2023
ANNUAL
R E P O R T
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ABOUT US
Foot Locker, Inc. is a leading footwear and apparel retailer that
unlocks the “inner sneakerhead” in all of us. With approximately
2,500 retail stores in 26 countries across North America, Europe,
Asia, Australia, and New Zealand, and a licensed 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.
FORWARD LOOKING
STATEMENT
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 2023 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.
CELEBRATING
FIVE DECADES
OF UNLOCKING
EVERYONE’S
INNER
SNEAKERHEAD
CONTENTS
Letter to Shareholders
Financial Highlights
Form 10-K
Board of Directors,
Executive Leadership Team,
and Corporate Information
1
4
9
IBC
footlocker-inc.com
PATTERN - BLACKPATTERN - BLACK MESSAGE
FROM OUR CEO
Dear Fellow Shareholders:
Our vision at Foot Locker, Inc. is to be known as the “go to” destination for
discovering and buying sneakers globally. Our mission is to unlock the “inner
sneakerhead” in all of us. The Lace Up Plan is designed to support our vision and
mission, and our plan delivers for all of our stakeholders: for customers, we will
be their destination for “all things sneakers, unlocking the inner sneakerhead in all
of us;” for brand partners, we will partner to build brand equity and incremental
growth; for team members, we offer job and career opportunities for our young and
diverse team members that leverage our Striper’s passion for sneaker culture; for
communities we will continue to invest in economic development and education for
the communities we serve; and for investors, we will provide longer-term, profitable
growth and attractive returns.
As we reflect on the past year, 2023 presented Foot Locker with certain
macroeconomic and consumer-related pressures in addition to Company-specific
factors, including elevated inventories. In the face of those challenges, the team
focused on both delivering near-term results and executing the Lace Up Plan by
closing underperforming stores and building out our loyalty program and digital
capabilities to drive long-term shareholder value creation. Looking to 2024, we
are repositioning Foot Locker, Inc. for the future. Our momentum — particularly
in the second half of the year — means that we are entering 2024 positioned
for a recovery, and on the path to reaching 8.5%-9.0% in EBIT margins by 2028.
As we look ahead to the Foot Locker brand’s 50th anniversary in September,
we are excited for the Company’s next 50 years of growth as the digital and
omnichannel retailer for “all things sneakers.”
11
MARY N. DILLON
President and
Chief Executive Officer
“Looking to
2024, we are
repositioning
Foot Locker, Inc.
for the future.
Our momentum
— particularly
in the second
half of the year
— means that
we are entering
2024 positioned
for a recovery,
and on the path
to reaching
8.5%-9.0% in
EBIT margins
by 2028.”
2023 STRATEGIC HIGHLIGHTS:
Lacing Up for the Future
NOTABLE ACHIEVEMENTS AND PROGRESS ON OUR LACE UP PLAN
IN 2023 INCLUDED:
X EXPAND SNEAKER CULTURE. We are harnessing our multi-branded leadership
position to expand sneaker culture by serving more sneaker occasions, providing more
sneaker choices, and driving greater sneaker distinction. Despite allocation changes in 2023,
we collaborated with our largest partner, Nike, on our mutual key pillars of basketball, kids,
and sneaker culture, and we look forward to continuing to enhance the partnership in 2024.
Further, sales of brands beyond Nike in our core banners outpaced our total company sales,
as penetration of our other brands in our business reached 35% of sales compared to 33%
in 2022. Additionally, we grew our door counts with vendors, including New Balance, On
Running, and Hoka.
X POWER UP OUR PORTFOLIO. We opened 69 new format stores at our Foot Locker
banner, including our highly-compelling Power and Community store concepts, that now
total 242 doors. We are well on our way to achieving our goal for these formats to comprise
at least 20% of our square footage in North America, compared with 16% today. In 2023, we
also began a meaningful store refresh program designed to create a more consistent and
elevated brand experience for our Foot Locker and Kids Foot Locker banners. Initial results
from our refreshed stores have been encouraging, and we intend to accelerate this refresh
work to approximately two-thirds of our global Foot Locker and Kids Foot Locker doors
by the end of next year. Additionally, our Off-Mall square footage increased to 39% of our
footprint in North America, up from approximately 34% in 2022. Finally, we are creating
more distinction among our banners and transforming our real estate footprint. In 2023,
we made strides to reposition the Champs Sports banner by focusing its store base to
serve the active athlete consumer.
X DEEPEN OUR RELATIONSHIP WITH CUSTOMERS. In 2023 we began to reignite
the Foot Locker brand by launching our new global platform “The Heart of Sneakers”
and investing in brand-building marketing strategies. We will continue to make strategic
investments in marketing in 2024 and beyond to drive customer engagement and evolve
and elevate the brand experience across channels. To deepen customer loyalty, we piloted
an enhanced FLX program in Canada. This re-imagined membership program is resonating
with a broader range of our customers and driving lift. We are excited to roll out this
program to the rest of North America in 2024, and globally in 2025.
2
X BEST-IN-CLASS OMNI. We saw meaningful gains in our digital penetration in 2023,
which reached 17.2% of sales, compared to 16.3% in 2022, after adjusting for the wind-down
of our digital-only banner, Eastbay, in 2022. Our momentum was driven by meaningful
improvements to our sites’ customer experience, including enhanced search capability,
site navigation, filtering, product recommendations, and cart and checkout optimizations,
among others. While we are still in the early innings of our digital transformation, we
continue to target 25% digital penetration by 2026. We are confident we will further
build on our progress in 2024, including the launch of our new and refreshed mobile
Foot Locker app.
IN ADDITION TO EXECUTING ON OUR STRATEGIC IMPERATIVES, WE
ADVANCED KEY BUSINESS INITIATIVES IN 