 2020
through October 2021, Chief Supply Chain Officer from April 2019 to
September 2020, and Senior Vice President, Supply Chain from March 2017
through March 2019.
Robert Higginbotham Mr. Higginbotham
is
the
interim Chief Financial Officer, effective
March 1, 2023. Mr. Higginbotham has served as Senior Vice President,
Investor Relations and Financial Planning & Analysis since December 2022.
Previously, Mr. Higginbotham served as Vice President, Investor Relations
from January 2022 through November 2022. Prior to joining the Company,
Mr. Higginbotham served as an Analyst at Guidepoint Global, LLC from
January 2020 through January 2022, and Senior Analyst and Co-Portfolio
Manager at BTG Pactual S.A. from August 2015 through October 2018.
Senior Vice President and Chief Accounting Officer since May 2009.
Giovanna Cipriano
Executive
Officer Since
2022
Age
61
50
2021
63
2014
55
2022
47
2022
46
2023
53
2009
There are no family relationships among the executive officers or directors of the Company.
2022 Form 10-K Page 15
PART II
Item 5. Market for the Company’s Common Equity, Related Shareholder Matters, and Issuer Purchases of
Equity Securities
Foot Locker, Inc. common stock (ticker symbol “FL”) is listed on the New York Stock Exchange as well as on the Börse
Stuttgart stock exchange in Germany. As of January 28, 2023, we had 9,183 shareholders of record owning 93,393,339
common shares.
We declared dividends of $0.40 per share in the first, second, third, and fourth quarters of 2022. On February 25, 2023,
the Board of Directors declared a quarterly dividend of $0.40 per share to be paid on April 28, 2023. The Board of
Directors regularly reviews the dividend policy and rate, taking into consideration the overall financial and strategic
outlook for our earnings, liquidity, and cash flow.
The following table is a summary of our fourth quarter share repurchases:
Date Purchased
October 30 to November 26, 2022
November 27 to December 31, 2022
January 1 to January 28, 2023
Total
Number
of Shares
Purchased (1)
Average
Price
Paid Per
Share (1)
Total Number of
Shares Purchased as
Part of Publicly
Announced
Program (2)
229 $
—
1,489
1,718 $
31.41
—
38.92
37.92
Dollar Value of
Shares that may
yet be Purchased
Under the
Program (2)
1,103,814,042
1,103,814,042
1,103,814,042
— $
—
—
—
(1) These columns reflect shares acquired in satisfaction of the tax withholding obligation of holders of restricted stock awards, which vested during
the quarter. The calculation of the average price paid per share includes all fees, commissions, and other costs associated with the repurchase
of such shares.
(2) On February 24, 2022, the Board of Directors approved a share repurchase program authorizing the Company to repurchase up to $1.2 billion of
its common stock replacing the prior authorization. The new share repurchase program does not have an expiration date.
Performance Graph
The graph below compares the cumulative five-year total return to shareholders (common stock price appreciation plus
dividends, on a reinvested basis) of our common stock relative to the total returns of the S&P 400 Specialty Retailing
Index and the Russell Midcap Index.
Foot Locker, Inc.
S&P 400 Specialty Retailing Index
Russell Midcap Index
2/3/2018 2/2/2019 2/1/2020 1/30/2021 1/29/2022 1/28/2023
106.51
83.41 $
$
157.26
102.43 $
$
149.11
115.89 $
$
102.13 $
163.86 $
151.42 $
98.73 $
152.18 $
136.44 $
117.01 $
101.07 $
99.59 $
100.00 $
100.00 $
100.00 $
The above information should not be deemed “soliciting material” or to be filed with the SEC, nor shall such information be incorporated by reference into any
future filing under the Securities Act of 1933 or Securities Exchange Act of 1934, each as amended, except to the extent that we specifically incorporate it by
reference into such filing.
2022 Form 10-K Page 16
Item 6. Selected Financial Data
FIVE-YEAR SUMMARY OF SELECTED FINANCIAL DATA
The selected financial data below should be read in conjunction with the Consolidated Financial Statements and the
Notes thereto and other information contained elsewhere in this report.
2022
2021
2020
2019
2018
($ in millions, except per share amounts)
Summary of Operations
Sales
Licensing revenue
Gross margin
Selling, general and administrative expenses
Depreciation and amortization
Impairment and other
Interest (expense) income, net
Other income / (expense), net
Net income attributable to Foot Locker, Inc.
Per Common Share Data
Basic earnings
Diluted earnings
Common stock dividends declared per share
Weighted-average Common Shares Outstanding
Basic earnings
Diluted earnings
Financial Condition
Cash and cash equivalents
Merchandise inventories
Property and equipment, net
Total assets
Long-term debt and obligations under capital leases
Total shareholders’ equity
Financial Ratios
Sales per average gross square foot (1)
SG&A as a percentage of sales
Net income margin
Adjusted net income margin (2)
Earnings before interest and taxes (EBIT) (2)
EBIT margin (2)
Adjusted EBIT (2)
Adjusted EBIT margin (2)
Return on assets (ROA)
Return on invested capital (ROIC) (2)
Current ratio
Other Data
Capital expenditures
Number of stores at year end
Total selling square footage at year end (in millions)
Total gross square footage at year end (in millions)
$
$
$
$
$
$
$
$
$
8,747
12
2,792
1,903
208
112
(15)
(42)
342
3.62
3.58
1.60
94.3
95.5
536
1,643
920
7,907
452
3,293
548
21.8 %
3.9 %
5.4 %
539
6.2 %
692
7.9 %
4.3 %
9.2 %
1.6
285
2,714
7.92
13.15
8,958
10
3,080
1,851
197
172
(14)
384
893
8.72
8.61
1.00
7,548
6
2,183
1,587
176
117
(7)
192
323
3.10
3.08
0.70
8,005
8
2,543
1,650
179
65
11
4
491
4.52
4.50
1.52
102.5
103.8
104.3
105.1
108.7
109.1
1,680
923
788
7,043
110
2,776
417
21.0
4.3
3.9
501
6.6
428
5.7
4.7
8.6
1.7
907
1,208
824
6,589
122
2,473
510
20.6
6.1
6.7
661
8.3
722
9.0
9.4
12.5
2.0
804
1,266
917
8,135
457
3,243
540
20.7
10.0
8.4
1,254
14.0
1,049
11.7
11.8
16.4
1.4
209
2,858
7.91
13.28
7,939
6
2,528
1,614
178
37
9
(1)
541
4.68
4.66
1.38
115.6
116.1
891
1,269
836
3,820
124
2,506
504
20.3
6.8
6.9
704
8.9
741
9.3
13.9
12.0
3.3
159
2,998
7.50
12.98
187
3,129
7.57
13.15
187
3,221
7.63
13.24
(1) Calculated as store sales divided by the average monthly ending gross square footage of the last thirteen months. The computation for each of
the years presented reflects the foreign exchange rate in effect for such year.
(2) These represent non-GAAP measures, see Item 7, “Management’s Discussion and Analysis of Financial Condition and Results of Operations”
for additional information and calculation.
2022 Form 10-K Page 17
Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations
This section of the Annual Report on Form 10-K generally discusses 2022 and 2021 detail and year-over-year
comparisons between these years. For a comparison of our results for 2021 to our results of 2020 and other financial
information related to 2020, refer to our Annual Report on Form 10-K for the year ended January 29, 2022 filed with the
SEC on March 24, 2022.
Our Business
Foot Locker, Inc. is a leading specialty retailer operating 2,714 stores in 29 countries across the North America, Europe,
Australia, New Zealand, and Asia with a franchised store presence in the Middle East and Asia. Foot Locker, Inc. has
a strong history of sneaker authority that sparks discovery and ignites the power of sneaker culture through its portfolio
of brands, including Foot Locker, Kids Foot Locker, Champs Sports, WSS, and atmos.
Overview of Consolidated Results
(in millions, except per share data)
Sales
Sales per average square foot
Licensing revenue
Gross margin
Gross margin rate
Selling, general and administrative expenses ("SG&A")
SG&A, as a percentage of sales
Income from operations
Income from continuing operations before income taxes
Net income attributable to Foot Locker, Inc.
Diluted earnings per share
Adjusted net income (non-GAAP)
Adjusted diluted earnings per share (non-GAAP)
Highlights of our 2022 financial performance include:
2022
2021
2020
$
$
$
$
$
$
$
8,747 $
548
12
2,792
31.9 %
1,903
21.8 %
581 $
524 $
342 $
3.58 $
473 $
4.95 $
8,958 $
540
10
3,080
34.4 %
1,851
20.7 %
870 $
1,240 $
893 $
8.61 $
755 $
7.27 $
7,548
417
6
2,183
28.9
1,587
21.0
309
494
323
3.08
296
2.81
• Sales per square foot increased to $548, from $540 per square foot in 2021, while total sales declined by 2.4%.
Excluding the effect of foreign currency fluctuations, sales increased by 0.9% as compared to the prior-year
period.
• Our footwear sales represented 80% of total sales, while apparel and accessory sales were 20%, consistent
with last year’s distribution of sales.
• Sales and comparable sales both decreased in 2022 compared to our record year in 2021.
Sales increase/(decrease)
Comparable-store sales increase/(decrease)
2022
2021
2020
(2.4) %
(1.9) %
18.7 %
15.4 %
(5.7) %
(5.9) %
• The percentage of our direct-to-customers sales channel decreased to 17.5% of total sales in 2022 as
compared with the prior year which represented 21.5% of total sales. The results in 2021 reflected some
remaining effects from the COVID-19 pandemic. We are making ongoing investments in our omni-channel
ecosystem, including our e-commerce experience and supply chain capabilities, in order to create seamless
shopping experiences across all of our sales channels.
• Gross margin, as a percentage of sales, decreased to 31.9% as a result of a more promotional marketplace
during 2022. We took pricing actions in line with the market in order to ensure that our inventory position
remained current and corresponding with sales trends.
• SG&A expenses were 21.8% of sales, an increase of 110 basis points as compared with the prior year. The
increase primarily reflected higher compensation costs and the effect of the prior-year payroll subsidies
recorded in connection with the COVID-19 pandemic.
2022 Form 10-K Page 18
• Our newly acquired businesses of WSS and atmos were both accretive to earnings. We continued to be excited
about the growth potential in both these banners.
• We substantially completed the wind down of the Footaction banner during 2022 and recently announced the
closure of our underperforming Sidestep banner, which is expected to be completed in the first half of 2023.
• Net income attributable to Foot Locker, Inc. was $342 million, or $3.58 diluted earnings per share. The
$551 million decrease from the prior-year period reflected a $426 million reduction in other income, primarily
from fair value adjustments to our minority investments, and a reduction in income from operations.
• Adjusted net income was $473 million, or $4.95 diluted earnings per share, as compared with adjusted net
income of $755 million, or $7.27 diluted earnings per share, in the prior year.
Highlights of our financial position for the year ended January 28, 2023 include:
• We ended the year in a strong financial position. Our cash and cash equivalents at January 28, 2023 were
$536 million and net of debt it was $84 million.
• Net cash provided by operating activities was $173 million as compared with $666 million last year, as we built
up our inventory position in 2022.
• Cash capital expenditures during 2022 totaled $285 million and were primarily directed to the remodeling or
relocation of 115 stores and the build-out of 103 new stores, as well as various technology and infrastructure
projects.
• During 2022, we returned $279 million of cash to our shareholders. Dividends totaling $150 million were
declared and paid during 2022, and 4,050,000 shares were repurchased under our share repurchase program
at a cost of $129 million. In February 2023, our Board of Directors approved a dividend of $0.40 per share
payable in April 2023. These initiatives demonstrate our commitment to continue delivering meaningful returns
to our shareholders.
Reconciliation of Non-GAAP Measures
In addition to reporting our financial results in accordance with generally accepted accounting principles (“GAAP”), we
report certain financial results that differ from what is reported under GAAP. In the following tables, we have presented
certain financial measures and ratios identified as non-GAAP such as Earnings Before Interest and Taxes (“EBIT”),
adjusted EBIT, adjusted EBIT margin, adjusted income before income taxes, adjusted net income, adjusted net income
margin, adjusted diluted earnings per share, Return on Invested Capital (“ROIC”), and free cash flow.
Effective with the first quarter of 2022, the calculation for non-GAAP earnings excludes gains and losses from all
minority investments, including the adjustments related to the investment in Retailors, Ltd. We believe this is a more
representative measure of our recurring earnings, assists in the comparability of results, and is consistent with how
management reviews performance. The non-GAAP results for prior periods have been recast, as applicable, to conform
to the current year’s presentation.
We present these non-GAAP measures because we believe they assist investors in comparing our performance across
reporting periods on a consistent basis by excluding items that are not indicative of our core business or which affect
comparability. These non-GAAP measures are also useful in assessing our progress in achieving our long-term
financial objectives.
Additionally, we present certain amounts as excluding the effects of foreign currency fluctuations, which are also
considered non-GAAP measures. Throughout the following discussions, where amounts are expressed as excluding
the effects of foreign currency fluctuations, such changes are determined by translating all amounts in both years using
the prior-year average foreign exchange rates. Presenting amounts on a constant currency basis is useful to investors
because it enables them to better understand the changes in our businesses that are not related to currency
movements.
We estimate the tax effect of the non-GAAP adjustments by applying a marginal rate to each of the respective items.
The income tax items represent the discrete amount that affected the period.
The non-GAAP financial information is provided in addition to, and not as an alternative to, our reported results prepared
in accordance with GAAP. Presented below is a reconciliation of GAAP and non-GAAP results discussed throughout
this Annual Report on Form 10-K. All adjusted amounts exclude the loss from discontinued operations. Please see the
non-GAAP reconciliations for free cash flow in the “Liquidity and Capital Resources” section.
2022 Form 10-K Page 19
Reconciliation of Non-GAAP Measures
($ in millions)
Pre-tax income:
Income from continuing operations before income taxes
Pre-tax adjustments excluded from GAAP:
Impairment and other (1)
Other income, net (2)
Adjusted income before income taxes (non-GAAP)
Calculation of Earnings Before Interest and Taxes (EBIT):
Income from continuing operations before income taxes
Interest expense, net
EBIT
Adjusted income before income taxes
Interest expense, net
Adjusted EBIT (non-GAAP)
EBIT margin %
Adjusted EBIT margin %
After-tax income:
Net income attributable to Foot Locker, Inc.
After-tax adjustments excluded from GAAP:
2022
2021
2020
$
524
$
1,240
$
494
112
41
677
524
(15)
539
677
(15)
692
$
$
$
$
$
172
(377)
1,035
1,240
(14)
1,254
1,035
(14)
1,049
$
$
$
$
$
117
(190)
421
494
(7)
501
421
(7)
428
$
$
$
$
$
6.2 %
7.9 %
14.0 %
11.7 %
6.6 %
5.7 %
$
342
$
893
$
323
Impairment and other, net of income tax benefit of $21, $42, and $24,
respectively (1)
Other income, net of income tax (benefit) expense of ($9), $99, and
$50 respectively (2)
Net loss from discontinued operations, net of income tax benefit of $1,
$-, and $-, respectively (3)
Tax reserves charge (4)
Tax benefits related to tax law rate changes (5)
Tax charge related to revaluation of certain intellectual property
91
32
3
5
—
130
93
(278)
(140)
—
—
(1)
—
—
(5)
rights (6)
Adjusted net income (non-GAAP)
$
—
473
$
11
755
$
25
296
Earnings per share:
Diluted EPS
Diluted EPS amounts excluded from GAAP:
Impairment and other (1)
Other income, net (2)
Net loss from discontinued operations (3)
Tax reserves charge (4)
Tax benefits related to tax law rate changes (5)
Tax charge related to revaluation of certain intellectual property
rights (6)
Adjusted diluted EPS (non-GAAP)
Net income margin %
Adjusted net income margin %
$
3.58
$
8.61
$
3.08
0.95
0.33
0.04
0.05
—
1.24
(2.68)
—
—
(0.01)
0.87
(1.33)
—
—
(0.05)
—
4.95
$
0.11
7.27
$
0.24
2.81
$
3.9 %
5.4 %
10.0 %
8.4 %
4.3 %
3.9 %
2022 Form 10-K Page 20
Notes on Non-GAAP Adjustments:
(1) For 2022, 2021, and 2020, we recorded impairment and other of $112 million ($91 million after tax), $172 million ($130 million after tax), and
$117 million ($93 million after tax), respectively. See the Impairment and Other section for further information.
(2) During 2022, 2021 and 2020, we recorded other expense of $41 million ($32 million after tax), and other income of $377 million ($278 million
after tax), and $190 million, ($140 million after-tax), respectively. During 2022, we recognized a loss of $61 million ($45 million after tax) to
measure the Retailors, Ltd. investment at fair value, based on the publicly available stock price, until it was sold in the fourth quarter. This includes
an offset of $1 million of dividend income. We recorded a gain of $77 million ($59 million after tax) on the Retailors, Ltd. investment in 2021. In
2022, we recognized a $19 million ($12 million after tax) gain on the sale of our Eastbay Team Sales business. Non-cash gains of $290 million
($214 million after tax) and $190 million ($140 million after tax) in 2021 and 2020, respectively, related to our minority investment in GOAT, which
is measured using the fair value measurement alternative and received additional funding at higher valuations than our initial investment. In
2021, this caption also included $7 million ($5 million after tax) related to the finalization of the insurance claim associated with the prior year
social unrest.
See the Other Income / (Expense), net section for further information.
(3) We recognized a charge to discontinued operations of $4 million ($3 million after tax) during the fourth quarter of 2022 related to the resolution of
a legal matter of a business we formerly operated.
(4)
In the second quarter of 2022, we recorded a $5 million charge related to our income tax reserves due to the resolution of a foreign tax settlement.
(5) We recognized tax charges of $1 million and $5 million during the fourth quarters of 2021 and 2020, respectively, in connection with tax law
changes in the Netherlands.
(6) We recorded tax charges related to the revaluation of certain intellectual property rights, pursuant to a non-U.S. advance pricing agreement of
$11 million and $25 million for 2021 and 2020, respectively.
Return on Invested Capital
ROIC is presented below and represents a non-GAAP measure. We believe ROIC is a meaningful measure because
it quantifies how efficiently we generated operating income relative to the capital we have invested in the business.
ROIC, subject to certain adjustments, is also used as a measure in executive long-term incentive compensation.
The closest U.S. GAAP measure to ROIC is Return on Assets (“ROA”) and is also presented below. ROA is calculated
as net income attributable to Foot Locker, Inc. in the fiscal year divided by the two-year average of total assets. ROA
decreased to 4.3% as compared with 11.8% in the prior year. This decrease reflected lower profits and higher average
total assets compared with 2021. Our ROIC decreased to 9.2% in 2022, as compared with 16.4% in the prior year. The
overall decrease in ROIC reflected a decrease in adjusted return after taxes, as well as higher average invested capital,
primarily related to higher inventory levels in 2022.
ROA (1)
ROIC %
2022
2021
2020
4.3 %
9.2 %
11.8 %
16.4 %
4.7 %
8.6 %
(1) Represents net income attributable to Foot Locker, Inc. of $349 million, $893 million, and $323 million divided by average total assets of
$8,021 million, $7,589 million, and $6,816 million for 2022, 2021, and 2020, respectively.
Calculation of ROIC:
($ in millions)
Adjusted EBIT
+ Interest component of straight-line rent expense (1)
Adjusted net operating profit
- Adjusted income tax expense (2)
+ Net loss attributable to noncontrolling interests
= Adjusted return after taxes
Average total assets
- Average cash and cash equivalents
- Average non-interest bearing current liabilities
- Average merchandise inventories
+ 13‑month average merchandise inventories
= Average invested capital
ROIC %
$
$
$
$
2022
2021
2020
$
$
$
692
136
828
(244)
1
585
8,021
(670)
(1,109)
(1,455)
1,569
6,356
$
$
$
1,049
144
1,193
(321)
1
873
7,589
(1,242)
(1,060)
(1,095)
1,116
5,308
$
9.2 %
$
16.4 %
428
158
586
(167)
—
419
6,816
(1,294)
(819)
(1,066)
1,243
4,880
8.6 %
(1) Represents the add-back to operating income driven by the hypothetical interest expense we would incur if the property under our operating
leases were owned or accounted for as finance leases. Calculated using the discount rate for each operating lease recorded as a component of
rent expense. Operating lease interest is added back to adjusted net operating profit in the ROIC calculation to account for differences in capital
structure between us and our competitors.
(2) The adjusted income tax expense represents the marginal tax rate applied to adjusted net operating profit for each of the periods presented.
2022 Form 10-K Page 21
Segment Reporting and Results of Operations
Our operating segments are identified according to how our business activities are managed and evaluated by our chief
operating decision maker, our CEO. We have three operating segments, North America, Europe, Middle East, and
Africa (“EMEA”), and Asia Pacific. We have further aggregated these operating segments into one reportable segment
based upon their shared customer base and similar economic characteristics.
Sales
Comparable-store sales is a key performance indicator for us. All references to comparable-store sales for a given
period relate to sales of stores that were open at the period-end and had been open for more than one year. The
computation of consolidated comparable sales also includes direct-to-customers sales as a result of our omnichannel
strategy. We view our e-commerce business as an extension of our physical stores. Stores opened or closed during
the period are not included in the comparable-store base; however, stores closed temporarily for relocation or
remodeling are included. Computations exclude the effect of foreign currency fluctuations.
Sales from acquired businesses that include inventory are included in the computation of comparable-store sales after
15 months of operations. Accordingly, sales of WSS were included effective January 2023, while the sales from atmos
continues to be excluded from the computation of comparable-store sales. Additionally, as a result of the Eastbay Team
Sales divestiture, sales from this business were removed for the computation of comparable sales for all periods.
The information shown below represents certain sales metrics by sales channel:
($ in millions)
Store sales
$ Change
% Change
% of total sales
Comparable sales increase (decrease)
Direct-to-customer sales
$ Change
% Change
% of total sales
Comparable sales increase (decrease)
Total sales
$ Change
% Change
Comparable sales increase (decrease)
$
$
$
$
$
$
2022
2021
7,219 $
190 $
2.7 %
82.5 %
3.7 %
1,528 $
(401) $
(20.8) %
17.5 %
(21.2) %
8,747 $
(211) $
(2.4) %
(1.9) %
7,029 $
1,582
29.0 %
78.5 %
25.8 %
1,929 $
(172)
(8.2) %
21.5 %
(10.6) %
8,958 $
1,410
18.7 %
62.8 %
2020
5,447
72.2 %
(19.3) %
2,101
27.8 %
62.8 %
7,548
5.6 %
In 2022, sales decreased by 2.4% to $8,747 million from sales of $8,958 million in 2021. Excluding the effect of foreign
currency fluctuations, sales increased by 0.9% as compared with 2021. Sales from our acquired WSS and atmos
banners totaled $604 million and $188 million for 2022, respectively, compared with a partial year in 2021 of $195 million
and $49 million, respectively.
Foot Locker
Champs Sports
Kids Foot Locker
WSS
Other
North America
Foot Locker
Sidestep
EMEA
Foot Locker
atmos
Asia Pacific
Total Foot Locker, Inc.
Constant
Currencies
Comparable
Sales
0.7 %
(13.1) %
(2.2) %
209.7 %
n.m.
(6.6) %
16.5 %
38.4 %
17.5 %
19.5 %
351.5 %
58.1 %
0.9 %
0.9 %
(13.1) %
(5.4) %
10.6 %
n.m.
(7.2) %
14.1 %
23.0 %
14.5 %
16.0 %
n.m.
16.0 %
(1.9) %
2022 Form 10-K Page 22
Comparable sales decreased by 1.9% as compared with the prior year. By operating segment, North America had a
7.2% decrease, while EMEA and Asia Pacific generated increases of 14.5% and 16.0%, respectively. Comparable
sales increased in our stores; however, they declined in our direct-to-customer channel in 2022. Our sales in stores
increased, driven by strong demand, brand diversification efforts, and improved access to high-quality inventory. Our
direct-to-customer channel continued to decrease to more historical levels, as shoppers navigated back to physical
locations.
For the combined channels, sales, excluding foreign currency fluctuations, decreased in North America by 6.6%, while
EMEA increased by 17.5%, and Asia Pacific increased by 19.5%, as compared with 2021. Our North American
operating segment’s sales, while strong in 2022, no longer benefited from the significant fiscal stimulus which
contributed to growth in 2021. The effects of inflation negatively affected customer demand. Additionally, the wind down
of the Footaction and Eastbay businesses negatively affected sales. Within EMEA, sales for the Foot Locker and
Sidestep banners increased with the return of in-store traffic. Asia Pacific, excluding atmos, generated increases in all
of the geographies in which it operates, led by our operations in Australia.
From a product perspective for the combined channels, the sales decrease in 2022 was across footwear and apparel,
offset by a small increase in accessories. Footwear sales decreased mainly across the men’s and kids’ segments, while
women’s increased. Similarly, apparel sales decreased for men’s and kids’, while women’s increased slightly.
Gross Margin
Gross margin rate
Basis point (decrease)/increase in the gross margin rate
31.9 %
(250)
34.4 %
550
28.9 %
2022
2021
2020
Components of the change:
Merchandise margin rate (decline)/ improvement
(Higher)/lower occupancy and buyers’ compensation
expense rate
(240)
(10)
450
100
Gross margin is calculated as sales minus cost of sales. Cost of sales includes the cost of merchandise, freight,
distribution costs including related depreciation expense, shipping and handling, occupancy and buyers’ compensation.
Occupancy costs include rent (including fixed common area maintenance charges and other fixed non-lease
components), real estate taxes, general maintenance, and utilities.
The gross margin rate decreased in 2022 by 250 basis points as compared to the prior year, reflecting a lower
merchandise margin rate due to higher markdowns versus historically-low levels last year. The occupancy rate
deleverage reflected the effect of prior year rent abatements related to COVID-19. Excluding the benefit from the prior
year abatement, the rate would have decreased by 10 basis points despite the decline in sales.
Selling, General and Administrative Expenses (SG&A)
($ in millions)
SG&A
$ Change
% Change
SG&A as a percentage of sales
$
$
2022
2021
$
1,903
52
$
2.8 %
21.8 %
$
1,851
264
16.6 %
20.7 %
2020
1,587
21.0 %
SG&A increased by $52 million, or 2.8%, in 2022, as compared with the prior year. As a percentage of sales, the SG&A
rate increased by 110 basis points as compared with 2021. Excluding the effect of foreign currency fluctuations, SG&A
increased by $121 million, or 6.5%, as compared with the prior year. Our newly acquired businesses contributed
$104 million to SG&A, as the prior year represented a partial year.
The increase in SG&A, as a percentage of sales, was driven by higher labor costs, information technology and support
expenses, and COVID-19 related matters in the prior year. SG&A in 2022 included nominal payroll subsidies from local
governments, compared with $16 million in 2021.
2022 Form 10-K Page 23
Depreciation and Amortization
($ in millions)
Depreciation and amortization
$ Change
% Change
2022
2021
$
$
$
208
11
$
5.6 %
$
197
21
11.9 %
2020
176
Depreciation and amortization increased by $11 million as compared with the prior year. Excluding the effect of foreign
currency fluctuations, depreciation and amortization increased by $17 million primarily due to the additions of WSS and
atmos.
Operating Results
Division profit was $832 million, or 9.5% of sales in 2022. This compares with $1,161 million, or 13.0% of sales, for the
prior year. The decrease was driven by both sales channels experiencing declines in gross margin and deleveraging
expenses. Our newly acquired businesses contributed $45 million to division profit, as the prior year represented a
partial period.
Impairment and Other
During the fourth quarter of 2022, we conducted an impairment review for approximately 142 underperforming stores,
including 70 Sidestep stores due to the announced closure of the banner. We evaluated the long-lived assets, including
the right-of-use assets and recorded non-cash charges of $53 million to write down store fixtures, leasehold
improvements, and right-of-use assets for approximately 110 of these stores, which included $17 million for Sidestep
stores. During the first and second quarters of 2022 we recorded impairment charges of $5 million related to long-lived
assets and right-of-use assets, as well as accelerated tenancy charges.
During 2022, we incurred $42 million of transformation consulting expense. Additionally, we incurred $22 million of
reorganization costs, primarily severance, due to the reduction of support functions as we streamlined the organization
for operational efficiency and included $4 million of other costs related to the wind down of the Sidestep banner. We
also recorded $8 million of intangible asset impairment on the Sidestep tradename, due to the store and website
closures. During the fourth quarter of 2022, we recorded a $9 million charge for litigation costs, as well as a benefit of
$31 million related to the change in fair value of contingent consideration related to our acquisition of atmos. During
2022 and 2021 we recorded acquisition and integration costs of $4 million and $24 million, respectively, which primarily
represented investment banking and integration consulting fees related to the WSS and atmos acquisitions.
During 2021, we conducted impairment reviews of Footaction stores and underperforming stores and we recorded
charges totaling $92 million. to write down store fixtures, leasehold improvements, and right-of-use assets. We also
recorded $4 million of reorganization expense related to Footaction and certain support functions. and non-cash
charges of $42 million related to the write-down of certain minority investments. Additionally, we recorded $15 million
of lease termination costs related to the closure of certain stores and $2 million of intangible asset impairment on the
Footaction tradename, due to the store and website closures.
See Note 5, Impairment and Other for additional information.
Corporate Expense
($ in millions)
Corporate expense
$ Change
2022
2021
2020
$
$
151
22
$
$
129
58
$
71
Corporate expense consists of unallocated general and administrative expenses as well as depreciation and
amortization related to our corporate headquarters, centrally managed departments, unallocated insurance and benefit
programs, certain foreign exchange transaction gains and losses, and other items. Depreciation and amortization
included in corporate expense was $39 million and $34 million in 2022 and 2021, respectively. Excluding the changes
in depreciation and amortization, corporate expense increased primarily due to higher information technology and
support expenses.
2022 Form 10-K Page 24
Interest Expense, net
($ in millions)
Interest expense
Interest income
Interest expense, net
Weighted-average interest rate (excluding fees)
$
$
2022
2021
2020
$
(24)
9
$
(15)
3.8 %
$
(17)
3
$
(14)
4.8 %
(13)
6
(7)
6.6 %
We recorded net interest expense of $15 million in 2022, compared to $14 million in 2021. Interest expense increased
primarily due to the issuance of the 4% Notes, partially offset by interest income from our cross-currency swap and
higher interest rates earned on our cash and cash equivalents.
Other Income / (Expense), net
($ in millions)
Other income / (expense), net
2022
2021
2020
$
(42)
$
384
$
192
This caption generally includes non-operating items, including changes in fair value of minority investments measured
at fair value or using the fair value measurement alternative, changes in the market value of our available-for-sale
security, our share of earnings or losses related to our equity method investments, and net benefit (expense) related to
our pension and postretirement programs excluding the service cost component.
During 2021, we invested $68 million to take a common stock minority stake in a public entity, Retailors, Ltd., which is
traded on the Tel Aviv stock exchange. This investment was at a discount to the initial public offering price, resulting in
a non-cash gain of $9 million in 2021. Additionally, changes in fair value generated non-cash gains of $68 million during
2021. A loss of $62 million was recorded during 2022, partially offset by $1 million of dividend income. This investment
was sold during 2022 generating proceeds of $83 million. Our minority investment in GOAT is accounted for using the
fair value measurement alternative, which is at cost adjusted for changes in observable prices minus impairment. GOAT
received funding at higher valuations in both 2021 and 2020 resulting in non-cash gains of $290 million and $190 million,
respectively. As of January 28, 2023, the fair value of our investment in GOAT totaled $612 million.
The losses in 2022 were offset by a gain of $19 million from the divestiture of Eastbay Team Sales.
Income Taxes
($ in millions)
Provision for income taxes
Effective tax rate
2022
2021
2020
$
180
$
34.3 %
348
$
28.1 %
171
34.5 %
Our effective tax rate for 2022 was 34.3%, as compared with 28.1% in 2021. The increase was primarily due to
significantly lower pretax income earned in the United States increasing the effect of nondeductible expenses on the
effective tax rate. Additionally, we recorded a $11 million tax charge in 2021 related to the revaluation of certain
intellectual property rights pursuant to a non-U.S. advance pricing agreement. During 2020, a $25 million tax charge
was recognized in connection with the revaluation. Additionally, during the fourth quarters of 2021 and 2020, we
recorded tax benefits of $1 million and $5 million, respectively, in connection with tax law changes in the Netherlands.
We regularly assess the adequacy of provisions for income tax contingencies in accordance with the applicable
authoritative guidance on accounting for income taxes. As a result, reserves for unrecognized tax benefits may be
adjusted due to new facts and developments, such as changes to interpretations of relevant tax law, assessments from
taxing authorities, settlements with taxing authorities, and lapses of statutes of limitations. During 2022, we recorded a
$5 million charge related to our income tax reserves due to the resolution of a foreign tax settlement. Partially offsetting
this charge were tax benefits totaling $3 million from reserves releases due to various statute of limitation lapses. The
changes in the tax reserves were not significant in 2021 and 2020.
During 2022, we recorded a tax expense of $6 million in connection with Eastbay Team Sales divestiture, including the
effect of a non-deductible goodwill write-off.
On August 16, 2022, President Biden signed the Inflation Reduction Act (“IRA”) of 2022 into law. The IRA contains a
number of revisions to the Internal Revenue Code, including a 15% corporate minimum tax and a 1% excise tax on
corporate stock repurchases in tax years beginning after December 31, 2022. We do not currently expect the IRA tax
provisions will have a significant effect on our overall effective tax rate.
2022 Form 10-K Page 25
Liquidity and Capital Resources
Liquidity
Our primary source of liquidity has been cash flow from operations, while the principal uses of cash have been to fund
inventory and other working capital requirements; finance capital expenditures related to store openings, store
remodelings, internet and mobile sites, information systems, and other support facilities; quarterly dividend payments;
and interest payments; and fund other cash requirements to support the development of our short-term and long-term
operating strategies. We generally finance real estate with operating leases. We believe our cash, cash equivalents,
future cash flow from operations, and amounts available under our credit agreement will be adequate to fund these
requirements.
We may also repurchase our common stock through open market purchases, privately negotiated transactions, or
otherwise. Such repurchases if any, will depend on prevailing market conditions, liquidity requirements, contractual
restrictions, and other factors. The amounts involved may be material. On February 24, 2022, the Board of Directors
approved a share repurchase program authorizing the Company to repurchase up to $1.2 billion of its common stock
replacing the prior authorization. The new share repurchase program does not have an expiration date and as of
January 28, 2023, approximately $1.1 billion remained available.
On February 15, 2023, the Board of Directors declared a quarterly dividend of $0.40 per share to be paid on
April 28, 2023.
Any material adverse change in customer demand, fashion trends, competitive market forces, or customer acceptance
of our merchandise mix and retail locations, uncertainties related to the effect of competitive products and pricing, our
reliance on a few key suppliers for a significant portion of our merchandise purchases and risks associated with global
product sourcing, economic conditions worldwide, the effects of currency fluctuations, as well as other factors listed
under the heading “Disclosure Regarding Forward-Looking Statements,” could affect our ability to continue to fund our
liquidity needs from business operations.
Maintaining access to merchandise that we consider appropriate for our business may be subject to the policies and
practices of our key suppliers. Therefore, we believe that it is critical to continue to maintain satisfactory relationships
with these key suppliers. We purchased 86% and 87% of our merchandise from our top five suppliers in 2022 and
2021, respectively. Approximately 65% and 68% was purchased from one supplier, Nike, Inc., in 2022 and 2021,
respectively.
Planned capital expenditures in 2023 are $275 million. Included in the planned amount is $210 million dedicated to real
estate projects designed to elevate our customers’ in-store experience. The real estate total includes the remodeling or
expansion of approximately 170 existing stores, as well as the planned opening of approximately 100 new stores,
primarily representing the continued expansion of our off-mall community-based and “power” store formats, which
provide pinnacle retail experiences that deliver connected customer interactions through service, experience, product,
and a sense of community. The real estate total includes continued expansion in North America, EMEA and funding for
approximately 25 WSS new stores. Finally, the capital plan for 2023 also includes $65 million primarily for digital and
supply chain initiatives. We also expect to spend an additional $30 million in software-as-a-service contracts related to
our technology initiatives. We have the ability to revise and reschedule some of the anticipated spending program
should our financial position require it.
Operating Activities
($ in millions)
Net cash provided by operating activities
$ Change
2022
2021
2020
$
$
173
(493)
$
666
$
1,062
The amount provided by operating activities reflects income adjusted for non-cash items and working capital changes.
Adjustments to net income for non-cash items include gains, losses, impairment and other, depreciation and
amortization, deferred income taxes, and share-based compensation expense.
The decrease in cash from operating activities reflected higher merchandise purchases and payments of accounts
payable and accrued and other liabilities, as well as lower net income, as compared with the same period last year.
2022 Form 10-K Page 26
Investing Activities
($ in millions)
Net cash used in investing activities
$ Change
2022
2021
2020
$
$
(162)
1,214
$
(1,376)
$
(168)
The reduction in cash used in investing activities primarily reflected the WSS and atmos acquisitions in the prior year,
a reduction in minority investment spend, and proceeds from the sale of a business and minority investment, partially
offset by higher capital expenditures in the current year. Spending for acquisitions in the current year related to WSS
of $2 million and $14 million for atmos as certain post-closing conditions were satisfied, as compared with total spending
of $1,056 million in 2021.
Capital expenditures in 2022 increased to $285 million from $209 million in the prior year. During 2022, we completed
the remodeling or relocation of 115 existing stores, the build-out of 103 new stores, and made progress on the
development of information systems, websites, and infrastructure, including supply chain initiatives.
During 2022, we sold our investment in a public entity (Retailors, Ltd.) generating cash of $83 million and dissolved a
joint venture for proceeds of $12 million. Also during the second quarter of 2022, we sold our Eastbay Team Sales
business receiving proceeds of $47 million. We have invested $5 million in minority investments during the current year,
including various limited partner venture capital funds managed by Black fund managers, who are committed to
advancing diverse-led businesses as part of our Leading in Education and Economic Development (LEED) initiative.
Financing Activities
($ in millions)
Net cash used in financing activities
$ Change
2022
2021
2020
$
$
(279)
(127)
$
(152)
$
(126)
Cash used in financing activities consisted primarily of our return to shareholders initiatives, including our share
repurchase program and cash dividend payments, as follows:
($ in millions)
Share repurchases
Dividends paid on common stock
Total returned to shareholders
2022
2021
2020
$
$
129
150
279
$
$
348
101
449
$
$
37
73
110
Cash used in financing activities increased primarily due to the prior year sale of $400 million aggregate principal
amount of our 4% Senior Notes due 2029, partially offset by the $98 million repayment of principal related to the 8.5%
debentures.
During 2022, we repurchased 4,050,000 shares of common stock for $129 million under our share repurchase
programs, whereas in the prior year we spent $348 million to repurchase shares. We also declared and paid
$150 million in dividends representing a quarterly rate of $0.40 per share in 2022, as compared with $101 million in
dividends in 2021.
Free Cash Flow (non-GAAP measure)
In addition to net cash provided by operating activities, we use free cash flow as a useful measure of performance and
as an indication of our financial strength and our ability to generate cash. We define free cash flow as net cash provided
by operating activities less capital expenditures (which is classified as an investing activity). We believe the presentation
of free cash flow is relevant and useful for investors because it allows investors to evaluate the cash generated from
underlying operations in a manner similar to the method used by management. Free cash flow is not defined under
U.S. GAAP. Therefore, it should not be considered a substitute for income or cash flow data prepared in accordance
with U.S. GAAP and may not be comparable to similarly titled measures used by other companies. It should not be
inferred that the entire free cash flow amount is available for discretionary expenditures. The following table presents a
reconciliation of net cash flow provided by operating activities, the most directly comparable U.S. GAAP financial
measure, to free cash flow.
($ in millions)
Net cash provided by operating activities
Free cash flow
2022
2021
2020
$
$
173
(112)
$
$
666
457
$
$
1,062
903
2022 Form 10-K Page 27
Capital Structure
We maintain a credit facility for working capital and general corporate purposes. We currently have a $600 million asset-
based revolving credit facility that is scheduled to expire on July 14, 2025. No borrowings were outstanding as of
January 28, 2023. The amount of borrowing under our credit facility is reduced by the amount of standby and
commercial letters of credit outstanding, which are not significant.
Credit Rating
As of March 27, 2023, our corporate credit ratings from Standard & Poor’s and Moody’s Investors Service are BB+ and
Ba1, respectively. In addition, Moody’s Investors Service has rated our senior unsecured notes Ba2.
Off-Balance Sheet Arrangements
We have not entered into any transactions with unconsolidated entities that expose us to material continuing risks,
contingent liabilities, or any other obligation under a variable interest in an unconsolidated entity. Also, our financial
policies prohibit the use of derivatives for which there is no underlying exposure.
Critical Accounting Policies
Our responsibility for integrity and objectivity in the preparation and presentation of the financial statements requires
application of appropriate accounting policies. Generally, our accounting policies and methods are those specifically
required by U.S. GAAP. Included in the Summary of Significant Accounting Policies note in “Item 8. Consolidated
Financial Statements and Supplementary Data” is a summary of the most significant accounting policies. In some
cases, we are required to calculate amounts based on estimates for matters that are inherently uncertain. We believe
the following to be the most critical of those accounting policies that necessitate subjective judgments.
Business Combinations
We account for business combinations using the acquisition method of accounting, which requires that once control is
obtained, all the assets acquired and liabilities assumed are recorded at their respective fair values at the date of
acquisition. Additionally, contingent consideration is recorded at fair value on the acquisition date and classified as a
liability. We allocate the purchase price of acquired businesses to the tangible, intangible assets, and contingent
consideration based, in part, upon internal estimates of cash flows and considering the report of a third-party valuation
expert retained to assist the Company and requires a significant amount of management judgment. The determination
of fair values of identifiable assets and liabilities as well as contingent consideration requires estimates and the use of
valuation techniques when market value is not readily available. For intangible assets acquired in a business
combination, we typically determine the fair value based on the discounted cash flow model, specifically the relief from
royalty method for intangible assets related to a tradename. Significant estimates in valuing certain intangible assets
and contingent consideration include, but are not limited to, the amount and timing of future cash flows, growth rates,
customer attrition rates, discount rates and useful lives. Changes to the assumptions used to estimate the fair value
could affect the recorded amounts of the assets acquired and the resultant goodwill, as well as the depreciation and
amortization expense recorded in future periods.
Impairment of Long-Lived Tangible Assets and Right-of-Use Assets
We perform an impairment review when circumstances indicate that the carrying value of long-lived tangible assets
and right-of-use assets may not be recoverable (“a triggering event”). Our policy for determining whether a triggering
event exists comprises the evaluation of measurable operating performance criteria and qualitative measures at the
lowest level for which identifiable cash flows are largely independent of cash flows of other assets and liabilities, which
is generally at the store level. We also evaluate for triggering events at the banner level. If an impairment review is
necessitated by the identification of a triggering event, we determine the fair value of the asset using assumptions
predominately identified from our historical performance and our long-range strategic plans.
To determine if an impairment exists, we compare the carrying amount of the asset with the estimated future
undiscounted cash flows expected to result from the use of the asset group. If the carrying amount of the asset exceeds
the estimated undiscounted future cash flows, we measure the amount of the impairment by comparing the carrying
amount of the asset group with its estimated fair value.
The estimation of fair value is measured by discounting expected future cash flows using a risk adjusted discount rate
and by using a market approach to determine current lease rates. Future expected cash flows are based upon estimates
that, if not achieved, may result in significantly different results.
2022 Form 10-K Page 28
Recoverability of Goodwill and Indefinite-Lived Intangible Assets
We review goodwill and indefinite-lived intangible assets for impairment annually during the fourth quarter of each
fiscal year or more frequently if impairment indicators arise. For more information on the change in our annual
impairment testing date, see the Summary of Significant Accounting Policies note in “Item 8. Consolidated Financial
Statements and Supplementary Data.” The review of impairment consists of either using a qualitative approach to
determine whether it is more likely than not that the fair value of the assets is less than their respective carrying values
or a one-step qualitative impairment test.
In performing the qualitative assessment, we consider many factors in evaluating whether the carrying value of goodwill
may not be recoverable, including declines in our stock price and market capitalization in relation to the book value of
the Company and macroeconomic conditions affecting retail. If, based on the results of the qualitative assessment, it
is concluded that it is not more likely than not that the fair value of a reporting unit exceeds its carrying value, additional
quantitative impairment testing is performed. The quantitative test requires that the carrying value of each reporting unit
be compared with its estimated fair value. If the carrying value of a reporting unit is greater than its fair value, a goodwill
impairment charge will be recorded for the difference (up to the carrying value of goodwill).
We use a discounted cash flow approach to determine the fair value of a reporting unit. The determination of discounted
cash flows of the reporting units and assets and liabilities within the reporting units requires significant estimates and
assumptions. These estimates and assumptions primarily include, but are not limited to, the discount rate, terminal
growth rates, earnings before depreciation and amortization, and capital expenditures forecasts. Due to the inherent
uncertainty involved in making these estimates, actual results could differ from those estimates. We evaluate the merits
of each significant assumption, both individually and in the aggregate, used to determine the fair value of the reporting
units, as well as the fair values of the corresponding assets and liabilities within the reporting units.
Owned trademarks and trade names that have been determined to have indefinite lives are not subject to amortization
but are reviewed at least annually for potential impairment. Our impairment evaluation for indefinite-lived intangible
assets consists of either a qualitative or quantitative assessment, similar to the process for goodwill.
If the results of the qualitative assessment indicate that it is more likely than not that the fair value of the indefinite lived
intangible is less than its carrying amount, or if we elect to proceed directly to a quantitative assessment, we calculate
the fair value using a discounted cash flow method, based on the relief-from-royalty concept, and compare the fair value
to the carrying value to determine if the asset is impaired. This methodology assumes that, in lieu of ownership, a third
party would be willing to pay a royalty in order to exploit the related benefits of these types of assets. This approach is
dependent on a number of factors, including estimates of future growth and trends, royalty rates in the category of
intellectual property, discount rates, and other variables. We base our fair value estimates on assumptions we believe
to be reasonable, but which are unpredictable and inherently uncertain. Actual future results may differ from those
estimates. We recognize an impairment loss when the estimated fair value of the intangible asset is less than the
carrying value.
Recent Accounting Pronouncements
Descriptions of the recently issued accounting principles are included in the Summary of Significant Accounting Policies
note in “Item 8. Consolidated Financial Statements and Supplementary Data.”
Item 7A. Quantitative and Qualitative Disclosures About Market Risk
Information regarding foreign exchange risk management is included in the Financial Instruments and Risk
Management note under “Item 8. Consolidated Financial Statements and Supplementary Data.”
Item 8. Consolidated Financial Statements and Supplementary Data
The following Consolidated Financial Statements of the Company are included as part of this Report:
• Consolidated Statements of Operations
• Consolidated Statements of Comprehensive Income
• Consolidated Balance Sheets
• Consolidated Statements of Changes in Shareholders’ Equity
• Consolidated Statements of Cash Flows
• Notes to the Consolidated Financial Statements
2022 Form 10-K Page 29
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To the Shareholders and Board of Directors
Foot Locker, Inc.:
Opinion on the Consolidated Financial Statements
We have audited the accompanying consolidated balance sheets of Foot Locker, Inc. and subsidiaries (the Company)
as of January 28, 2023 and January 29, 2022, the related consolidated statements of operations, comprehensive
income, changes in shareholders’ equity, and cash flows for each of the years in the three-year period ended
January 28, 2023, and the related notes (collectively, the consolidated financial statements). In our opinion, the
consolidated financial statements present fairly, in all material respects, the financial position of the Company as of
January 28, 2023 and January 29, 2022, and the results of its operations and its cash flows for each of the years in the
three-year period ended January 28, 2023, in conformity with U.S. generally accepted accounting principles.
We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United
States) (PCAOB), the Company’s internal control over financial reporting as of January 28, 2023, based on criteria
established in Internal Control – Integrated Framework (2013) issued by the Committee of Sponsoring Organizations
of the Treadway Commission, and our report dated March 27, 2023 expressed an adverse opinion on the effectiveness
of the Company’s internal control over financial reporting.
Basis for Opinion
These consolidated financial statements are the responsibility of the Company’s management. Our responsibility is to
express an opinion on these consolidated financial statements based on our audits. We are a public accounting firm
registered with the PCAOB and are required to be independent with respect to the Company in accordance with the
U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and
the PCAOB.
We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and
perform the audit to obtain reasonable assurance about whether the consolidated financial statements are free of
material misstatement, whether due to error or fraud. Our audits included performing procedures to assess the risks of
material misstatement of the consolidated financial statements, whether due to error or fraud, and performing
procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the
amounts and disclosures in the consolidated financial statements. Our audits also included evaluating the accounting
principles used and significant estimates made by management, as well as evaluating the overall presentation of the
consolidated financial statements. We believe that our audits provide a reasonable basis for our opinion.
Critical Audit Matter
The critical audit matter communicated below is a matter arising from the current period audit of the consolidated
financial statements that was communicated or required to be communicated to the audit committee and that: (1) relates
to accounts or disclosures that are material to the consolidated financial statements and (2) involved our especially
challenging, subjective, or complex judgments. The communication of a critical audit matter does not alter in any way
our opinion on the consolidated financial statements, taken as a whole, and we are not, by communicating the critical
audit matter below, providing a separate opinion on the critical audit matter or on the accounts or disclosures to which
it relates.
Fair value of asset group related to certain underperforming stores
As discussed in Notes 1 and 5 to the consolidated financial statements, the Company performs an impairment review
when circumstances indicate that the carrying amount of long-lived tangible assets and right-of-use assets may not be
recoverable. The long-lived tangible assets and the right-of-use assets of the Company as of January 28, 2023 were
$920 million and $2,443 million, respectively. If a triggering event is identified, the Company compares the carrying
amount of the asset group with the estimated future cash flows expected to result from the use of the asset group. If
the carrying amount of the asset group exceeds the estimated undiscounted future cash flows, the Company measures
the amount of the impairment by comparing the carrying amount of the asset group with its estimated fair value.
2022 Form 10-K Page 30
The estimation of fair value of the asset group is measured by discounting expected future cash flows using a risk-
adjusted discount rate and current market-based information for right-of-use assets. During the year ended
January 28, 2023, the Company recorded impairment charges of $53 million related to certain underperforming stores.
We identified the evaluation of the fair value of the asset group related to certain underperforming stores as a critical
audit matter. The market-based assumptions used to estimate the fair value of the asset group included market rent
estimates for comparable stores that required a high degree of auditor judgment to evaluate and were challenging to
test in the current economic environment. Changes in the selection of the market rent estimates could have had a
significant effect on the determination of the fair value of the asset group, which impacted the measurement and
allocation of the impairment loss within the asset group.
The following are the primary procedures we performed to address this critical audit matter. We evaluated the design
and tested the operating effectiveness of certain internal controls over the Company’s long-lived tangible asset and
right-of-use asset impairment assessment process, including a control related to the estimate of the fair value of the
asset group. We involved valuation professionals with specialized skills and knowledge, who assisted in (1) evaluating
the market rent estimates by assessing comparable retail leasing activity applicable to each location, and (2) assessing
historic leasing activity of the Company in relation to historical store sales performance.
/s/ KPMG LLP
We have served as the Company’s auditor since 1995.
New York, New York
March 27, 2023
2022 Form 10-K Page 31
CONSOLIDATED STATEMENTS OF OPERATIONS
2022
2021
2020
$
8,747 $
12
8,759
8,958 $
10
8,968
($ in millions, except per share amounts)
Sales
Licensing revenue
Total revenue
Cost of sales
Selling, general and administrative expenses
Depreciation and amortization
Impairment and other
Income from operations
Interest expense, net
Other income / (expense), net
Income from continuing operations before income taxes
Income tax expense
Net income from continuing operations
Net loss from discontinued operations, net of tax
Net income
Net loss attributable to noncontrolling interests
Net income attributable to Foot Locker, Inc.
$
Basic earnings per share
Earnings per share from continuing operations attributable to
Foot Locker, Inc.
$
Net loss per share from discontinued operations, net of tax $
Net earnings per share attributable to Foot Locker, Inc.
$
Weighted-average shares outstanding
Diluted earnings per share
Earnings per share from continuing operations attributable to
Foot Locker, Inc.
$
Net loss per share from discontinued operations, net of tax $
$
Net earnings per share attributable to Foot Locker, Inc.
Weighted-average shares outstanding, assuming dilution
5,955
1,903
208
112
581
(15)
(42)
524
180
344
(3)
341
1
342 $
5,878
1,851
197
172
870
(14)
384
1,240
348
892
—
892
1
893 $
3.66 $
(0.04) $
3.62 $
94.3
8.72 $
— $
8.72 $
102.5
3.62 $
(0.04) $
3.58 $
95.5
8.61 $
— $
8.61 $
103.8
7,548
6
7,554
5,365
1,587
176
117
309
(7)
192
494
171
323
—
323
—
323
3.10
—
3.10
104.3
3.08
—
3.08
105.1
See Accompanying Notes to Consolidated Financial Statements.
2022 Form 10-K Page 32
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
($ in millions)
Net income attributable to Foot Locker, Inc.
Other comprehensive income (loss), net of income tax
2022
2021
2020
$
342 $
893 $
323
Foreign currency translation adjustment:
Translation adjustment arising during the period, net of income
tax (benefit)/expense of $-, $(1), and $3, respectively
Hedges contracts:
Change in fair value of derivatives, net of income tax benefit of
$-, $-, and $-, respectively
Pension and postretirement adjustments:
Net actuarial gain (loss) and foreign currency fluctuations arising
during the year, net of income tax expense/(benefit) of $(4), $8,
and $4, respectively
(41)
(43)
40
(3)
1
2
(12)
23
13
Amortization of net actuarial gain/loss and prior service cost
included in net periodic benefit costs, net of income tax
expense of $3, $3, and $3, respectively
Comprehensive income
$
7
293 $
7
881 $
8
386
See Accompanying Notes to Consolidated Financial Statements.
2022 Form 10-K Page 33
CONSOLIDATED BALANCE SHEETS
January 28,
2023
January 29,
2022
($ in millions, except share amounts)
ASSETS
Current assets:
Cash and cash equivalents
Merchandise inventories
Other current assets
Property and equipment, net
Operating lease right-of-use assets
Deferred taxes
Goodwill
Other intangible assets, net
Minority investments
Other assets
LIABILITIES AND SHAREHOLDERS’ EQUITY
Current liabilities:
Accounts payable
Accrued and other liabilities
Current portion of debt and obligations under finance leases
Current portion of lease obligations
Long-term debt and obligations under finance leases
Long-term lease obligations
Other liabilities
Total liabilities
Shareholders’ equity:
Common stock and paid-in capital: 93,396,901 and 99,070,796 shares
issued, respectively
Retained earnings
Accumulated other comprehensive loss
Less: Treasury stock at cost: 1,489 and 2,050,000 shares, respectively
Noncontrolling interest
Total shareholders' equity
$
$
$
$
536
1,643
342
2,521
920
2,443
90
785
426
630
92
7,907
492
568
6
544
1,610
446
2,230
328
4,614
760
2,925
(392)
—
—
3,293
7,907
$
$
$
$
804
1,266
293
2,363
917
2,616
86
797
454
781
121
8,135
596
561
6
572
1,735
451
2,363
343
4,892
770
2,900
(343)
(88)
4
3,243
8,135
See Accompanying Notes to Consolidated Financial Statements.
2022 Form 10-K Page 34
CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS’ EQUITY
Additional Paid-In
Capital &
Accumulated
Other
Non-
Total
Retained Comprehensive Controlling Shareholders'
(shares in thousands, amounts in millions)
Balance at February 1, 2020
Restricted stock issued
Issued under director and stock plans
Share-based compensation expense
Shares of common stock used to satisfy tax withholding
obligations
Share repurchases
Reissued - Employee Stock Purchase Plan ("ESPP")
Retirement of treasury stock
Noncontrolling interest acquired
Net income
Cash dividends on common stock ($0.70 per share)
Translation adjustment, net of tax
Change in hedges, net of tax
Pension and postretirement adjustments, net of tax
Balance at January 30, 2021
Restricted stock issued
Issued under director and stock plans
Share-based compensation expense
Shares of common stock used to satisfy tax withholding
obligations
Share repurchases
Reissued - ESPP
Retirement of treasury stock
Net income (loss)
Cash dividends on common stock ($1.00 per share)
Translation adjustment, net of tax
Change in hedges, net of tax
Pension and postretirement adjustments, net of tax
Balance at January 29, 2022
Restricted stock issued
Issued under director and stock plans
Share-based compensation expense
Shares of common stock used to satisfy tax withholding
obligations
Share repurchases
Reissued - ESPP
Retirement of treasury stock
Termination of joint venture
Net income (loss)
Cash dividends on common stock ($1.60 per share)
Translation adjustment, net of tax
Change in hedges, net of tax
Pension and postretirement adjustments, net of tax
Balance at January 28, 2023
Treasury Stock
Common Stock
Shares Amount Shares Amount Earnings
— $ 2,103
—
—
—
—
—
—
104,188 $
121
297
—
— $
—
—
—
764
—
7
15
—
—
—
(913)
—
—
—
—
—
—
103,693 $
499
353
—
—
—
—
(5,474)
—
—
—
—
—
99,071 $
117
228
—
—
—
—
(6,019)
—
—
—
—
—
—
93,397 $
—
—
—
(7)
—
—
—
—
—
—
779
—
11
29
—
—
(7)
(42)
—
—
—
—
—
770
—
7
31
—
—
(2)
(46)
—
—
—
—
—
—
760
(41)
(969)
23
913
—
—
—
—
—
—
(74) $
—
—
—
—
(1)
—
(37)
—
1
(27)
34
—
—
323
—
(73)
—
—
—
—
—
—
—
(3) $ 2,326
—
—
—
—
—
—
(205)
(7,546)
301
5,474
—
—
—
—
—
(2,050) $
—
—
—
—
(11)
—
(348)
—
14
(218)
260
893
—
(101)
—
—
—
—
—
—
—
(88) $ 2,900
—
—
—
—
—
—
(40)
(4,050)
120
6,019
—
—
—
—
—
—
(1) $
—
(1)
—
(129)
—
5
(167)
213
—
—
342
—
(150)
—
—
—
—
—
—
—
— $ 2,925
Loss
interest
Equity
(394) $
—
—
—
—
—
—
—
—
—
—
40
2
21
(331) $
—
—
—
—
—
—
—
—
—
(43)
1
30
(343) $
—
—
—
—
—
—
—
—
—
—
(41)
(3)
(5)
(392) $
—
—
—
—
—
—
—
—
5
—
—
—
—
—
5
—
—
—
—
—
—
—
(1)
—
—
—
—
4
—
—
—
—
—
—
—
(3)
(1)
—
—
—
—
—
$
$
$
$
2,473
—
7
15
(1)
(37)
1
—
5
323
(73)
40
2
21
2,776
—
11
29
(11)
(348)
7
—
892
(101)
(43)
1
30
3,243
—
7
31
(1)
(129)
3
—
(3)
341
(150)
(41)
(3)
(5)
3,293
$
$
$
$
See Accompanying Notes to Consolidated Financial Statements.
2022 Form 10-K Page 35
CONSOLIDATED STATEMENTS OF CASH FLOWS
($ in millions)
From operating activities:
Net income
Adjustments to reconcile net income to net cash from operating
activities:
2022
2021
2020
$
341 $
892 $
323
Non-cash impairment and other
Fair value adjustments to minority investments
Fair value change in contingent consideration
Depreciation and amortization
Deferred income taxes
Share-based compensation expense
Gain on disposal of business
Change in assets and liabilities:
Merchandise inventories
Accounts payable
Accrued and other liabilities
Insurance recovery received for inventory loss
Other, net
Net cash provided by operating activities
From investing activities:
Capital expenditures
Purchase of business, net of cash acquired
Minority investments
Proceeds from sale of business
Proceeds from minority investments
Proceeds from sale of property
Insurance proceeds related to loss on property and equipment
Net cash used in investing activities
From financing activities:
Proceeds from debt issuance, net
Payment of debt issuance costs
Proceeds from the revolving credit facility
Repayment of the revolving credit facility
Purchase of treasury shares
Dividends paid on common stock
Payment of long-term debt and obligations under finance leases
Shares of common stock repurchased to satisfy tax withholding
obligations
Treasury stock reissued under employee stock plan
Proceeds from common stock issued under employee stock plan
Proceeds from exercise of stock options
(Purchase of) / contribution from non-controlling interest
Net cash used in financing activities
Effect of exchange rate fluctuations on cash, cash equivalents, and
restricted cash
Net change in cash, cash equivalents, and restricted cash
Cash, cash equivalents, and restricted cash at beginning of year
Cash, cash equivalents, and restricted cash at end of period
Supplemental information:
Interest paid
Income taxes paid
Cash paid for amounts included in measurement of operating lease
liabilities
$
$
Cash paid for amounts included in measurement of finance lease
liabilities
Right-of-use assets obtained in exchange for operating lease obligations
Assets obtained in exchange for finance lease obligations
67
61
(31)
208
21
31
(19)
(397)
(101)
(1)
—
(7)
173
(285)
(14)
(5)
47
95
—
—
(162)
—
—
—
—
(129)
(150)
(6)
(1)
3
—
6
(2)
(279)
148
(367)
—
197
74
29
—
(259)
161
1
10
(220)
666
(209)
(1,056)
(118)
—
—
3
4
(1,376)
395
(2)
—
—
(348)
(101)
(102)
(11)
7
—
10
—
(152)
—
(268)
850
582 $
(6)
(868)
1,718
850 $
17 $
153
11 $
387
704
9
458
—
790
5
417
4
97
(190)
—
176
(9)
15
—
294
60
140
—
156
1,062
(159)
—
(9)
—
—
—
—
(168)
—
(4)
330
(330)
(37)
(73)
(23)
(1)
—
2
4
6
(126)
8
776
942
1,718
14
100
626
1
331
11
See Accompanying Notes to Consolidated Financial Statements.
2022 Form 10-K Page 36
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
1. Summary of Significant Accounting Policies
Basis of Presentation
The consolidated financial statements include the accounts of Foot Locker, Inc. and its domestic and international
subsidiaries, as well as any entities in which we have a controlling voting interest that are required to be consolidated.
All significant intercompany amounts have been eliminated. As used in these Notes to Consolidated Financial
Statements the terms “Foot Locker,” “Company,” “we,” “our,” and “us” refer to Foot Locker, Inc. and its consolidated
subsidiaries.
The preparation of financial statements in conformity with U.S. generally accepted accounting principles requires
management to make estimates and assumptions relating to the reporting of assets and liabilities and the disclosure
of contingent liabilities at the date of the financial statements, and the reported amounts of revenues and expenses
during the reporting period. Actual results may differ from those estimates.
Certain reclassifications have been made to prior period financial statements to conform to the current period
presentation. Effective in 2022, we separately present licensing revenue in the Consolidated Statements of
Operations as a component of total revenue. Previously, licensing revenue was presented within other income /
(expense), net.
Reporting Year
Our fiscal year end is a 52-week or 53-week period ending the Saturday closest to the last day in January. Fiscal year
2022, 2021, and 2020 represented the 52 weeks ended January 28, 2023, January 29, 2022, and February 1, 2020,
respectively. References to years in this annual report relate to fiscal years rather than calendar years.
Revenue Recognition
Store revenue is recognized at the point of sale and includes merchandise, net of returns, and excludes taxes.
Revenue from layaway sales is recognized when the customer receives the product, rather than when the initial
deposit is paid. We recognize revenue for merchandise that is shipped to our customers from our distribution centers
and stores upon shipment as the customer has control of the product upon shipment. We account for shipping and
handling as a fulfillment activity. We accrue the cost and recognize revenue for these activities upon shipment date,
therefore total sales recognized includes shipping and handling fees. We have license agreements with unaffiliated
third-party operators located in the Middle East and Asia. The agreements are largely structured with royalty income
paid as a percentage of sales for the use of our trademarks, trade name and branding. We record licensing revenue
based upon sales estimates for the current period from the third-party operators.
Gift Cards
We sell gift cards which do not have expiration dates. Revenue from gift card sales is recorded when the gift cards
are redeemed by customers. Gift card breakage is recognized as revenue in proportion to the pattern of rights
exercised by the customer, unless there is a legal obligation to remit the value of unredeemed gift cards to the relevant
jurisdictions.
Advertising Costs and Sales Promotion
Advertising and sales promotion costs are expensed at the time the advertising or promotion takes place, net of
reimbursements for cooperative advertising. Cooperative advertising reimbursements earned for the launch and
promotion of certain products agreed upon with vendors are recorded in the same period as the associated expenses
are incurred.
Digital advertising costs are expensed as incurred, net of reimbursements for cooperative advertising. Digital
advertising includes search engine marketing, such as display ads and keyword search terms, and other various
forms of digital advertising. Reimbursements received in excess of expenses incurred related to specific, incremental,
and identifiable advertising costs are accounted for as a reduction to the cost of merchandise and are reflected in
cost of sales when the merchandise is sold.
2022 Form 10-K Page 37
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
1. Summary of Significant Accounting Policies (continued)
Advertising costs, including digital advertising, which are included as a component of SG&A, were as follows:
($ in millions)
Advertising expenses
Digital advertising expenses
Cooperative advertising reimbursements
Net advertising expense
Share-Based Compensation
$
$
2022
2021
2020
135 $
87
(37)
185 $
113 $
110
(29)
194 $
69
89
(14)
144
We recognize compensation expense for share-based awards based on the grant date fair value of those awards.
We use the Black-Scholes option-pricing model to determine the fair value of stock options, which requires the input
of subjective assumptions regarding the expected term, expected volatility, and risk-free interest rate. See Note 22,
Share-Based Compensation, for information on the assumptions used to calculate the fair value of stock options.
Share-based compensation expense is recognized on a straight-line basis over the requisite service period for each
vesting tranche of the award. Upon exercise of stock options, issuance of restricted stock or units, or issuance of
shares under the employee stock purchase plan, we will issue authorized but unissued common stock or use common
stock held in treasury.
Awards of restricted stock units cliff vest after the passage of time, generally three years. Performance stock unit
awards are earned only after the attainment of performance goals in connection with the relevant performance period
and vest after an additional one-year period.
PSU awards granted in 2022 also include a performance objective based on our relative total shareholder return over
the performance period to a pre-determined peer group, assuming the reinvestment of dividends. The fair value of
these awards is determined using a Monte Carlo simulation as of the date of the grant and share-based compensation
expense will not be adjusted should the target awards vary from actual awards.
Earnings Per Share
We account for earnings per share (“EPS”) using the treasury stock method. Basic EPS is computed by dividing net
income for the period by the weighted-average number of common shares outstanding at the end of the period.
Diluted EPS reflects the weighted-average number of common shares outstanding during the period used in the basic
EPS computation plus dilutive common stock equivalents.
The computation of basic and diluted EPS is as follows:
(in millions, except per share data)
Income from continuing operations
Net loss attributable to noncontrolling interests
Income from continuing operations attributable to
Foot Locker, Inc.
Net loss from discontinued operations, net of tax
Net income attributable to Foot Locker, Inc.
Weighted-average common shares outstanding
Dilutive effect of potential common shares
Weighted-average common shares outstanding
assuming dilution
2022
2021
2020
$
344 $
1
892 $
1
345
(3)
893
—
$
342 $
893 $
94.3
1.2
95.5
102.5
1.3
103.8
323
—
323
—
323
104.3
0.8
105.1
2022 Form 10-K Page 38
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
1. Summary of Significant Accounting Policies (continued)
(in millions, except per share data)
Basic earnings per share
Earnings per share from continuing operations
attributable to Foot Locker, Inc.
Net loss per share from discontinued operations, net of
tax
Net earnings per share attributable to Foot Locker, Inc. $
Diluted earnings per share
Earnings per share from continuing operations
attributable to Foot Locker, Inc.
Net loss per share from discontinued operations, net of
tax
Net earnings per share attributable to Foot Locker, Inc. $
2022
2021
2020
$
3.66 $
8.72 $
3.10
(0.04)
3.62 $
—
8.72 $
—
3.10
$
3.62 $
8.61 $
3.08
(0.04)
3.58 $
—
8.61 $
—
3.08
Anti-dilutive share-based awards excluded from diluted
calculation
2.7
1.8
2.5
Performance stock units related to our long-term incentive programs of 0.4 million for 2022, 0.4 million for 2021, and
0.4 million for 2020, have been excluded from diluted weighted-average shares. The issuance of these shares are
contingent on our performance metrics as compared to the pre-established performance goals, which have not been
achieved.
Cash, Cash Equivalents, and Restricted Cash
Cash consists of funds held on hand and in bank accounts. Cash equivalents include amounts on demand with banks
and all highly liquid investments with original maturities of three months or less, including money market funds.
Additionally, amounts due from third-party credit card processors for the settlement of debit and credit card
transactions are included as cash equivalents as they are generally collected within three business days. We present
book overdrafts, representing checks issued but still outstanding in excess of bank balances, as part of accounts
payable.
Restricted cash represents cash that is restricted as to withdrawal or use under the terms of various agreements.
Restricted cash includes amounts held in escrow in connection with various leasing arrangements in Europe, and
deposits held in insurance trusts to satisfy the requirement to collateralize part of the self-insured workers’
compensation and liability claims.
The following table provides the reconciliation of cash, cash equivalents, and restricted cash, as reported on our
consolidated statements of cash flows:
($ in millions)
Cash and cash equivalents (1)
Restricted cash included in other current assets
Restricted cash included in other non-current assets
Cash, cash equivalents, and restricted cash
$
$
January 28,
2023
January 29,
2022
January 30,
2021
536
13
33
582
$
$
804
8
38
850
$
$
1,680
8
30
1,718
(1)
Includes cash equivalents of $41 million, $48 million, and $503 million for the years ended January 28, 2023, January 29, 2022, and
February 1, 2020, respectively.
2022 Form 10-K Page 39
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
1. Summary of Significant Accounting Policies (continued)
Merchandise Inventories and Cost of Sales
Merchandise inventories are valued at the lower of cost or market using the retail inventory method, except for WSS
and atmos. Cost is determined on the last-in, first-out (“LIFO”) basis for domestic inventories and on the first-in, first-
out (“FIFO”) basis for international inventories. Merchandise inventories for our WSS and atmos businesses are
valued at its net realizable value using the weighted average method. Cost is determined on the FIFO basis.
The retail inventory method is used by retail companies to value inventories at cost and calculate gross margins due
to its practicality. Under the retail inventory method, cost is determined by applying a cost-to-retail percentage across
groupings of similar items, known as departments. The cost-to-retail percentage is applied to ending inventory at its
current owned retail valuation to determine the cost of ending inventory on a department basis. We provide reserves
based on current selling prices when the inventory has not been marked down to market.
Transportation, distribution center, and sourcing costs are capitalized in merchandise inventories. We expense the
freight associated with transfers between our store locations in the period incurred. We maintain an accrual for
shrinkage based on historical rates.
Cost of sales is comprised of the cost of merchandise, as well as occupancy, buyers’ compensation, and shipping
and handling costs. The cost of merchandise is recorded net of amounts received from suppliers for damaged product
returns, markdown allowances, and volume rebates, as well as cooperative advertising reimbursements received in
excess of specific, incremental advertising expenses.
Minority Investments
We use the equity method to account for investments in which we have the ability to exercise significant influence
over the investee’s operating and financial policies, or in which we hold a partnership or limited liability company
interest in an entity with specific ownership accounts, unless we have virtually no influence over the investee’s
operating and financial policies. As of January 28, 2023 and January 29, 2022, we had $51 million and $56 million,
respectively, of investments which are accounted for under the equity method.
Our investments that are not accounted for under the equity method are measured either at cost, adjusted for changes
in observable prices minus impairment under the practicability exception, or at fair value for our investment in the
common stock of an entity that is publicly traded. As of January 28, 2023 and January 29, 2022, we had $579 million
and $725 million, respectively, of investments which are accounted for under these methods.
Property and Equipment
Property and equipment are recorded at cost, less accumulated depreciation and amortization. Significant additions
and improvements to property and equipment are capitalized. Major renewals or replacements that substantially
extend the useful life of an asset are capitalized. Maintenance and repairs are expensed as incurred.
Depreciation and amortization are computed on a straight-line basis over the following estimated useful lives:
Buildings
Store leasehold improvements
Furniture, fixtures, and equipment
Software
Maximum of 50 years
Shorter of the asset useful life or expected term of the lease
3‑10 years
2‑5 years
2022 Form 10-K Page 40
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
1. Summary of Significant Accounting Policies (continued)
Internal-Use Software Development Costs
We capitalize certain external and internal computer software and software development costs incurred during the
application development stage. The application development stage generally includes software design and
configuration, coding, testing, and installation activities. Capitalized costs include only external direct cost of materials
and services consumed in developing or obtaining internal-use software, and payroll and payroll-related costs for
employees who are directly associated with and devote time to the internal-use software project. Capitalization of
such costs ceases no later than the point at which the project is substantially complete and ready for its intended
use. We generally amortize these costs on a straight-line basis over a period not to exceed five years. Training and
maintenance costs are expensed as incurred, while upgrades and enhancements are capitalized if it is probable that
such expenditures will result in additional functionality. Capitalized software, net of accumulated amortization, is
included as a component of Property and equipment, net and was $87 million and $103 million at January 28, 2023
and January 29, 2022, respectively.
Cloud computing arrangements (software-as-a-service contracts) and related implementation costs that are
capitalized are amortized on a straight-line basis over the contract term. These amounts are classified with prepaid
expense and other long-term assets in the Consolidated Balance Sheets. Expense related to cloud computing
arrangements are included in SG&A. The corresponding cash flows related to these arrangements are included in
“Net cash provided by operating activities” in the Company’s Consolidated Statements of Cash Flows.
Impairment of Long-Lived Tangible Assets and Right-of-Use Assets
We perform an impairment review when circumstances indicate that the carrying value of long-lived tangible assets
and right-of-use assets may not be recoverable (“a triggering event”). Our policy in determining whether a triggering
event exists comprises the evaluation of measurable operating performance criteria and qualitative measures at the
lowest level for which identifiable cash flows are largely independent of cash flows for other assets and liabilities,
which is generally at the store level. We also evaluate triggering events at the banner level. In evaluating potential
store level impairment, we compare future undiscounted cash flows expected to result from the use of the asset
group to the carrying amount of the asset group. The future cash flows are estimated predominately based on our
historical performance and long-range strategic plans. If the carrying amount of the asset group exceeds the
estimated undiscounted future cash flows, we measure the amount of the impairment by comparing the carrying
amount of the asset group with its estimated fair value. The estimation of fair value is measured by discounting
expected future cash flows using a risk adjusted discount rate and using current market-based information for right-
of-use assets. We estimate fair value based on the best information available using estimates, judgments, and
projections as considered necessary.
Leases
Lease liabilities are recognized at the commencement date based on the present value of lease payments over the
lease term for those arrangements where there is an identified asset and the contract conveys the right to control its
use. The lease term includes options to extend or terminate a lease only when we are reasonably certain that we will
exercise that option. The right-of-use asset is measured at the initial amount of the lease liability adjusted for lease
payments made at or before the lease commencement date, initial direct costs, and any tenant improvement
allowances received. For operating leases, right-of-use assets are reduced over the lease term by the straight-line
lease expense recognized less the amount of accretion of the lease liability determined using the effective interest
method.
We combine lease components and non-lease components. Given our policy election to combine lease and non-
lease components, we also consider fixed common area maintenance (“CAM”) part of our fixed future lease
payments; therefore, fixed CAM is also included in our lease liability. We recognize rent expense for operating leases
as of the possession date for store leases or the commencement of the agreement for non-store leases. Rental
expense, inclusive of rent holidays, concessions, and tenant allowances are recognized over the lease term on a
straight-line basis. Contingent payments based upon sales and future increases determined by inflation related
indices cannot be estimated at the inception of the lease and, accordingly, are charged to operations as
incurred.
2022 Form 10-K Page 41
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
1. Summary of Significant Accounting Policies (continued)
As most of our leases do not provide an implicit interest rate, we use our incremental borrowing rates based on the
remaining lease term to determine the present value of future lease payments. Our incremental borrowing rate for a
lease is the rate of interest we would have to pay on a collateralized basis to borrow an amount equal to the lease
payments under similar terms.
Leases with an initial term of 12 months or less are not recorded on the balance sheet. We recognize lease expense
for short-term leases on a straight-line basis over the lease term.
Impairment of Goodwill and Other Intangible Assets
Goodwill and intangible assets with indefinite lives are reviewed for impairment annually during the first quarter of
each fiscal year historically, or more frequently if impairment indicators arise. During the fourth quarter of 2022, we
voluntarily changed our annual goodwill testing date from the first day of the fiscal year to the first day of our fourth
quarter. The Company believes this change in method of applying the accounting principle is preferable, as it better
aligns the annual impairment testing date with the most current information from the budgeting and strategic planning
process and provides management with sufficient time to complete its annual assessment in advance of our year-
end reporting. The change did not delay, accelerate, or avoid an impairment charge.
The review of goodwill impairment consists of either using a qualitative approach to determine whether it is more
likely than not that the fair value of the assets is less than their respective carrying values or a one-step quantitative
impairment test. In performing the qualitative assessment, we consider many factors in evaluating whether the
carrying value of goodwill may not be recoverable, including declines in our stock price and market capitalization in
relation to the book value of the Company and macroeconomic conditions affecting retail. If, based on the results of
the qualitative assessment, it is concluded that it is not more likely than not that the fair value of a reporting unit
exceeds its carrying value, additional quantitative impairment testing is performed. The quantitative test requires that
the carrying value of each reporting unit be compared with its estimated fair value. If the carrying value of a reporting
unit is greater than its fair value, a goodwill impairment charge will be recorded for the difference (up to the carrying
value of goodwill).
We use a discounted cash flow approach to determine the fair value of a reporting unit. The determination of
discounted cash flows of the reporting units and assets and liabilities within the reporting units requires significant
estimates and assumptions. These estimates and assumptions primarily include, but are not limited to, the discount
rate, terminal growth rates, earnings before depreciation and amortization, and capital expenditures forecasts. Due
to the inherent uncertainty involved in making these estimates, actual results could differ from those estimates. We
evaluate the merits of each significant assumption, both individually and in the aggregate, used to determine the fair
value of the reporting units, as well as the fair values of the corresponding assets and liabilities within the reporting
units.
For our annual impairment review conducted in the fourth quarter of 2022, we concluded the fair value of each
reporting unit exceeded its carrying value. Goodwill is net of accumulated impairment charges of $167 million for all
periods presented. Refer to Note 2 for further detail regarding acquisitions made during 2021.
Intangible assets with indefinite lives are tested for impairment if impairment indicators arise and, at a minimum,
annually. The impairment review for intangible assets with indefinite lives consists of either performing a qualitative
or a quantitative assessment. If the results of the qualitative assessment indicate that it is more likely than not that
the fair value of the indefinite-lived intangible is less than its carrying amount, or if we elect to proceed directly to a
quantitative assessment, we calculate the fair value using a discounted cash flow method, based on the relief from
royalty method, and compare the fair value to the carrying value to determine if the asset is impaired. Intangible
assets that are determined to have finite lives are amortized over their useful lives and are measured for impairment
only when events or changes in circumstances indicate that the carrying value may be impaired.
2022 Form 10-K Page 42
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
1. Summary of Significant Accounting Policies (continued)
Contingent Consideration
As a result of our purchase of atmos, we recognized contingent consideration, as a component of the purchase
consideration is payable contingent on the achievement of certain sales and EBITDA performance. See Note 2 for
further details. Contingent consideration is classified as a liability when it will be settled in cash or a variable number
of shares (or a combination thereof), and the amount of the payment is not dependent upon the fair value of the
Company’s common stock. The fair value of the contingent consideration liability is estimated using an option pricing
model simulation that determines an average projected payment value across numerous iterations. This technique
determines projected payments based on simulated sales and EBITDA derived from an internal forecast, adjusted
for selected revenue and EBITDA volatilities and risk premiums based on market data for comparable guideline public
companies. The projected payments are then discounted back to the valuation date at the Company’s cost of debt
using a term commensurate with the contractual payment dates.
The contingent consideration liability will be measured at fair value on a recurring basis until the contingency is
resolved. Changes in the estimated fair value of the contingent consideration liability will be reflected in operating
income or expense in the Consolidated Statements of Operations.
Derivative Financial Instruments
All derivative financial instruments are recorded in our Consolidated Balance Sheets at their fair values. For
derivatives designated as a hedge, and effective as part of a hedge transaction, the effective portion of the gain or
loss on the hedging derivative instrument is reported as a component of other comprehensive income/loss or as a
basis adjustment to the underlying hedged item and reclassified to earnings in the period in which the hedged item
affects earnings. The effective portion of the gain or loss on hedges of foreign net investments is generally not
reclassified to earnings unless the net investment is disposed of. To the extent derivatives do not qualify or are not
designated as hedges, or are ineffective, their changes in fair value are recorded in earnings immediately, which may
subject us to increased earnings volatility.
Income Taxes
We account for our income taxes under the asset and liability method, which requires the recognition of deferred tax
assets and liabilities for the expected future tax consequences of events that have been included in the financial
statements. Under this method, deferred tax assets and liabilities are determined on the basis of the differences
between the financial statements and the tax basis of assets and liabilities, using enacted tax rates in effect for
the year in which the differences are expected to reverse. Deferred tax assets are recognized for tax credits and net
operating loss carryforwards, reduced by a valuation allowance, which is established when it is more likely than not
that some portion or all of the deferred tax assets will not be realized. The effect of a change in tax rates on deferred
tax assets and liabilities is recognized in income in the period that includes the enactment date.
We recognize net deferred tax assets to the extent that we believe these assets are more likely than not to be realized.
In making such a determination, we consider all available positive and negative evidence, including future reversals
of existing taxable temporary differences, projected future taxable income, tax-planning strategies, and results of
recent operations. If we determine that we would be able to realize our deferred tax assets in the future in excess of
their net recorded amount, we would make an adjustment to the deferred tax asset valuation allowance, which would
reduce the provision for income taxes.
A taxing authority may challenge positions that we adopted in our income tax filings. Accordingly, we may apply
different tax treatments for transactions in filing our income tax returns than for income tax financial reporting. We
regularly assess our tax positions for such transactions and record reserves for those differences when considered
necessary. Tax positions are recognized only when it is more likely than not, based on technical merits, that the
positions will be sustained upon examination. Tax positions that meet the more-likely-than-not threshold are
measured using a probability weighted approach as the largest amount of tax benefit that is greater than fifty percent
likely of being realized upon settlement. Whether the more-likely-than-not recognition threshold is met for a tax
position is a matter of judgment based on the individual facts and circumstances of that position evaluated in light of
all available evidence. We recognize interest and penalties related to unrecognized tax benefits within income tax
expense in the accompanying Consolidated Statement of Operations. Accrued interest and penalties are included
within the related tax liability line in the Consolidated Balance Sheet.
2022 Form 10-K Page 43
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
1. Summary of Significant Accounting Policies (continued)
Pension and Postretirement Obligations
Pension benefit obligations and net periodic pension costs are calculated using actuarial assumptions. Two key
assumptions used in accounting for pension liabilities and expenses are the discount rate and expected rate of return
on plan assets. The discount rate for the U.S. plans is determined by reference to the Bond:Link interest rate model
based upon a portfolio of highly-rated U.S. corporate bonds with individual bonds that are theoretically purchased to
settle the plan’s anticipated cash outflows. The cash flows are discounted to their present value and an overall
discount rate is determined. The discount rate selected to measure the present value of the Canadian benefit
obligations was developed by using that plan’s bond portfolio indices, which match the benefit obligations. We
measure our plan assets and benefit obligations using the month-end date that is closest to our fiscal year end. The
expected return on plan assets assumption is derived using the current and expected asset allocation of the pension
plan assets and considering historical as well as expected performance of those assets.
Insurance Liabilities
We are primarily self-insured for health care, workers’ compensation, and general liability costs. Accordingly,
provisions are made for actuarially determined estimates of discounted future claim costs for such risks, for the
aggregate of claims reported, and claims incurred but not yet reported. Self-insured liabilities totaled $13 million for
January 28, 2023, $14 million for January 29, 2022 and $13 million for January 30, 2021. Workers’ compensation
and general liability reserves are discounted using a risk-free interest rate. Imputed interest expense related to these
liabilities was not significant for any of the periods presented.
Treasury Stock Retirement
We periodically retire treasury shares that we acquire through share repurchases and return those shares to the
status of authorized but unissued. We account for treasury stock transactions under the cost method. For each
reacquisition of common stock, the number of shares and the acquisition price for those shares is added to the
existing treasury stock count and total value. When treasury shares are retired, our policy is to allocate the excess of
the repurchase price over the par value of shares acquired to both retained earnings and additional paid-in capital.
The portion allocated to additional paid-in capital is determined by applying a percentage, which is determined by
dividing the number of shares to be retired by the number of shares issued, to the balance of additional paid-in capital
as of the retirement date.
We retired 6,019,212 and 5,474,288 shares of our common stock held in treasury during 2022 and 2021, respectively.
The shares were returned to the status of authorized but unissued. As a result, treasury stock decreased by
$213 million and $260 million as of January 28, 2023 and January 29, 2022, respectively.
Foreign Currency Translation
The functional currency of our international operations is the applicable local currency. The translation of the
applicable foreign currency into U.S. dollars is performed for balance sheet accounts using current exchange rates
in effect at the balance sheet date and for revenue and expense accounts using the weighted-average rates of
exchange prevailing during the year. The unearned gains and losses resulting from such translation are included as
a separate component of accumulated other comprehensive loss (“AOCL”) within shareholders’ equity.
Recently Adopted Accounting Pronouncements
Recently issued accounting pronouncements did not, or are not believed by management to, have a material effect
on our present or future consolidated financial statements.
Recent Accounting Pronouncements Not Yet Adopted
All recently issued accounting pronouncements are not expected to have a material effect on the consolidated
financial statements.
2022 Form 10-K Page 44
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
2. Acquisitions
WSS
In 2021, the Company, through its wholly-owned subsidiary Foot Locker Retail, Inc., acquired 100% of the shares of
Eurostar, Inc., a Delaware corporation operating as WSS (“WSS”). WSS is a U.S.-based off-mall athletic footwear
and apparel retailer, focused on the Hispanic consumer, which operated 93 stores at the acquisition, primarily on the
West Coast.
We believe that this acquisition enhances our growth opportunities in North America and creates further diversification
and differentiation in terms of both customers and products.
The results of WSS are included in our consolidated financial statements since the acquisition date. The proforma
effects of the acquisition have not been presented, as their effects were not significant to the consolidated results of
operations.
The aggregate purchase price for the acquisition was $809 million ($2 million paid in 2022 and $737 million paid in
2021, net of cash acquired) and was funded with available cash. During 2022, we recorded insignificant changes to
the value of net assets acquired related to income tax balances.
The following table represents the final allocation of the purchase price for WSS. We determined that the WSS
tradename will have an indefinite life and will not be amortized. The excess purchase price over the fair value of
assets was allocated to goodwill.
($ in millions)
Assets acquired:
Cash and cash equivalents
Merchandise inventories
Other current assets
Property and equipment, net
Operating lease right-of-use assets
Tradenames
Customer relationships
Other assets
Liabilities assumed:
Accounts payable and accrued liabilities
Current portion of obligations under finance leases
Current portion of lease obligations
Long-term portion of obligations under finance leases
Long-term lease obligations
Deferred taxes
Other liabilities
Goodwill
Total purchase price
atmos
$
$
$
70
82
10
133
143
296
13
4
(59)
(3)
(19)
(50)
(127)
(87)
(4)
407
809
Effective November 1, 2021, the Company, acquired certain entities collectively operated as atmos, headquartered
in Japan. atmos is a digitally led, culturally-connected global brand featuring premium sneakers and apparel, an
exclusive in-house label, collaborative relationships with leading vendors in the sneaker ecosystem, experiential
stores, and a robust omni-channel platform.
The aggregate purchase price for the acquisition was $372 million ($12 million paid in 2022 and $319 million paid in
2021, net of cash acquired) subject to adjustment for the finalization of the purchase price. At closing, we placed
$20 million related to certain indemnifications and this indemnification escrow will be released in May 2023, unless
there is a pending claim. The acquisition was funded with available cash.
2022 Form 10-K Page 45
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
2. Acquisitions (continued)
The purchase price includes contingent consideration which can reach up to $111 million based on achieving certain
revenue growth and EBITDA performance targets. The contingent consideration was initially valued at $35 million in
2021 and during 2022 that amount was reduced to $4 million, through impairment and other in our Consolidated
Statements of Operations.
The results of atmos are included in our consolidated financial statements since the acquisition date. The proforma
effects of the acquisition have not been presented, as their effects were not significant to the consolidated results of
operations.
The table below summarizes the final allocation of the purchase price to the fair value of assets acquired for atmos
using the exchange rate in effect as of the date of the acquisition. The excess purchase price over the fair value of
assets was allocated to goodwill. Changes to amounts reported in the prior year resulted in a change to goodwill of
$7 million and primarily was related to intangibles. These adjustments did not have a significant effect on the
consolidated results of operations. We determined that the atmos tradenames will have an indefinite life and will not
be amortized. Goodwill of $30 million is deductible for tax purposes over 15 years.
($ in millions)
Assets acquired:
Cash and cash equivalents
Merchandise inventories
Other current assets
Property and equipment, net
Operating lease right-of-use assets
Tradenames
Customer relationships
Other assets
Liabilities assumed:
Accounts payable
Current portion of lease obligations
Other current liabilities
Long-term lease obligations
Deferred taxes
Other liabilities
Goodwill (1)
Total purchase price (2)
$
$
$
6
20
12
7
44
130
9
6
(10)
(10)
(8)
(35)
(40)
(8)
249
372
(1) Goodwill represented on this table is at the exchange rate in effect as of the date of acquisition.
(2) Total purchase price consists of $337 million in cash and $35 million of contingent consideration.
3. Revenue
The table below presents sales disaggregated by sales channel as well as licensing revenue earned from our various
franchised arrangements. Sales are attributable to the channel in which the sales transaction is initiated.
($ in millions)
Sales by Channel
Stores
Direct-to-customers
Total sales
Licensing revenue
Total revenue
2022
2021
2020
$
$
7,219 $
1,528
8,747
12
8,759 $
7,029 $
1,929
8,958
10
8,968 $
5,447
2,101
7,548
6
7,554
2022 Form 10-K Page 46
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
3. Revenue (continued)
Revenue by geographic area is presented in the following table. Revenue is attributed to the country in which the
transaction is fulfilled.
($ in millions)
Revenue by Geography
United States
International
Total revenue
2022
2021
2020
$
$
5,981 $
2,778
8,759 $
6,477 $
2,491
8,968 $
5,581
1,973
7,554
For the year ended January 28, 2023, the countries that comprised the majority of the revenue for the international
category were Canada, France, Italy, Australia, and Germany. No other individual country included in the international
category was significant.
Sales by banner and operating segments are presented in the following table.
($ in millions)
Foot Locker
Champs Sports
Kids Foot Locker
WSS
Other
North America
Foot Locker
Sidestep
Other
EMEA
Foot Locker
atmos
Asia Pacific
Total sales
Contract Liabilities
2022
2021
2020
3,304 $
1,681
708
604
126
6,423
1,628
94
—
1,722
414
188
602
8,747 $
3,295 $
1,939
724
195
742
6,895
1,565
76
—
1,641
373
49
422
8,958 $
2,835
1,610
590
—
903
5,938
1,250
46
47
1,343
267
—
267
7,548
$
$
The table below presents the activity of our gift card liability balance:
($ in millions)
Gift card liability at beginning of year
Liabilities acquired - WSS
Redemptions
Breakage recognized in sales
Activations
Foreign currency fluctuations
Gift card liability
January 28,
2023
January 29,
2022
$
$
46
—
(259)
(17)
266
—
36
$
$
41
1
(249)
(17)
271
(1)
46
We elected not to disclose the information about remaining performance obligations since the amount of gift cards
redeemed after 12 months is not significant for both 2022 and 2021.
4. Segment Information
We have integrated all available shopping channels including stores, websites, apps, social channels, and catalogs.
Store sales are primarily fulfilled from the store’s inventory but may also be shipped from our distribution centers or
from a different store location if an item is not available at the original store. Direct-to-customer orders are generally
shipped to our customers through our distribution centers but may also be shipped from a store or a combination of
our distribution centers and stores depending on the availability of particular items.
2022 Form 10-K Page 47
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
4. Segment Information (continued)
Our operating segments are identified according to how our business activities are managed and evaluated by our
chief operating decision maker, our CEO. We have three operating segments, North America, EMEA (Europe, Middle
East and Africa), and Asia Pacific. Our North America operating segment includes the results of the following banners
in the U.S. and Canada: Foot Locker, Kids Foot Locker, Lady Foot Locker, Champs Sports, Footaction, and WSS,
including each of their related e-commerce businesses, as well as our Eastbay business that included internet,
catalog, and team sales. Our EMEA operating segment includes the results of the following banners in Europe: Foot
Locker, Sidestep, and Kids Foot Locker, including each of their related e-commerce businesses. Our Asia Pacific
operating segment includes the results of Foot Locker in Australia, New Zealand, and Asia and atmos operating
primarily in Japan, as well as their related e-commerce businesses. Additionally, the EMEA and Asia Pacific operating
segments include licensing revenue. We further aggregated these operating segments into one reportable segment
based upon their shared customer base and similar economic characteristics.
We evaluate performance based on several factors, of which the primary financial measure is the banner’s financial
results referred to as division profit. Division profit reflects income before income taxes, impairment and other,
corporate expense, interest expense, net and other income / (expense), net.
The following table summarizes our results:
($ in millions)
Division profit
Less: Impairment and other (1)
Less: Corporate expense (2)
Income from operations
Interest expense, net
Other income / (expense), net (3)
Income from continuing operations before income
2022
2021
2020
$
$
844
112
151
581
(15)
(42)
1,171 $
172
129
870
(14)
384
taxes
$
524
$
1,240 $
497
117
71
309
(7)
192
494
(1) See Note 5, Impairment and Other for additional information on these amounts.
(2) Corporate expense for all years presented reflects the reallocation of expense between corporate and the operating divisions. No change was
made during 2022. Based upon annual internal studies of corporate expense, the allocation of such expenses to the operating divisions was
increased by $19 million for 2021 and $28 million for 2020, thereby reducing corporate expense.
(3) See Note 6, Other Income / (expense), net for additional information on these amounts.
Long-lived asset information as of and for the fiscal years ended January 28, 2023, January 29, 2022, and
January 30, 2021 is presented in the following table. Long-lived assets reflect property and equipment and lease
right-of-use assets.
($ in millions)
Long-Lived Assets
United States
International
Total long-lived assets
2022
2021
2020
$
$
2,152 $
1,211
3,363 $
2,285 $
1,248
3,533 $
2,218
1,286
3,504
For the year ended January 28, 2023, the countries that comprised the majority of long-lived assets for the
international category were Canada, France, Italy, Australia, Germany, and England. No other individual country
included in the international category was significant as of January 28, 2023.
($ in millions)
Division
Corporate
Total
Depreciation and
Amortization
Capital Expenditures (1)
2022 2021 2020 2022 2021 2020 2022 2021 2020
88 $ 7,178 $ 7,184 $ 5,159
$ 169 $ 163 $ 152 $ 200 $ 127 $
1,884
71
24
82
$ 208 $ 197 $ 176 $ 285 $ 209 $ 159 $ 7,907 $ 8,135 $ 7,043
Total Assets
729
951
39
85
34
(1) Represents cash capital expenditures for all years presented.
2022 Form 10-K Page 48
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
5. Impairment and Other
($ in millions)
Impairment of long-lived assets and right-of-use
assets
$
Transformation consulting
Reorganization costs
Litigation costs
Other intangible asset impairments
Acquisition and integration costs
Change in fair value of contingent consideration
Impairment of investments
Lease termination costs
(Insurance recovery)/ losses related to social unrest
Runners Point shut down
Pension litigation related charges
Total impairment and other
$
2022
2021
2020
58 $
42
22
9
8
4
(31)
—
—
—
—
—
112 $
92 $
—
4
—
2
24
—
42
15
(7)
—
—
172 $
77
—
7
—
—
—
—
4
—
8
19
2
117
During the fourth quarter of 2022, we conducted an impairment review for approximately 142 underperforming stores,
which included 70 Sidestep stores. The Company has made the strategic decision to shut down this banner during
2023. We evaluated the long-lived assets, including the right-of-use assets and recorded non-cash charges
of $53 million to write down store fixtures, leasehold improvements, and right-of-use assets for approximately 110 of
these stores, which included $17 million for Sidestep stores. During the first and second quarters of 2022 we recorded
impairment charges of $5 million related to long-lived assets and right-of-use assets, as well as accelerated tenancy
charges.
Impairment of long-lived assets and right of use assets recorded during 2021 related primarily to the decision to shut
down our Footaction banner. The amounts in 2020 primarily represented impairment related to our stores operating
in Europe, which had a triggering event caused by the COVID-19 pandemic. All periods reflect charges associated
with our annual fourth quarter impairment review of underperforming stores.
During 2022, we incurred $42 million of transformation consulting expense. Additionally, we incurred $22 million of
reorganization costs, primarily severance, due to the reduction of support functions as we streamlined the
organization for operational efficiency and included $4 million of other costs related to the wind down of the Sidestep
banner. Associated with the decision to shut down the Sidestep banner, we recorded an $8 million intangible asset
impairment on the Sidestep tradename.
During the fourth quarter of 2022, we recorded a $9 million charge for litigation, representing a pending settlement of
a wage/hour matter.
In connection with the acquisition of atmos in the prior year, the purchase included contingent consideration based
on the achievement of certain sales and EBITDA metrics. The fair value was initially measured as part of the purchase
price as $35 million. As required, the adjustment of its fair value was recorded through earnings and represents a
benefit of $31 million recorded in the fourth quarter of 2022.
During 2022 and 2021 we recorded acquisition and integration costs of $4 million and $24 million, respectively, which
primarily represented investment banking and integration consulting fees related to the WSS and atmos acquisitions.
Over the last several years we have made several minority investments in early-stage companies. In connection with
these investments, we recorded non-cash charges of $42 million and $4 million, in 2021 and 2020 respectively,
related to the write-down of certain minority investments due to their underperformance.
2022 Form 10-K Page 49
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
6. Other Income / (Expense), net
Other income / expense, net generally includes non-operating items, such as:
-
-
-
-
-
changes in value for our investments accounted for using the fair value measurement alternative, which
is at cost adjusted for changes in observable prices minus impairment,
our share of earnings or losses related to our equity method investments,
net benefit expense or income related to our pension and postretirement programs, excluding the
service cost component,
changes in fair value, premiums paid, and realized gains associated with foreign currency option
contracts,
changes in the market value of our available-for-sale security, and
premiums paid to repurchase and retire bonds.
($ in millions)
Minority investment in Retailors, Ltd.
Share of earnings (losses) related to other minority
investments
Team Sales divestiture
Minority investment in GOAT
Pension and postretirement net benefit income,
excluding service cost
Other
Total other income / (expense), net
2022
2021
2020
$
(61) $
77 $
1
19
—
—
(1)
$
(42) $
3
—
290
7
7
384 $
—
(1)
—
190
5
(2)
192
During 2021, we invested $68 million to take a common stock minority stake in a public entity, Retailors, Ltd., which
is traded on the Tel Aviv stock exchange. This investment was at a discount to the initial public offering price, resulting
in a non-cash gain of $9 million in 2021. Additionally, changes in fair value related to our Retailors, Ltd. investment
generated non-cash gains of $68 million during 2021. During 2022, we sold our position in this investment. A loss of
$62 million was recorded during 2022, partially offset by $1 million of dividend income. Our minority investment in
GOAT is accounted for using the fair value measurement alternative, which is at cost adjusted for changes in
observable prices minus impairment. GOAT received funding at higher valuations in both 2021 and 2020 resulting in
non-cash gains of $290 million and $190 million, respectively.
During 2021, we recorded $7 million of insurance recoveries in excess of the losses sustained in the prior year related
to the social unrest.
7. Merchandise Inventories
($ in millions)
LIFO inventories
FIFO inventories
Total merchandise inventories
January 28,
2023
January 29,
2022
$
$
1,093
550
1,643
$
$
788
478
1,266
The value of our LIFO inventories as calculated on a LIFO basis, approximates their value as calculated on a FIFO
basis.
8. Other Current Assets
($ in millions)
Net receivables
Prepaid income taxes
Other prepaid expenses
Prepaid rent
Restricted cash
Other
$
$
January 28,
2023
January 29,
2022
160
62
71
19
13
17
342
$
$
134
56
64
19
8
12
293
2022 Form 10-K Page 50
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
9. Property and Equipment, net
($ in millions)
Owned properties:
Land
Buildings
Furniture, fixtures, equipment and software development costs
Less: accumulated depreciation
Finance leases:
Assets under finance leases
Less: accumulated amortization
Alterations to leased and owned buildings:
Cost
Less: accumulated amortization
10. Other Intangible Assets, net
January 28,
2023
January 29,
2022
$
$
4
53
1,379
1,436
(948)
488
65
(12)
53
967
(588)
379
920
$
$
4
52
1,329
1,385
(902)
483
65
(6)
59
954
(579)
375
917
($ in millions)
Amortized intangible assets: (1)
Lease acquisition costs
Trademarks/tradenames
Customer lists
January 28, 2023
Gross
value
Accum.
amort.
Net
value
Life in Gross
Years (3)
value
January 29, 2022
Accum.
amort.
Net
value
$
$
102 $
18
20
140 $
(100) $
(18)
(9)
(127) $
2
—
11
13
9.4 $
—
3.0
5.0 $
107 $
18
13
138 $
(104) $
(18)
(2)
(124) $
3
—
11
14
Indefinite life intangible assets: (1)
Trademarks/tradenames (2)
$
$
413
426
$
$
440
454
(1) The change in the ending balances also reflect the effect of foreign currency fluctuations due primarily to the movements of the Yen in relation
(2)
to the U.S. dollar.
Includes a non-cash impairment charge of $8 million and $2 million recorded in 2022 and 2021, respectively, see Note 5, Impairment and
Other.
(3) Represents the weighted-average useful life as of January 28, 2023 and excludes those assets that are fully amortized.
In connection with the acquisitions of WSS and atmos, we recognized indefinite life intangible assets of $296 million
for WSS related tradenames, $130 million for atmos related tradenames (a provisional amount of $135 million was
recorded at January 29, 2022). Additionally, we recognized customer list intangible assets of $13 million for WSS
and $9 million for atmos, both of which will be amortized over 3 years. The intangibles related to atmos were originally
recorded at the exchange rate in effect as of the date of acquisition and are presented in the above table at current
period exchange rates.
Amortizing intangible assets primarily represent the WSS and atmos customer lists and lease acquisition costs, which
are amounts that are required to secure prime lease locations, primarily in Europe. Amortization expense recorded
is as follows:
($ in millions)
Amortization expense
2022
2021
2020
$
8 $
5 $
3
2022 Form 10-K Page 51
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
10. Other Intangible Assets, net (continued)
Estimated future amortization expense for finite lived intangibles for the next five years is as follows:
($ in millions)
2023
2024
2025
11. Other Assets
($ in millions)
Restricted cash
Security deposits
Pension asset
Auction rate security
Other
12. Accrued and Other Liabilities
($ in millions)
Other payroll and payroll related costs, excluding taxes
Incentive bonuses
Taxes other than income taxes
Property and equipment (1)
Customer deposits
Rent related costs
Advertising
Income taxes payable
Other
$
7
5
1
January 28,
2023
January 29,
2022
33 $
29
4
6
20
92 $
38
33
21
7
22
121
January 28,
2023
January 29,
2022
99 $
72
69
39
39
35
30
39
146
568 $
78
82
75
58
50
57
34
11
116
561
$
$
$
$
(1) Accruals for property and equipment are excluded from the Statements of Cash Flows for all years presented.
13. Revolving Credit Facility
We have a $600 million asset-based revolving credit facility that is scheduled to expire on July 14, 2025 (as
amended, “2020 Credit Agreement”).
In 2021, we entered into an amendment to the 2020 Credit Agreement (“Amended Credit Agreement”). The
amendment provides for, among other things, (i) reducing the interest rates and commitment fees applicable to the
loans and commitments, respectively, as described below, and (ii) reducing the “floor” applicable. The amendment
provides that the interest rate applicable to loans drawn under the credit facility will be equal to, at our option, either
a base rate, determined by reference to the federal funds rate, plus a margin of 0.25% to 0.75% per annum, or a
Eurodollar rate, determined by reference to LIBOR, plus a margin of 1.25% to 1.75% per annum, in each case,
depending on availability under the Amended Credit Agreement. In addition, we will pay a commitment fee of 0.25%
per annum on the unused portion of the commitments under the Amended Credit Agreement. No events of default
occurred during 2022.
We may use the Amended Credit Agreement to, among other things, support standby letters of credit in connection
with insurance programs. The letters of credit outstanding as of January 28, 2023 were not significant.
The unamortized balance of fees paid in connection with the credit facility at January 28, 2023 was $3 million. Interest
expense, including facility fees, related to the revolving credit facility was $3 million, $3 million, and $5 million for
2022, 2021, and 2020, respectively.
2022 Form 10-K Page 52
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
14. Long-Term Debt and Obligations Under Finance Leases
The components of long-term debt and obligations under finance leases are as follows:
($ in millions)
4% Senior Notes due 2029
Obligations under finance leases
Current portion of debt and obligations under finance leases
January 28,
2023
January 29,
2022
$
$
$
395 $
57
452 $
6
446 $
394
63
457
6
451
Interest expense related to long-term debt and the amortization of the associated debt issuance costs was $17 million,
$12 million and $8 million for 2022, 2021, and 2020, respectively.
15. Other Liabilities
($ in millions)
Deferred taxes
Income taxes
Pension benefits
Contingent consideration
Other
\
16. Leases
January 28,
2023
January 29,
2022
$
237 $
31
21
4
35
$
328 $
224
28
16
35
40
343
The majority of our leases are operating leases for our company-operated retail store locations. We also lease,
among other things, distribution and warehouse facilities, and office space for corporate administrative purposes.
Operating lease periods generally range from 5 to 10 years and generally contain rent escalation provisions. Some
of the store leases contain renewal options with varying terms and conditions.
Amounts recognized in the Consolidated Balance Sheet were as follows:
($ in millions)
Operating leases:
Operating lease right-of-use assets
Operating lease liabilities classified as current
Operating lease liabilities classified as long-term
Total operating lease liabilities
($ in millions)
Finance leases:
Property and equipment, net
Finance lease obligations classified as current
Finance lease obligations classified as long-term
Total finance lease obligations
January 28,
2023
January 29,
2022
$
$
$
2,443 $
2,616
544 $
2,230
2,774 $
572
2,363
2,935
January 28,
2023
January 29,
2022
$
$
$
53 $
6 $
51
57 $
59
6
57
63
2022 Form 10-K Page 53
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
16. Leases (continued)
Other information related to our leases as of January 28, 2023 and January 29, 2022 consisted of the following:
Weighted-average remaining lease term (years)
Operating leases
Finance leases
Weighted-average discount rate
Operating leases
Finance leases
January 28,
2023
January 29,
2022
6.5
14.7
5.0 %
4.3 %
6.7
15.0
4.7 %
4.2 %
Total lease costs include fixed operating lease costs, variable lease costs, and short-term lease costs. Most of our
real estate leases require us to pay certain expenses, such as CAM costs, real estate taxes, and other executory
costs, of which the fixed portion is included in operating lease costs. Variable lease costs include non-lease
components which are not fixed and are not included in determining the present value of our lease liability. Variable
lease costs also include amounts based on a percentage of gross sales in excess of specified levels that are
recognized when probable.
Lease costs which relate to retail stores and distribution centers are classified within cost of sales, while non-store
lease costs are included in SG&A. Amortization of leased equipment assets is classified in depreciation and
amortization. The components of lease cost for 2022, 2021, and 2020 were as follows:
($ in millions)
Operating lease costs
Variable lease costs
Short-term lease costs
Sublease income
Total operating lease costs
Finance lease costs:
Amortization of leased assets
Interest on lease liabilities
Total finance lease costs
Total lease cost
Maturities of lease liabilities as of January 28, 2023 are as follows:
($ in millions)
2023
2024
2025
2026
2027
Thereafter
Total lease payments
Less: Interest
Total lease liabilities
2022
2021
2020
$
$
657 $
308
19
(1)
983
6
3
9
992 $
653 $
331
23
(1)
1,006
4
1
5
1,011 $
620
290
23
(1)
932
1
—
1
933
Operating
leases
Finance
leases
Total
$
$
651 $
576
481
387
304
877
3,276
502
2,774
$
8 $
8
6
4
4
48
78
21
57
$
659
584
487
391
308
925
3,354
523
2,831
As of January 28, 2023, we signed operating leases primarily for retail stores that have not yet commenced and the
total future undiscounted lease payments under these leases are $102 million.
2022 Form 10-K Page 54
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
17. Accumulated Other Comprehensive Loss
($ in millions)
Foreign currency translation adjustments
Hedge contracts
Unrecognized pension cost and postretirement
benefit
2022
2021
2020
$
$
(148)
(3)
(241)
(392)
$
$
(107)
—
(236)
(343)
$
$
(64)
(1)
(266)
(331)
The changes in AOCL for the year ended January 28, 2023 were as follows:
Foreign
Currency
Translation
Items Related
to Pension and
Postretirement
Hedge
Adjustments Contracts Benefits
$
(107) $
— $
(236) $
Total
($ in millions)
Balance as of January 29, 2022
(343)
(42)
7
(14)
(49)
(392)
OCI before reclassification
Amortization of pension actuarial loss, net of tax
Pension and postretirement remeasurement, net of tax
Other comprehensive income
Balance as of January 28, 2023
$
(41)
—
—
(41)
(148) $
(3)
—
—
(3)
(3) $
2
7
(14)
(5)
(241) $
Reclassifications to income from AOCL for the year ended January 28, 2023 were as follows:
($ in millions)
Amortization of actuarial loss:
Pension benefits
Income tax benefit
Amortization of actuarial loss, net of tax
18. Income Taxes
$
$
10
(3)
7
The domestic and international components of pre-tax income are as follows:
($ in millions)
Domestic
International
Total pre-tax income
2022
2021
2020
$
$
440 $
84
524 $
1,244 $
(4)
1,240 $
647
(153)
494
Domestic pre-tax income includes the results of non-U.S. businesses that are operated in branches owned directly
by the U.S. which, therefore, are subject to U.S. income tax.
The income tax provision consists of the following:
($ in millions)
Current:
Federal
State and local
International
Total current tax provision
Deferred:
Federal
State and local
International
Total deferred tax provision
Total income tax provision
2022
2021
2020
$
64 $
27
68
159
23
4
(6)
21
192 $
66
16
274
49
15
10
74
$
180 $
348 $
114
43
23
180
6
(2)
(13)
(9)
171
2022 Form 10-K Page 55
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
18. Income Taxes (continued)
Following the enactment of Public Law 115-97 (“Tax Act”) and the one-time transition tax, our historical foreign
earnings are not subject to additional U.S. federal tax upon repatriation. Further, no additional U.S. federal tax will be
due upon repatriation of current foreign earnings because they are either exempt or subject to U.S. tax as earned.
At January 28, 2023, we had accumulated undistributed foreign earnings of approximately $571 million. This amount
consists of historical earnings that were previously taxed under the Tax Act and post-Tax Act earnings. Investments
in our foreign subsidiaries, including working capital, will continue to be permanently reinvested. Cash balances in
excess of working capital needs are considered to be available for repatriation to the United States and foreign
withholding taxes will be accrued as necessary on these amounts.
We have not recorded a deferred tax liability for the difference between the financial statement carrying amount and
the tax basis of our investments in foreign subsidiaries. The determination of any unrecorded deferred tax liability on
this amount is not practicable due to the uncertainty of how these investments would be recovered.
A reconciliation of the significant differences between the federal statutory income tax rate and the effective income
tax rate on pre-tax income is as follows:
Federal statutory income tax rate
Increase in valuation allowance
State and local income taxes, net of federal tax benefit
International income taxed at varying rates
Foreign tax credits
Domestic/foreign tax settlements
Federal tax credits
Other, net
Effective income tax rate
2022
2021
2020
21.0 %
2.6
5.0
8.4
(3.6)
(0.5)
(0.4)
1.8
34.3 %
21.0 %
0.7
5.4
2.4
(1.4)
(0.3)
(0.1)
0.4
28.1 %
21.0 %
6.3
6.6
4.3
(2.4)
(0.5)
(0.4)
(0.4)
34.5 %
Deferred income taxes are provided for the effects of temporary differences between the amounts of assets and
liabilities recognized for financial reporting purposes and the amounts recognized for income tax purposes. Items that
give rise to significant portions of our deferred tax assets and liabilities are as follows:
($ in millions)
Deferred tax assets:
Tax loss/credit carryforwards and capital loss
Employee benefits
Property and equipment
Operating leases - liabilities
Other
Total deferred tax assets
Valuation allowance
Total deferred tax assets, net
Deferred tax liabilities:
Merchandise inventories
Operating leases - assets
Goodwill and other intangible assets
Net investment gains
Property and equipment
Other
Total deferred tax liabilities
Net deferred tax liability
Balance Sheet caption reported in:
Deferred taxes
Other liabilities
January 28,
2023
January 29,
2022
$
123 $
42
—
725
61
951 $
(93)
858 $
87 $
667
123
115
6
7
1,005 $
(147) $
133
38
15
720
74
980
(80)
900
68
662
155
131
—
22
1,038
(138)
90 $
86
(224)
(237)
(138)
(147) $
2022 Form 10-K Page 56
$
$
$
$
$
$
$
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
18. Income Taxes (continued)
Based upon the level of historical taxable income and projections for future taxable income, which are based upon
our long-range strategic plans, management believes it is more likely than not that we will realize the benefits of
deductible differences, net of the valuation allowances, over the periods in which the temporary differences are
anticipated to reverse. However, the amount of the deferred tax asset considered realizable could be adjusted in the
future if estimates of taxable income are revised.
As of January 28, 2023, we have a valuation allowance of $93 million to reduce our deferred tax assets to an amount
that is more likely than not to be realized. A valuation allowance of $77 million was recorded against tax loss
carryforwards of certain foreign entities. Based on the history of losses and the absence of prudent and feasible
business plans for generating future taxable income in these entities, we believe it is more likely than not that the
benefit of these loss carryforwards will not be realized. As of January 28, 2023, a valuation allowance of $15 million
was established for foreign taxes assessed at rates in excess of the U.S. federal tax rate for which no U.S. foreign
tax credit is available. Additionally, since we do not have any reasonably foreseeable sources of Canadian capital
gains, a valuation allowance of $1 million was established since 2019 for a deferred tax asset arising from a capital
loss.
At January 28, 2023, we have international minimum tax credit carryforwards with a potential tax benefit of $3 million
and operating loss carryforwards with a potential tax benefit of $100 million, a portion of which will expire between
2023 and 2029 and a portion of which will never expire. We will have, when realized, a capital loss with a potential
benefit of $1 million. The Canadian loss will carryforward indefinitely after realization. The international operating loss
carryforwards include nominal unrecognized tax benefits. We also have foreign tax credit carrybacks and
carryforwards with a potential tax benefit of $19 million that will expire between 2023 and 2032.
We operate in multiple taxing jurisdictions and are subject to audit. Audits can involve complex issues that may
require an extended period of time to resolve. A taxing authority may challenge positions that we have adopted in
our income tax filings. Accordingly, we may apply different tax treatments for transactions in filing the income tax
returns than for income tax financial reporting. We regularly assess our tax positions for such transactions and record
reserves for those differences. We participate in the IRS’s Compliance Assurance Process and the examination of
our 2021 U.S. Federal income tax filing was concluded in February 2023. To date, no adjustments have been
proposed in any audits that will have a material effect on our financial position or results of operations.
At January 28, 2023, we had $52 million of gross unrecognized tax benefits, of which $44 million would, if recognized,
affect our annual effective tax rate. We classified certain income tax liabilities as current or noncurrent based on
management’s estimate of when these liabilities will be settled. Interest expense and penalties related to
unrecognized tax benefits are classified as income tax expense. Interest expense recognized was $6 million in 2022
and was not significant for any of the prior years presented.
The following table summarizes the activity related to unrecognized tax benefits:
($ in millions)
Unrecognized tax benefits at beginning of year
Foreign currency translation adjustments
Increases related to current year tax positions
Increases related to prior period tax positions
Decreases related to prior period tax positions
Settlements
Lapse of statute of limitations
Unrecognized tax benefits at end of year
$
$
2022
2021
2020
41
(1)
9
7
—
—
(4)
52
$
$
47
(2)
3
2
(3)
(1)
(5)
41
$
$
45
3
2
3
—
(1)
(5)
47
It is reasonably possible that the liability associated with our unrecognized tax benefits will increase or decrease
within the next twelve months. These changes may be the result of foreign currency fluctuations, ongoing audits, or
the expiration of statutes of limitations. Settlements during 2023 are not expected to be significant based on current
estimates. Audit outcomes and the timing of audit settlements are subject to significant uncertainty. Although
management believes that adequate provision has been made for such issues, the ultimate resolution could have an
adverse effect on our earnings. Conversely, if these issues are resolved favorably in the future, the related provision
would be reduced, generating a positive effect on earnings.
2022 Form 10-K Page 57
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
19. Financial Instruments and Risk Management
We operate internationally and utilize certain derivative financial instruments to mitigate our foreign currency
exposures, primarily related to third-party and intercompany forecasted transactions. As a result of the use of
derivative instruments, we are exposed to the risk that counterparties will fail to meet their contractual obligations. To
mitigate this counterparty credit risk, we have a practice of entering into contracts with major financial institutions
selected based upon their credit ratings and other financial factors. We monitor the creditworthiness of counterparties
throughout the duration of the derivative instrument.
Derivative Holdings Designated as Hedges
The primary currencies to which we are exposed are the euro, British pound, Canadian dollar, Australian dollar, and
the Japanese Yen. Generally, merchandise inventories are purchased by each geographic area in their respective
local currency with the exception of the United Kingdom, whose merchandise inventory purchases are primarily
denominated in euros.
For option and foreign exchange forward contracts designated as cash flow hedges of the purchase of inventory, the
effective portion of gains and losses is deferred as a component of AOCL and is recognized as a component of cost
of sales when the related inventory is sold. The amount reclassified to cost of sales related to such contracts was not
significant for any of the periods presented. The effective portion of gains or losses associated with other forward
contracts is deferred as a component of AOCL until the underlying transaction is reported in earnings. The ineffective
portion of gains and losses related to cash flow hedges recorded to earnings was not significant for any of the periods
presented.
On May 6, 2022, we entered into a cross-currency swap contract to reduce the effect of the fluctuating U.S.
Dollar (“USD”) to Japanese Yen (“JPY”) foreign exchange rate on our foreign currency-denominated
intercompany loan between our Japanese and U.S. subsidiary. We expect the gains and losses on this contract
to offset losses and gains on the hedged transaction in an effort to reduce the earnings volatility resulting from
the remeasurement of the principal and interest accrued on the loan. Though the intercompany loan eliminates
in consolidation, the foreign currency remeasurement of the loan and interest by the U.S. subsidiary is reflected
in the consolidated financial statements.
The cross-currency swap contract has a notional amount of JPY 11 billion and final receipt of $85 million. The
cross-currency swap contract, which matures on November 2, 2031, swaps Yen-denominated interest
payments for U.S. dollar-denominated interest payments, thereby economically converting the JPY 11 billion
fixed-rate 3.51% intercompany loan to a fixed-rate 6.77% USD-denominated receivable for our U.S. subsidiary.
We designated the cross-currency swap contract to hedge the changes in value of the intercompany loan and
its variability on earnings. We apply fair value hedge accounting, and we consider market factors other than the
change in the spot exchange rate on the notional amount of the swap to be excluded components. The foreign
currency spot rate fluctuations on the cross-currency swap notional amount and interest accruals are reported
in earnings each period, while all other changes are reported in other comprehensive income. Because the
terms of the hedged item and the hedging instrument match and the likelihood of swap counterparty default is
not probable, the hedge is expected to exactly offset changes in the fair value of the foreign currency debt
resulting from to foreign currency fluctuations over the term of the swap.
As of January 28, 2023, the cross-currency swap had a fair value of $3 million and was included in other
liabilities. We record the changes in the fair value of the contract to AOCL. Each period, we reclassify an amount
out of AOCL equal to the remeasurement gain or loss on the hedged intercompany loan that is recorded in
selling, general and administrative expenses. As of January 28, 2023, there was $3 million in AOCL, net of tax,
related to the cross-currency swap. In addition, we recognize swap interest income based on the differential in
fixed interest rates per the contract. During 2022, we recorded $2 million of income in interest expense, net.
Refer to Note 17 for further information regarding amounts recorded in AOCL.
2022 Form 10-K Page 58
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
19. Financial Instruments and Risk Management (continued)
Derivative Holdings Not Designated as Hedges
We enter into certain derivative contracts that are not designated as hedges, such as foreign exchange forward
contracts and currency option contracts. These derivative contracts are used to manage certain costs of foreign
currency-denominated merchandise purchases, intercompany transactions, and the effect of fluctuating foreign
exchange rates on the reporting of foreign currency-denominated earnings. Changes in the fair value of derivative
holdings not designated as hedges, as well as realized gains and premiums paid, are recorded in earnings
immediately within SG&A or Other income, net, depending on the type of transaction. The aggregate amount
recognized for these contracts was not significant for any of the periods presented.
Fair Value of Derivative Contracts
The following represents the fair value of our derivative contracts.
($ in millions)
Hedging Instruments:
Foreign exchange forward contracts
Cross-currency swap
Business Risk
Balance Sheet
January 28,
Caption
2023
January 29,
2022
Current liabilities
$
Non-current liabilities $
— $
3 $
1
—
The retail business is highly competitive. Price, quality, selection of merchandise, reputation, store location,
advertising, and customer experience are important competitive factors in our business. We operate in 29 countries
and purchased 86% of our merchandise in 2022 from our top 5 suppliers. In 2022, we purchased 65% of our athletic
merchandise from one major supplier, Nike, Inc. (“Nike”). Each of our banners are highly dependent on Nike; they
individually purchased approximately 50% to 75% of their merchandise from Nike.
Included in our Consolidated Balance Sheet at January 28, 2023, are the net assets of our European operations,
which total $454 million and are located in 20 countries, 11 of which have adopted the euro as their functional
currency.
20. Fair Value Measurements
We categorize our financial instruments into a three-level fair value hierarchy that prioritizes the inputs to valuation
techniques used to measure fair value into three broad levels. The fair value hierarchy gives the highest priority to
quoted prices in active markets for identical assets or liabilities (Level 1) and the lowest priority to unobservable inputs
(Level 3). If the inputs used to measure fair value fall within different levels of the hierarchy, the category level is
based on the lowest priority level input that is significant to the fair value measurement of the instrument.
Fair value is determined based upon the exit price that would be received to sell an asset or paid to transfer a liability
in an orderly transaction between market participants exclusive of any transaction costs. Our financial assets
recorded at fair value are categorized as follows:
Level 1 - Quoted prices for identical instruments in active markets.
Level 2 - Observable inputs other than quoted prices included within Level 1, including quoted prices for similar
instruments in active markets; quoted prices for identical or similar instruments in markets that are not
active; and model-derived valuations in which all significant inputs or significant value-drivers are
observable in active markets.
Level 3 - Model-derived valuations in which one or more significant inputs or significant value-drivers are
unobservable.
During 2021, we invested $68 million to take a common stock minority stake in a public entity, Retailors, Ltd., which
is traded on the Tel Aviv stock exchange. This investment was classified as a Level 1 instrument since the fair value
is readily available in an active market. During 2022, we sold our holdings in this investment.
2022 Form 10-K Page 59
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
20. Fair Value Measurements (continued)
Our auction rate security, classified as available-for-sale, is recorded within Other assets on the Consolidated
Balance Sheet and is recorded at fair value with gains and losses reported in Other income, net in our Consolidated
Statements of Operations. The fair value of the auction rate security is determined by using quoted prices for similar
instruments in active markets and accordingly is classified as a Level 2 instrument.
The fair value of the contingent consideration liability associated with the atmos acquisition is estimated using an
option pricing model simulation that determines an average projected payment value across numerous iterations.
See Note 1 for further details.
Our derivative financial instruments are valued using market-based inputs to valuation models. These valuation
models require a variety of inputs, including contractual terms, market prices, yield curves, and measures of volatility
and therefore are classified as Level 2 instruments.
Assets and Liabilities Measured at Fair Value on a Recurring Basis
($ in millions)
As of January 28, 2023
As of January 29, 2022
Level 1 Level 2 Level 3 Level 1
Level 2
Level 3
Assets
Minority investment in common
stock
Available-for-sale security
Total assets
Liabilities
Contingent consideration
Foreign exchange forward
contracts
Cross-currency swap contract
Total liabilities
$
$
$
— $
—
— $
— $
6
6 $
— $
—
— $
145 $
—
145 $
— $
7
7 $
$
— $
— $
4 $
— $
— $
—
—
— $
—
3
3 $
—
—
4 $
—
—
— $
1
—
1 $
—
—
—
35
—
—
35
There were no transfers into or out of Level 1, Level 2, or Level 3 for any of the periods presented.
Assets and Liabilities Measured at Fair Value on a Nonrecurring Basis
Certain assets and liabilities are measured at fair value on a nonrecurring basis. Assets and liabilities recognized or
disclosed at fair value on the consolidated financial statements on a nonrecurring basis include items such as
property, plant and equipment, operating lease right-of-use assets, goodwill, other intangible assets, and minority
investments that are not accounted for under the equity method of accounting. These assets are measured using
Level 3 inputs, if determined to be impaired. The preferred stock of our minority investment in GOAT is measured
using the fair value measurement alternative had a carrying value of $579 million for both January 28, 2023 and
January 29, 2022. As of January 28, 2023, cumulative impairments on our portfolio of minority investments were
$53 million.
Long-Term Debt
The fair value of long-term debt is determined by using model-derived valuations in which all significant inputs or
significant value-drivers are observable in active markets and therefore are classified as Level 2.
($ in millions)
Carrying value (1)
Fair value
January 28, 2023
January 29, 2022
$
$
395
338
$
$
394
389
(1) The carrying value of debt for both periods reflect $5 million of issuer’s discount and costs related to 4% Notes due in 2029.
The carrying values of cash and cash equivalents, restricted cash, and other current receivables and payables
approximate their fair value.
2022 Form 10-K Page 60
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
21. Retirement Plans and Other Benefits
Pension and Other Postretirement Plans
We have defined benefit pension plans covering certain of our North American employees. In May 2019, the U.S.
qualified pension plan was amended such that all employees who were not participants in the plan as of
December 31, 2019, will not become participants after such date. All benefit accruals were frozen as of
December 31, 2019 for all plan participants with less than eleven years of service as of that date. For participants
with more than eleven years of service as of December 31, 2019, benefit accruals were frozen as of
December 31, 2022. Participants will continue to accrue interest at a fixed rate of 6% per year.
We also sponsor postretirement medical and life insurance plans, which are available to most of our retired U.S.
employees. These plans are contributory and are not funded. These plans are not significant.
The following tables set forth the plans’ changes in benefit obligations and plan assets, funded status, and amounts
recognized in the Consolidated Balance Sheets:
($ in millions)
Change in benefit obligation
Benefit obligation at beginning of year
Service cost
Interest cost
Plan participants’ contributions
Actuarial gains
Foreign currency translation adjustments
Benefits paid
Settlement
Benefit obligation at end of year
Change in plan assets
Fair value of plan assets at beginning of year
Actual return on plan assets
Employer contributions
Foreign currency translation adjustments
Benefits paid
Fair value of plan assets at end of year
Funded status
Amounts recognized on the balance sheet:
Other assets
Accrued and other liabilities
Other liabilities
2022
2021
$
$
$
$
$
$
$
674
14
21
—
(93)
(2)
(48)
—
566
676
(83)
3
(2)
(48)
546
(20)
4
(3)
(21)
(20)
$
$
$
$
$
$
$
753
16
18
—
(55)
(1)
(55)
(2)
674
716
11
3
1
(55)
676
2
21
(3)
(16)
2
The Canadian qualified pension plan’s assets exceeded its accumulated benefit obligation for both 2022 and 2021.
In 2021, the U.S. qualified pension plan’s assets exceeded its accumulated benefit obligation, however in 2022 the
accumulated benefit obligation was greater than the plan’s assets. Our non-qualified pension plans have an
accumulated benefit obligation in excess of plan assets, as these plans are unfunded. Accordingly, the table below
reflects the U.S. non-qualified plans for 2022 and 2021 and the U.S. qualified plan for 2022.
($ in millions)
Projected benefit obligation
Accumulated benefit obligation
Fair value of plan assets
$
2022
2021
$
533
533
509
20
20
—
2022 Form 10-K Page 61
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
21. Retirement Plans and Other Benefits (continued)
The following table provides the amounts recognized in AOCL on a pre-tax basis:
($ in millions)
Net actuarial loss at beginning of year
Amortization of net loss
Loss arising during the year
Foreign currency fluctuations
Net actuarial loss at end of year
$
$
320
(10)
21
(2)
329
The actuarial losses recognized during 2022 were primarily driven lower actual return as compared with the expected
return on plan assets partially offset by an increase in discount rates applied against future expected benefit
payments, which resulted in a decrease in the benefit obligation for the pension benefit plans.
The following weighted-average assumptions were used to determine the benefit obligations under the plans:
Discount rate
Rate of compensation increase
2022
2021
5.0 %
3.6 %
3.2 %
3.6 %
Pension expense is actuarially calculated annually based on data available at the beginning of each year. The
expected return on plan assets is determined by multiplying the expected long-term rate of return on assets by the
market-related value of plan assets for the U.S. qualified pension plan and market value for the Canadian qualified
pension plan. The market-related value of plan assets is a calculated value that recognizes investment gains and
losses in fair value related to equities over three or five years, depending on which computation results in a market-
related value closer to market value. Market-related value for the U.S. qualified plan was $618 million and $652 million
for 2022 and 2021, respectively.
Assumptions used in the calculation of net benefit cost include the discount rate selected and disclosed at the end of
the previous year, as well as other assumptions detailed in the table below:
Discount rate
Rate of compensation increase
Expected long-term rate of return on assets
2022
2021
2020
3.2 %
3.6 %
4.8 %
2.5 %
3.6 %
5.3 %
2.9 %
3.6 %
5.5 %
The expected long-term rate of return on invested plan assets is based on the plans’ weighted-average target asset
allocation, as well as historical and future expected performance of those assets. The target asset allocation is
selected to obtain an investment return that is sufficient to cover the expected benefit payments and to reduce the
variability of our future contributions.
The following are the components of net periodic pension benefit cost. Service cost is recognized as a component of
SG&A and the remaining pension and postretirement expense components are recognized as part of Other income,
net.
($ in millions)
Service cost
Interest cost
Expected return on plan assets
Amortization of net loss
Net benefit expense
2022
2021
2020
$
$
14 $
21
(31)
10
14 $
16 $
18
(35)
10
9 $
14
21
(37)
12
10
The mortality assumption used to value the 2022 and 2021 U.S. pension obligations was the Pri-2012 mortality table
with generational projection using MP-2021 for both males and females. For years ended January 28, 2023 and
January 29, 2022, we used the 2014 CPM Private Sector mortality table projected generationally with Scale CPM-B
for both males and females to value its Canadian pension obligations
2022 Form 10-K Page 62
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
21. Retirement Plans and Other Benefits (continued)
Plan Assets
The target composition of our U.S. qualified pension plan assets is 70% fixed-income securities, 28.5% equities, and
1.5% real estate. We may alter the asset allocation targets from time to time depending on market conditions and the
funding requirements of the pension plan. This current asset allocation has and is expected to limit volatility with
regard to the funded status of the plan, but may result in higher pension expense due to the lower long-term rate of
return associated with fixed-income securities. Due to market conditions and other factors, actual asset allocations
may vary from the target allocation outlined above. The target composition of our Canadian qualified pension plan
assets is 95% fixed-income securities and 5% equities. We believe plan assets are invested in a conservative manner
with the same overall objective and investment strategy as noted below for the U.S. pension plan. The bond portfolio
is comprised of government and corporate bonds chosen to match the duration of the pension plan’s benefit payment
obligations. This current asset allocation will limit future volatility.
We believe plan assets are invested in a conservative manner with an objective of providing a total return that, over
the long term, provides sufficient assets to fund benefit obligations, taking into account our expected contributions
and the level of funding risk deemed appropriate. Our investment strategy seeks to diversify assets among classes
of investments with differing rates of return, volatility, and correlation in order to reduce funding risk. Diversification
within asset classes is also utilized to ensure that there are no significant concentrations of risk in plan assets and to
reduce the effect that the return on any single investment may have on the entire portfolio.
Valuation of Investments
Commingled trust funds are valued at the net asset value of units held by the plan at year end. Stocks and mutual
funds traded on U.S. and Canadian security exchanges are valued at closing market prices on the measurement
date. Each category of U.S. and Canadian plan assets is classified within the same level of the fair value hierarchy
for 2022 and 2021.
The fair values of the U.S. pension plan assets at January 28, 2023 and January 29, 2022 were as follows:
($ in millions)
Cash
Cash equivalents
Commingled funds:
Equity securities
Fixed-income securities
Real estate securities
Corporate stock
Mutual fund
Total assets at fair value
Level 2
Level 3
Level 1
$
2 $
—
—
—
—
17
10
29 $
$
— $
1
130
341
8
—
—
480 $
2022 Total 2021 Total
—
2 $
4
1
— $
—
—
—
—
—
—
— $
130
341
8
17
10
509 $
163
425
9
18
12
631
The fair values of the Canadian pension plan assets at January 28, 2023 and January 29, 2022 were as follows:
($ in millions)
Cash equivalents
Equity securities:
Canadian and international
Fixed-income securities:
Cash matched bonds
Total assets at fair value
Level 1
$
— $
Level 2
Level 3
6 $
2022 Total 2021 Total
6
6 $
— $
3
—
—
3
$
—
3 $
28
34 $
—
— $
28
37 $
3
36
45
2022 Form 10-K Page 63
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
21. Retirement Plans and Other Benefits (continued)
Contributions and Expected Payments
We were not required to make any contributions to the U.S. qualified pension plan in 2022 and 2021. We do not
anticipate making any contributions to the U.S. qualified pension plan in 2023 due to the strong funded status of the
plan, however we continually evaluate the amount and timing of any potential contributions based on market
conditions and other factors. We paid $3 million and $3 million in pension benefits related to our non-qualified pension
plans during 2022 and 2021, respectively.
Estimated future benefit payments for each of the next five years and the five years thereafter are as follows:
($ in millions)
2023
2024
2025
2026
2027
2028-2032
Savings Plans
$
68
50
47
46
44
198
We have a 401(k) plan that is available to employees whose primary place of employment is the U.S., and another
plan that is available to employees whose primary place of employment is in Puerto Rico. With the acquisition of
WSS in 2021, we became the sponsor of the 401(k) plan for WSS employees. The charges for matching contributions
were not significant for any of the periods presented.
22. Share-Based Compensation
Stock Awards
Under our 2007 Stock Incentive Plan (the “2007 Stock Plan”), stock options, restricted stock, restricted stock units,
stock appreciation rights, or other share-based awards may be granted to nonemployee directors, officers and other
employees, including our subsidiaries and operating divisions worldwide. Options for employees become exercisable
in substantially equal annual installments over a three-year period, beginning with the first anniversary of the date of
grant of the option, unless a shorter or longer duration is established at the time of the option grant. The options
terminate ten years from the date of grant. On May 21, 2014, the 2007 Stock Plan was amended to increase the
number of shares of common stock reserved for all awards to 14 million shares. As of January 28, 2023, there were
3,651,807 shares available for issuance under this plan.
On August 24, 2022, the Company granted options and other awards to its new President and Chief Executive Officer,
Mary N. Dillon. These awards were granted outside of the 2007 Stock Incentive Plan as employment inducement
awards and do not require shareholder approval under the rules of the New York Stock Exchange or otherwise.
Shares available for future grant under this plan of 545,660 are reserved for the sole purpose to issue shares pursuant
to her employment inducement awards.
Employees Stock Purchase Plan
Under our 2013 Foot Locker Employees Stock Purchase Plan (“ESPP”), participating employees are able to
contribute up to 10% of their annual compensation, not to exceed $25,000 in any plan year, through payroll
deductions to acquire shares of our common stock at 85% of the lower market price on one of two specified dates in
each plan year. Of the 3,000,000 shares of common stock authorized under this plan, there were 1,854,858 shares
available for purchase as of January 28, 2023. During 2022 and 2021, participating employees purchased 119,518
shares and 300,788 shares, respectively.
2022 Form 10-K Page 64
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
22. Share-Based Compensation (continued)
Share-Based Compensation Expense
Total compensation expense included in SG&A and
($ in millions)
the associated tax benefits recognized related to our
Options and employee stock purchase plan
share-based compensation plans, were as follows:
Restricted stock units and performance stock units
Total share-based compensation expense
$
$
2022
2021
2020
5
26
31
$
$
6
23
29
$
$
Tax benefit recognized
$
3
$
3
$
Valuation Model and Assumptions
6
9
15
2
The Black-Scholes option-pricing model is used to estimate the fair value of options and the stock purchase plan.
The Black-Scholes option-pricing model incorporates various and subjective assumptions, including expected term
and expected volatility.
We estimate the expected term of options using our historical exercise and post-vesting employment termination
patterns, which we believe are representative of future behavior. The expected term for the employee stock purchase
plan valuation is based on the length of each purchase period as measured at the beginning of the offering period,
which is one year.
We estimate the expected volatility of our common stock at the grant date using a weighted-average of our historical
volatility and implied volatility from traded options on our common stock. We believe that this combination of historical
volatility and implied volatility provides a better estimate of future stock price volatility.
The risk-free interest rate assumption is determined using the Federal Reserve nominal rates for U.S. Treasury zero-
coupon bonds with maturities similar to those of the expected term of the award being valued. The expected dividend
yield is derived from our historical experience.
The following table shows the assumptions used to compute the share-based compensation expense:
Stock Option Plans
2022
2021
2020
Stock Purchase Plan
2021
2020
2022
Weighted-average risk free rate
of interest
Expected volatility
Weighted-average expected
award life (in years)
Dividend yield
Weighted-average fair value
1.8 %
35 %
3.9
2.7 %
0.9 %
47 %
5.5
1.5 %
0.5 %
37 %
1.0 %
40.0 %
4.9
4.3 %
1.0
2.6 %
0.1 %
45 %
1.0
4.0 %
1.8 %
48 %
1.0
4.2 %
$
10.80
$
20.22
$
5.03
$
18.46
$
9.61
$
13.97
2022 Form 10-K Page 65
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
22. Share-Based Compensation (continued)
The information set forth in the following table covers options granted under our stock option plans:
Options outstanding at the beginning of the year
Granted
Exercised
Expired or cancelled
Options outstanding at January 28, 2023
Options exercisable at January 28, 2023
Number
of
Shares
(in thousands)
3,211
590
(207)
(338)
3,256
2,535
Weighted-
Average
Remaining
Contractual Life
(in years)
Weighted-
Average
Exercise
Price
(per share)
$
4.5 $
3.3 $
48.84
31.71
28.15
41.22
47.85
52.36
The total fair value of options vested was $4 million during 2022 and 2021. During the years ended January 28, 2023,
and January 29, 2022, we received $6 million and $10 million in cash from option exercises and recognized a related
tax benefit of an insignificant amount and $2 million, respectively.
The total intrinsic value of options exercised (the difference between the market price of the Company’s common
stock on the exercise date and the price paid by the optionee to exercise the option) is presented below:
($ in millions)
Exercised
2022
2021
2020
$
1 $
8
$
3
The aggregate intrinsic value for stock options outstanding, and those outstanding and exercisable (the difference
between the closing stock price on the last trading day of the period and the exercise price of the options, multiplied
by the number of in-the-money stock options) is presented below:
($ in millions)
Outstanding
Outstanding and exercisable
$
$
2022
20
11
As of January 28, 2023, there was $3 million of total unrecognized compensation cost related to nonvested stock
options, which is expected to be recognized over a remaining weighted-average period of 1.5 years.
The following table summarizes information about stock options outstanding and exercisable at January 28, 2023:
Range of Exercise
Prices
Number
Outstanding
Remaining
Contractual
Life
Options Outstanding
Weighted-
Average
Weighted-
Average
Exercise
Price
Options Exercisable
Number
Exercisable
Weighted-
Average
Exercise
Price
$21.60 - $36.51
$39.17 - $48.98
$53.61 - $58.94
$62.02 - $72.83
(in thousands, except prices per share and contractual life)
1,123
459
493
1,181
3,256
7.0 $
2.9
5.1
2.4
4.5 $
25.91
44.84
56.75
66.14
47.85
514 $
445
395
1,181
2,535 $
23.09
45.02
57.46
66.14
52.36
2022 Form 10-K Page 66
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
22. Share-Based Compensation (continued)
Restricted Stock Units and Performance Stock Units
Restricted stock units (“RSU”) may be awarded to certain officers, key employees of the Company, and nonemployee
directors. Additionally, performance stock units (“PSU”) are awarded to officers and certain key employees in
connection with our long-term incentive program. Each RSU and PSU represents the right to receive one share of
our common stock provided that the applicable performance and vesting conditions are satisfied. PSU awards
granted in 2022 also include a performance objective based on our relative total shareholder return over the
performance period to a pre-determined peer group, assuming the reinvestment of dividends. The fair value of these
awards is determined using a Monte Carlo simulation as of the date of the grant and share-based compensation
expense will not be adjusted should the target awards vary from actual awards.
Generally, RSU awards fully vest after the passage of time, typically three years for employees and one year for
nonemployee directors, provided there is continued service with the Company until the vesting date, subject to the
terms of the award. PSU awards are earned only after the attainment of performance goals in connection with the
relevant performance period and vest after an additional one-year period. No dividends are paid or accumulated on
any RSU or PSU awards. Compensation expense is recognized using the market value at the date of grant and is
amortized over the vesting period.
RSU and PSU activity is summarized as follows:
Weighted-Average
Number
of
Shares
(in thousands)
Remaining Weighted-Average
Contractual
Life
(in years)
Grant Date
Fair Value
(per share)
Nonvested at beginning of year
Granted
Vested
Performance adjustment (1)
Forfeited
Nonvested at January 28, 2023
1,391
1,242
(117)
15
(539)
1,992
$
1.3 $
43.95
31.42
54.29
35.56
37.58
Aggregate value ($ in millions)
$
75
(1) This represents adjustments made to PSU awards reflecting changes in estimates based upon our current performance against predefined
financial targets.
The total fair value of awards vested was $6 million, $23 million, and $6 million, for 2022, 2021, and 2020,
respectively. At January 28, 2023, there was $27 million of total unrecognized compensation cost related to
nonvested awards.
23. Legal Proceedings
Legal proceedings pending against the Company or its consolidated subsidiaries consist of ordinary, routine litigation,
including administrative proceedings, incidental to the business of the Company or businesses that have been sold
or discontinued by the Company in past years. These legal proceedings include commercial, intellectual property,
customer, privacy, environmental, and employment-related claims. Additionally, the Company is a defendant in two
purported class actions alleging wage/hour and wage statement violations in California.
We do not believe that the outcome of any such legal proceedings pending against the Company or its consolidated
subsidiaries, as described above, would have a material adverse effect on our consolidated financial position,
liquidity, or results of operations, taken as a whole, based upon current knowledge and taking into consideration
current accruals. Litigation is inherently unpredictable. Judgments could be rendered or settlements made that could
adversely affect the Company’s operating results or cash flows in a particular period.
2022 Form 10-K Page 67
Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure
There were no disagreements between the Company and its independent registered public accounting firm on
matters of accounting principles or practices.
Item 9A. Controls and Procedures
(a) Evaluation of Disclosure Controls and Procedures
The Company’s management performed an evaluation, under the supervision and with the participation of the
Company’s Chief Executive Officer (“CEO”) and Chief Financial Officer (“CFO”), of the effectiveness of the
design and operation of the Company’s disclosure controls and procedures (as that term is defined in Rules
13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as amended (the “Exchange Act”)) as of
January 28, 2023. Based on that evaluation, the Company’s CEO and CFO have concluded that the Company’s
disclosure controls and procedures were not effective as of January 28, 2023, due to deficiencies identified at
our WSS business resulting in a material weakness, discussed below in Management’s Annual Report on
Internal Control over Financial Reporting.
Per Rules 13a-15(e) and 15d-15(e), the term disclosure controls and procedures means controls and other
procedures of an issuer that are designed to ensure that information required to be disclosed by the issuer in
the reports that it files or submits under the Exchange Act (15 U.S.C. 78a et seq.) is recorded, processed,
summarized, and reported within the time periods specified in the SEC’s rules and forms. Disclosure controls
and procedures include, without limitation, controls and procedures designed to ensure that information required
to be disclosed by an issuer in the reports that it files or submits under the Exchange Act is accumulated and
communicated to the issuer’s management, including its CEO and CFO, or persons performing similar functions,
as appropriate to allow timely decisions regarding required disclosure.
The Company’s management, including the CEO and CFO, does not expect that our disclosure controls and
procedures or our internal control over financial reporting will prevent all errors and all fraud due to inherent
limitations of internal controls. Because of such limitations, there is a risk that material misstatements will not
be prevented or detected on a timely basis by internal control over financial reporting. However, these inherent
limitations are known features of the financial reporting process. Therefore, it is possible to design into the
process safeguards to reduce, though not eliminate, this risk.
In light of the material weakness described below, management performed additional analysis and other
procedures to ensure that our consolidated financial statements were prepared in accordance with U.S.
generally accepted accounting principles (U.S. GAAP). Accordingly, management believes that the
consolidated financial statements included in this Annual Report on Form 10-K fairly present, in all material
respects, our financial position, results of operations and cash flows as of and for each of the periods presented
herein, in accordance with U.S. GAAP.
(b) Management’s Annual Report on Internal Control over Financial Reporting
The Company’s management is responsible for establishing and maintaining adequate internal control over
financial reporting (as that term is defined in Exchange Act Rules 13a-15(f) and 15d-15(f)). To evaluate the
effectiveness of the Company’s internal control over financial reporting, the Company uses the framework in
Internal Control-Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the
Treadway Commission (the “2013 COSO Framework”). Using the 2013 COSO Framework, the Company’s
management, including the CEO and CFO, under the oversight of the Board of Directors, evaluated the
Company’s internal control over financial reporting and concluded that the Company’s internal control over
financial reporting was not effective as of January 28, 2023.
2022 Form 10-K Page 68
A company’s internal control over financial reporting includes those policies and procedures that:
(1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions
and dispositions of the assets of the Company;
(2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial
statements in accordance with generally accepted accounting principles, and that receipts and expenditures
of the company are being made only in accordance with authorizations of management and directors of the
Company; and
(3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or
disposition of the company’s assets that could have a material effect on the financial statements.
Because of its inherent limitations, internal control over financial reporting may not prevent or detect
misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that
controls may become inadequate because of changes in conditions or that the degree of compliance with the
policies or procedures may deteriorate.
A material weakness is a deficiency, or a combination of deficiencies, in internal control over financial reporting,
such that there is a reasonable possibility that a material misstatement of our annual or interim financial
statements will not be prevented or detected on a timely basis.
Management identified a material weakness related to ineffective general information technology controls over
logical access and change management at our WSS business. As a result, process level automated controls
and manual controls that are dependent on the completeness and accuracy of information derived from the
affected information systems were also ineffective. This material weakness resulted from ineffective risk
assessment associated with the information technology environment and individuals with insufficient knowledge
and training associated with designing and implementing the controls.
The control deficiencies did not result in any errors. However, the control deficiencies created a reasonable
possibility that a material misstatement to the consolidated financial statements would not be prevented or
detected on a timely basis. Therefore, we concluded that the deficiencies represent a material weakness in the
Company’s internal control over financial reporting and our internal control over financial reporting was not
effective as of January 28, 2023.
Our independent registered public accounting firm, KPMG LLP, who audited the Company’s consolidated
financial statements included in this Annual Report on Form 10-K, has issued an adverse opinion on the
effectiveness of the Company’s internal control over financial reporting, which is included in Item 9A(d).
(c) Changes in Internal Control over Financial Reporting
Management, with oversight from the Audit Committee of the Board of Directors, has begun certain remedial
actions and is developing a full plan, which will be executed during fiscal 2023. This plan may include, among
other items, additional risk assessment procedures over information technology, modifications and
enhancements to controls, and additional training related to the design and implementation of control
procedures. These deficiencies will not be considered remediated until the remediation plan is complete, and
controls have been operational for a sufficient period of time and successfully tested.
There were no other changes in internal control over financial reporting (as defined by Rule 13a-15(f) and 15d-
15(f) under the Exchange Act) during the quarter ended January 28, 2023 that have materially affected, or are
reasonably likely to materially affect, our internal control over financial reporting.
(d) Report of Independent Registered Public Accounting Firm on Internal Control Over Financial Reporting
The report appears on the following page.
2022 Form 10-K Page 69
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To the Shareholders and Board of Directors
Foot Locker, Inc.:
Opinion on Internal Control Over Financial Reporting
We have audited Foot Locker, Inc. and subsidiaries' (the Company) internal control over financial reporting as of
January 28, 2023, based on criteria established in Internal Control – Integrated Framework (2013) issued by the Committee
of Sponsoring Organizations of the Treadway Commission. In our opinion, because of the effect of the material weakness,
described below, on the achievement of the objectives of the control criteria, the Company has not maintained effective
internal control over financial reporting as of January 28, 2023, based on criteria established in Internal Control – Integrated
Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission.
We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States)
(PCAOB), the consolidated balance sheets of the Company as of January 28, 2023 and January 29, 2022, the related
consolidated statements of operations, comprehensive income, changes in shareholders’ equity, and cash flows for each
of the years in the three-year period ended January 28, 2023, and the related notes (collectively, the consolidated financial
statements), and our report dated March 27, 2023 expressed an unqualified opinion on those consolidated financial
statements.
A material weakness is a deficiency, or a combination of deficiencies, in internal control over financial reporting, such that
there is a reasonable possibility that a material misstatement of the company’s annual or interim financial statements will
not be prevented or detected on a timely basis. A material weakness related to ineffective general information technology
controls over logical access and change management has been identified and included in management’s assessment. The
material weakness was considered in determining the nature, timing, and extent of audit tests applied in our audit of the
2022 consolidated financial statements, and this report does not affect our report on those consolidated financial statements.
Basis for Opinion
The Company’s management is responsible for maintaining effective internal control over financial reporting and for its
assessment of the effectiveness of internal control over financial reporting, included in the accompanying Management’s
Annual Report on Internal Control over Financial Reporting. Our responsibility is to express an opinion on the Company’s
internal control over financial reporting based on our audit. We are a public accounting firm registered with the PCAOB and
are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the
applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audit in accordance with the standards of the PCAOB. Those standards require that we plan and perform
the audit to obtain reasonable assurance about whether effective internal control over financial reporting was maintained in
all material respects. Our audit of internal control over financial reporting included obtaining an understanding of internal
control over financial reporting, assessing the risk that a material weakness exists, and testing and evaluating the design
and operating effectiveness of internal control based on the assessed risk. Our audit also included performing such other
procedures as we considered necessary in the circumstances. We believe that our audit provides a reasonable basis for
our opinion.
Definition and Limitations of Internal Control Over Financial Reporting
A company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the
reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally
accepted accounting principles. A company’s internal control over financial reporting includes those policies and procedures
that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and
dispositions of the assets of the company; (2) provide reasonable assurance that transactions are recorded as necessary
to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts
and expenditures of the company are being made only in accordance with authorizations of management and directors of
the company; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition,
use, or disposition of the company’s assets that could have a material effect on the financial statements.
Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also,
projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate
because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.
/s/ KPMG LLP
New York, New York
March 27, 2023
2022 Form 10-K Page 70
Item 9B. Other Information
None.
Item 9C. Disclosure Regarding Foreign Jurisdictions that Prevent Inspections
None.
PART III
Item 10. Directors, Executive Officers, and Corporate Governance
(a) Directors of the Company
Information relative to directors of the Company will be set forth under the heading “Proposal 1: Election
of Directors” in the Proxy Statement and is incorporated herein by reference.
(b) Executive Officers of the Company
Information with respect to executive officers of the Company is set forth in Item 4A in Part I.
(c) Information on our audit committee and the audit committee financial expert will be contained under the
heading “Committees” under the Board of Directors section of the Proxy Statement and is incorporated
herein by reference.
(d) Information about the Code of Business Conduct applicable to our employees, including our Chief Executive
Officer, Chief Financial Officer, Chief Accounting Officer, and the Board of Directors, will be set forth under
the heading “Code of Business Conduct” under the Governance section of the Proxy Statement and is
incorporated herein by reference.
Item 11. Executive Compensation
Information set forth in the Proxy Statement beginning with the section captioned “Director Compensation” through
and including the section captioned “Excess Savings Plan” is incorporated herein by reference.
Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Shareholder Matters
Information set forth in the Proxy Statement under the section captioned “Shareholder Ownership” is incorporated
herein by reference. Equity compensation plan information is contained under the “Stock Awards” and “Employees
Stock Purchase Plan” sections of the Share-Based Compensation note in “Item 8. Consolidated Financial Statements
and Supplementary Data.”
Item 13. Certain Relationships and Related Transactions, and Director Independence
Information set forth under the heading “Directors’ Independence” under the Governance section of the Proxy
Statement is incorporated herein by reference.
Item 14. Principal Accounting Fees and Services
Our independent registered public accounting firm is KPMG LLP, New York, NY, Auditor Firm ID: 185. Information
about the principal accounting fees and services is set forth under the heading “Audit and Non-Audit Fees” under the
“Proposal 5” section of the Proxy Statement and is incorporated herein by reference. Information about the Audit
Committee’s preapproval policies and procedures is set forth in the section captioned “Audit Committee Preapproval
Policies and Procedures” under the “Proposal 5” section of the Proxy Statement and is incorporated by reference.
PART IV
Item 15. Exhibits and Financial Statement Schedules
(a)(1) and (2) Financial Statements
The list of financial statements required by this item is set forth in Item 8. “Consolidated Financial Statements
and Supplementary Data.” All other schedules specified under Regulation S-X have been omitted because
they are not applicable, because they are not required, or because the information required is included in
the financial statements or notes thereto.
(a)(3) and (c) Exhibits
An index of the exhibits are on pages 72 through 75.
Item 16. Form 10-K Summary
None.
2022 Form 10-K Page 71
FOOT LOCKER, INC.
INDEX OF EXHIBITS
Exhibit No.
3.1
Description
Certificate of Incorporation of the Registrant, as filed by the Department of State of the State of New
York on April 7, 1989 (incorporated herein by reference to Exhibit 3(i)(a) to the Quarterly Report on
Form 10-Q for the quarterly period ended July 26, 1997 filed on September 4, 1997 (the
“July 26, 1997 Form 10-Q”)), as amended by Certificates of Amendment of the Certificate of
Incorporation of the Registrant, as filed by the Department of State of the State of New York on
to
(a) July 20, 1989, (b) July 24, 1990, (c) July 9, 1997 (incorporated herein by reference
Exhibit 3(i)(b) to the July 26, 1997 Form 10-Q), (d) June 11, 1998 (incorporated herein by reference
to Exhibit 4.2(a) to the Registration Statement on Form S-8 (Registration No. 333-62425)),
(e) November 1, 2001 (incorporated herein by reference to Exhibit 4.2 to the Registration Statement
on Form S-8 (Registration No. 333-74688)), (f) May 28, 2014 (incorporated herein by reference to
Exhibit 3.1 to the Current Report on Form 8-K dated May 21, 2014 filed on May 28, 2014), and (g)
December 8, 2020 (incorporated herein by reference to Exhibit 3.1 to the Current Report on
Form 8-K dated December 7, 2020 filed on December 8, 2020).
3.2
By-Laws of the Registrant (incorporated herein by reference to Exhibit 3.1 to the Current Report on
Form 8-K dated February 20, 2018 filed on February 22, 2018).
4.1
4.2
4.3
10.1
10.2
10.3
10.4†
10.5†
10.6†
Description of Registrant’s Securities (incorporated by reference to Exhibit 4.1 to the Annual Report
on Form 10-K for the fiscal year ended January 29, 2022 filed on March 22, 2022).
Indenture, dated as of October 5, 2021, by and among the Registrant, certain guarantors from time
to time party thereto, and U.S. Bank National Association, as Trustee (incorporated herein by
reference to Exhibit 4.1 to the Current Report on Form 8-K dated September 29, 2021 filed on
October 5, 2021.
Form of 4% Senior Notes due 2029 (incorporated herein by reference to Exhibit 4.2 to the
September 29, 2021 Form 8-K).
Credit Agreement, dated as of May 19, 2016, among the Registrant, the guarantors party thereto,
the lenders party thereto and Wells Fargo, National Association, as agent, letter of credit issuer and
swing line lender (incorporated herein by reference to Exhibit 10.1 to the Current Report on Form 8-K
dated May 19, 2016 filed on May 19, 2016).
Amendment No. 1 to Credit Agreement, dated as of July 14, 2020, among the Registrant, the
guarantors party thereto, the lenders party thereto, and Wells Fargo, National Association, as
administrative agent, letter of credit issuer, and swing line lender (incorporated herein by reference
to Exhibit 10.1 to the Current Report on Form 8-K dated July 14, 2020 filed on July 16, 2020).
Amendment No. 2 to Credit Agreement, dated as of May 19, 2021, among the Registrant, the
guarantors party thereto, the lenders party thereto, and Wells Fargo, National Association, as
administrative agent, letter of credit issuer, and swing line lender (incorporated by reference to
Exhibit 10.1 to the Form 8-K filed by Foot Locker, Inc. on May 20, 2021).
2007 Stock Incentive Plan, amended and restated as of May 21, 2014 (incorporated herein by
reference to Exhibit 10.3 to the Current Report on Form 8-K dated December 23, 2014 filed on
December 31, 2014).
Amendment No. 1 to 2007 Stock Incentive Plan, amended and restated as of May 21, 2014
(incorporated herein by reference to Exhibit 10.5 to the Annual Report on Form 10-K for the fiscal
year ended January 28, 2017 filed on March 23, 2017).
Long-Term Incentive Compensation Plan, as amended and restated (incorporated herein by
reference to Exhibit 10.3 to the Current Report on Form 8-K dated March 23, 2016 filed on
March 29, 2016.
2022 Form 10-K Page 72
Exhibit No.
Description
Executive Incentive Cash Compensation Plan (incorporated by reference to Exhibit 10.1 to the
Current Report on Form 8-K dated March 28, 2018 filed on April 3, 2018).
10.7†
10.8†
10.9†
10.10†
10.11†
10.12†
10.13†
10.14†
10.15†
10.16†
10.17†
10.18†
10.19†
10.20†
10.21†
10.22†
10.23†
Form of Stock Option Award Agreement (incorporated by reference to Exhibit 10.8 to the Annual
Report on Form 10-K for the fiscal year ended January 29, 2022 filed on March 22, 2022).
Form of Restricted Stock Unit Award Agreement for Executives (incorporated by reference to Exhibit
10.9 to the Annual Report on Form 10-K for the fiscal year ended January 29, 2022 filed on
March 22, 2022).
Form of Restricted Stock Unit Award Agreement for Directors (incorporated by reference to Exhibit
10.10 to the Annual Report on Form 10-K for the fiscal year ended January 29, 2022 filed on
March 22, 2022).
Form of Performance Stock Unit Award Agreement (incorporated by reference to Exhibit 10.11 to
the Annual Report on Form 10-K for the fiscal year ended January 29, 2022 filed on March 22, 2022).
Form of Stock Option Inducement Award Agreement (Annual Award) for Mary N. Dillon (incorporated
herein by reference to Exhibit 99.3 on Form S-8 (Registration No. 333-267044), filed on
August 24, 2022 (the "2022 Form S-8")).
Form of Restricted Stock Unit Inducement Award Agreement (Annual Award) for Mary N. Dillon
(incorporated herein by reference to Exhibit 99.4 to the 2022 Form S-8).
Form of Restricted Stock Unit Inducement Award Agreement for Mary N. Dillon (Sign-On Award)
(incorporated herein by reference to Exhibit 99.1 to the 2022 Form S-8).
Form of Performance Stock Unit Inducement Award Agreement (Annual Award) for Mary N. Dillon
(incorporated herein by reference to Exhibit 99.5 to the 2022 Form S-8).
Form of Performance Stock Unit Inducement Award Agreement (Transformation Award) for Mary N.
Dillon (incorporated herein by reference to Exhibit 99.2 to the 2022 Form S-8).
Executive Supplemental Retirement Plan (incorporated herein by reference to Exhibit 10(d) to the
Registration Statement on Form 8-B filed on August 7, 1989 (Registration No. 1-10299) (the “8-B
Registration Statement”)).
Amendment No. 1 to Executive Supplemental Retirement Plan (incorporated herein by reference to
Exhibit 10(c)(i) to the Annual Report on Form 10-K for the fiscal year ended January 28, 1995 filed
on April 24, 1995).
Amendment No. 2 to Executive Supplemental Retirement Plan (incorporated herein by reference to
Exhibit 10(d)(ii) to the Annual Report on Form 10-K for the fiscal year ended January 27, 1996 filed
on April 26, 1996).
Supplemental Executive Retirement Plan (the “SERP”), as amended and restated (incorporated
herein by reference to Exhibit 10.1 to the Current Report on Form 8-K dated August 13, 2007 filed
on August 17, 2007).
Amendment No. 1 to SERP (incorporated herein by reference to Exhibit 10.1 to the Current Report
on Form 8-K dated May 25, 2011 filed on May 27, 2011).
Amendment No. 2 to SERP (incorporated herein by reference to Exhibit 10.3 to the Current Report
on Form 8-K dated March 26, 2014 filed on April 1, 2014.
Amendment No. 3 to SERP (incorporated herein by reference to Exhibit 10.1 to the Current Report
on Form 8-K dated May 22, 2019 filed on May 28, 2019).
2022 Form 10-K Page 73
Exhibit No.
Description
Amendment No. 4 to SERP (incorporated herein by reference to Exhibit 10.1 to the Quarterly Report
on Form 10-Q for the quarterly period ended August 3, 2019 filed on September 11, 2019).
10.24†
10.25†
10.26†
10.27†
10.28†
10.29†
10.30†
10.31†
10.32†
Directors’ Retirement Plan, as amended (incorporated herein by reference to Exhibit 10(k) to the 8-B
Registration Statement).
Amendment No. 1 to Directors’ Retirement Plan (incorporated herein by reference to Exhibit 10(c) to
the Quarterly Report on Form 10-Q for the quarterly period ended October 28, 1995 filed on
December 11, 1995).
Excess Cash Balance Plan (incorporated herein by reference to Exhibit 10.22 to the Annual Report
on Form 10-K for the fiscal year ended January 31, 2009 filed on March 30, 2009 (the “2008
Form 10-K”)).
Excess Savings Plan (incorporated herein by reference to Exhibit 10.25 to the Annual Report on
Form 10-K for the fiscal year ended January 30, 2021 filed on March 25, 2021).
Automobile Expense Reimbursement Program for Senior Executives (incorporated herein by
reference to Exhibit 10.26 to the 2008 Form 10-K).
Executive Medical Expense Allowance Program for Senior Executives (incorporated herein by
reference to Exhibit 10.27 to the 2008 Form 10-K).
Financial Planning Allowance Program for Senior Executives (incorporated herein by reference to
Exhibit 10.28 to the 2008 Form 10-K).
Long-Term Disability Program for Senior Executives (incorporated herein by reference to
Exhibit 10.32 to the 2008 Form 10-K).
10.33*
Form of Indemnification Agreement, as amended.
10.34
10.35
10.36†
10.37†
10.38†
10.39†
10.40†
Trust Agreement dated as of November 12, 1987 (“Trust Agreement”), between F.W. Woolworth Co.
and The Bank of New York, as amended and assumed by the Registrant (incorporated herein by
reference to Exhibit 10(j) to the 8-B Registration Statement).
Amendment No. 1 to Trust Agreement made as of April 11, 2001 (incorporated herein by reference
to Exhibit 10.4 to the May 5, 2001 Form 10-Q).
Employment Agreement, dated August 16, 2022, by and between Mary N. Dillon and the Company,
(incorporated herein by reference to Exhibit 10.2 to the Current Report on Form 8-K dated
August 16, 2022 filed on August 19, 2022).
Employment Agreement, dated November 6, 2014, by and between Richard A. Johnson and the
Company (incorporated herein by reference to Exhibit 10.2 to the Current Report on Form 8-K dated
November 3, 2014 filed on November 7, 2014).
Amendment No. 1 to Employment Agreement, dated August 17, 2022, by and between Richard A.
Johnson and the Company (incorporated herein by reference to Exhibit 10.1 to the Current Report
on Form 8-K dated August 16, 2022 filed on August 19, 2022).
Form of Senior Executive Employment Agreement (incorporated herein by reference to Exhibit 10.1
to the Current Report on Form 8-K dated April 20, 2015 filed on April 20, 2015).
Form of Executive Employment Agreement (incorporated herein by reference to Exhibit 10.19 to the
Annual Report on Form 10-K for the fiscal year ended January 30, 2016 filed on March 24, 2016).
19*
Policy Prohibiting Insider Trading.
21*
Subsidiaries of the Registrant.
2022 Form 10-K Page 74
Exhibit No.
Description
23*
Consent of Independent Registered Public Accounting Firm.
31.1*
Certification of Chief Executive Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
31.2*
Certification of Chief Financial Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
32**
Certification of Chief Executive Officer and Chief Financial Officer Pursuant to 18 U.S.C.
Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
101.INS*
XBRL Instance Document.
101.SCH*
XBRL Taxonomy Extension Schema.
101.CAL*
XBRL Taxonomy Extension Calculation Linkbase.
101.DEF*
XBRL Taxonomy Extension Definition Linkbase.
101.LAB*
XBRL Taxonomy Extension Label Linkbase.
101.PRE*
XBRL Taxonomy Extension Presentation Linkbase.
104*
Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 10.1).
† Management contract or compensatory plan or arrangement
*
Filed herewith
** Furnished herewith
2022 Form 10-K Page 75
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the Company has duly
caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
SIGNATURES
FOOT LOCKER, INC.
By: /s/ MARY N. DILLON
Mary N. Dillon
President and Chief Executive Officer
Date: March 27, 2023
Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below on
March 27, 2023, by the following persons on behalf of the Company and in the capacities indicated.
/s/ MARY N. DILLON
Mary N. Dillon
President and
Chief Executive Officer
/s/ GIOVANNA CIPRIANO
Giovanna Cipriano
Senior Vice President and Chief Accounting Officer
/s/ VIRGINIA C. DROSOS
Virginia C. Drosos
Director
/s/ ALAN D. FELDMAN
Alan D. Feldman
Director
/s/ GUILLERMO G. MARMOL
Guillermo G. Marmol
Director
/s/ DARLENE NICOSIA
Darlene Nicosia
Director
/s/ ROBERT HIGGINBOTHAM
Robert Higginbotham
Senior Vice President and
Interim Chief Financial Officer
/s/ STEVEN OAKLAND
Steven Oakland
Director
/s/ ULICE PAYNE, JR.
Ulice Payne, Jr.
Director
/s/ KIMBERLY K. UNDERHILL
Kimberly K. Underhill
Director
/s/ TRISTAN WALKER
Tristan Walker
Director
/s/ DONA D. YOUNG
Dona D. Young
Non-Executive Chair
2022 Form 10-K Page 76
CONSENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
We consent to the incorporation by reference in the following registration statements of Foot Locker,
Inc. and subsidiaries of our reports dated March 27, 2023, with respect to the consolidated financial
statements of Foot Locker, Inc. and subsidiaries and the effectiveness of internal control over financial
reporting.
Exhibit 23
Form S-8 No. 333-33120
Form S-8 No. 333-121515
Form S-8 No. 333-144044
Form S-8 No. 333-149803
Form S-8 No. 333-167066
Form S-8 No. 333-171523
Form S-8 No. 333-190680
Form S-8 No. 333-196899
Form S-8 No. 333-267044
/s/ KPMG LLP
New York, New York
March 27, 2023
I, Mary N. Dillon, certify that:
CERTIFICATION
Exhibit 31.1
1. I have reviewed this Annual Report on Form 10-K of Foot Locker, Inc. (the “Registrant”);
2. Based on my knowledge, this report does not contain any untrue statement of a material fact or
omit to state a material fact necessary to make the statements made, in light of the circumstances
under which such statements were made, not misleading with respect to the period covered by this
report;
3. Based on my knowledge, the financial statements, and other financial information included in this
report, fairly present in all material respects the financial condition, results of operations and cash
flows of the Registrant as of, and for, the periods presented in this report;
4. The Registrant’s other certifying officer(s) and I are responsible for establishing and maintaining
disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e))
and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-
15(f)) for the Registrant and have:
a)
b)
c)
d)
designed such disclosure controls and procedures, or caused such disclosure controls and
procedures to be designed under our supervision, to ensure that material information
relating to the Registrant, including its consolidated subsidiaries, is made known to us by
others within those entities, particularly during the period in which this report is being
prepared;
designed such internal control over financial reporting, or caused such internal control over
financial reporting to be designed under our supervision, to provide reasonable assurance
regarding the reliability of financial reporting and the preparation of financial statements for
external purposes in accordance with generally accepted accounting principles;
evaluated the effectiveness of the Registrant’s disclosure controls and procedures and
presented in this report our conclusions about the effectiveness of the disclosure controls
and procedures, as of the end of the period covered by this report based on such
evaluation; and
disclosed in this report any change in the Registrant’s internal control over financial
reporting that occurred during the Registrant’s most recent fiscal quarter (the Registrant’s
fourth fiscal quarter in the case of an annual report) that has materially affected, or is
reasonably likely to materially affect, the Registrant’s internal control over financial
reporting; and
5. The Registrant’s other certifying officer(s) and I have disclosed, based on our most recent
evaluation of internal control over financial reporting, to the Registrant’s auditors and the Audit
Committee of the Registrant’s Board of Directors:
a)
all significant deficiencies and material weaknesses in the design or operation of internal
control over financial reporting which are reasonably likely to adversely affect the
Registrant’s ability to record, process, summarize and report financial information; and
b)
any fraud, whether or not material, that involves management or other employees who
have a significant role in the Registrant’s internal control over financial reporting.
March 27, 2023
/s/ MARY N. DILLON
Chief Executive Officer
I, Robert Higginbotham, certify that:
CERTIFICATION
Exhibit 31.2
1. I have reviewed this Annual Report on Form 10-K of Foot Locker, Inc. (the “Registrant”);
2. Based on my knowledge, this report does not contain any untrue statement of a material fact or
omit to state a material fact necessary to make the statements made, in light of the circumstances
under which such statements were made, not misleading with respect to the period covered by this
report;
3. Based on my knowledge, the financial statements, and other financial information included in this
report, fairly present in all material respects the financial condition, results of operations and cash
flows of the Registrant as of, and for, the periods presented in this report;
4. The Registrant’s other certifying officer(s) and I are responsible for establishing and maintaining
disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e))
and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-
15(f)) for the Registrant and have:
a)
designed such disclosure controls and procedures, or caused such disclosure controls and
procedures to be designed under our supervision, to ensure that material information relating
to the Registrant, including its consolidated subsidiaries, is made known to us by others
within those entities, particularly during the period in which this report is being prepared;
b)
designed such internal control over financial reporting, or caused such internal control over
financial reporting to be designed under our supervision, to provide reasonable assurance
regarding the reliability of financial reporting and the preparation of financial statements for
external purposes in accordance with generally accepted accounting principles;
c)
evaluated the effectiveness of the Registrant’s disclosure controls and procedures and
presented in this report our conclusions about the effectiveness of the disclosure controls
and procedures, as of the end of the period covered by this report based on such evaluation;
and
d)
disclosed in this report any change in the Registrant’s internal control over financial reporting
that occurred during the Registrant’s most recent fiscal quarter (the Registrant’s fourth fiscal
quarter in the case of an annual report) that has materially affected, or is reasonably likely
to materially affect, the Registrant’s internal control over financial reporting; and
5. The Registrant’s other certifying officer(s) and I have disclosed, based on our most recent
evaluation of internal control over financial reporting, to the Registrant’s auditors and the Audit
Committee of the Registrant’s Board of Directors:
a)
all significant deficiencies and material weaknesses in the design or operation of internal
control over financial reporting which are reasonably likely to adversely affect the
Registrant’s ability to record, process, summarize and report financial information; and
b)
any fraud, whether or not material, that involves management or other employees who have
a significant role in the Registrant’s internal control over financial reporting.
March 27, 2023
/s/ ROBERT HIGGINBOTHAM
Interim Chief Financial Officer
FOOT LOCKER, INC.
CERTIFICATION PURSUANT TO
18 U.S.C. SECTION 1350
AS ADOPTED PURSUANT TO
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002
Exhibit 32
In connection with the Annual Report on Form 10-K of Foot Locker, Inc. (the “Registrant”) for the period ended
January 28, 2023, as filed with the Securities and Exchange Commission on the date hereof (the “Report”), Mary N.
Dillon, as Chief Executive Officer of the Registrant and Robert Higginbotham, as Interim Chief Financial Officer of
the Registrant, each hereby certify, pursuant to 18 U.S.C. Section 1350, that:
(1) the Report fully complies with the requirements of Section 13(a) or 15(d) of the
Securities Exchange Act of 1934; and
(2) the information contained in the Report fairly presents, in all material respects, the
financial condition and results of operations of the Registrant.
Dated: March 27, 2023
/s/ MARY N. DILLON
Mary N. Dillon
Chief Executive Officer
/s/ ROBERT HIGGINBOTHAM
Robert Higginbotham
Interim Chief Financial Officer
The foregoing certification is being furnished solely pursuant to 18 U.S.C. § 1350 and is not being filed as part of the
Report or as a separate disclosure document. Such certification will not be deemed to be incorporated by reference
into any filing under the Securities Act of 1933, as amended, or the Securities Exchange Act of 1934, as amended,
except to the extent that the company specifically incorporates it by reference.
BOARD OF DIRECTORS
EXECUTIVE LEADERSHIP
DIVISIONAL LEADERSHIP
CORPORATE INFORMATION
Bryon Milburn
President, Lockers &
Champs Sports
North America
Jill Feldman
Senior Vice President,
General Manager,
Foot Locker North America
Tomas Petersson
Senior Vice President,
General Manager,
Foot Locker Europe
Patrick Walsh
Senior Vice President and
General Manager,
atmos
Natalie Ellis
Vice President, General Manager,
Foot Locker Asia Pacific
Anthony Aversa
Senior Vice President and
Interim General Manager,
Champs Sports
Jeffrey Porter
Interim General Manager,
WSS
Corporate Headquarters
330 West 34th Street
New York, New York 10001
(212) 720-3700
Worldwide Website
Our website at www.footlocker-inc.com
offers information about our Company,
including our SEC filings, press
releases, and corporate governance
documents.
Transfer Agent and Registrar
Computershare
P.O. Box 43006
Providence, RI 02940-3078
(866) 857-2216
(201) 680-6578 Outside U.S. and Canada
(800) 952-9245 Hearing Impaired -TTY Phone
www.computershare.com/investor
Overnight correspondence
should be sent to:
150 Royall Street, Suite 101
Canton, MA 02021
Independent Registered Public
Accounting Firm
KPMG LLP
345 Park Avenue
New York, New York 10154
(212) 758-9700
Dividend Reinvestment
Dividends on Foot Locker, Inc.
common stock may be reinvested
through participation in the Dividend
Reinvestment Program. Participating
shareholders may also make optional
cash purchases of Foot Locker, Inc.
common stock. Please contact our
Transfer Agent.
Service Marks and Trademarks
The service marks and trademarks
Foot Locker, Kids Foot Locker, Champs
Sports, WSS and atmos are owned by
Foot Locker, Inc. or it’s affiliates.
Investor Information
Investor inquiries should be directed to
the Investor Relations Department at
(212) 720-4600.
Mary N. Dillon 1
President and
Chief Executive Officer
Dona D. Young 1, 2, 5
Non-Executive Chair
Retired Chairman,
President and Chief Executive Officer
The Phoenix Companies, Inc.
Virginia C. Drosos 2, 5
Chief Executive Officer
Signet Jewelers Limited
Alan D. Feldman 3, 5
Retired Chairman,
President and Chief
Executive Officer
Midas, Inc.
Guillermo G. Marmol 1, 2, 3
President
Marmol & Associates;
President and Chief Executive Officer
Viron Therapeutics Holdings, Inc.
Darlene Nicosia 2, 3
Chief Executive Officer
Hearthside Foot Solutions LLC
Steven Oakland 1, 4, 5
Chief Executive Officer and President
TreeHouse Foods, Inc.
Ulice Payne, Jr. 1, 2, 4
President and Managing Member
Addison-Clifton, LLC;
President
Cyber-Athletix, LLC
Kimberly K. Underhill 1, 3, 4
Senior Advisor
Boston Consulting Group
Tristan Walker 4, 5
Founder and Chief Executive Officer
Walker and Company Brands, Inc.;
Managing Member
Heirloom Management Company, LLC
1 Member of Executive Committee
2 Member of Audit Committee
3 Member of Human Capital and
Compensation Committee
4 Member of Nominating and Corporate
Responsibility Committee
5 Technology and Digital Engagement
Committee
Mary N. Dillon
President and
Chief Executive Officer
Franklin R. Bracken
Executive Vice President and
Chief Commercial Officer
Sheilagh M. Clarke
Executive Vice President,
General Counsel and Secretary
Rosalind Reeves
Executive Vice President and
Chief Human Resources Officer
Elliott Rodgers
Executive Vice President and
Chief Operations Officer
Robert Higginbotham
Senior Vice President and
Interim Chief Financial Officer
Giovanna Cipriano
Senior Vice President and
Chief Accounting Officer
CORPORATE LEADERSHIP
Adrian Butler
Senior Vice President and
Chief Technology Officer
Todd Greener
Senior Vice President,
Global Supply Chain
Chris Santaella
Senior Vice President,
Chief Merchandising Officer
Peter Scaturro
Senior Vice President,
Strategic Planning and Growth
Kim Waldmann
Senior Vice President and
Chief Customer Officer
Anthony D. Foti
Vice President, Deputy General
Counsel and Assistant Secretary
Olivia Mata
Vice President,
Corporate Communications
John A. Maurer
Vice President, Treasurer
LACING UP FOR
THE FUTURE
footlocker-inc.com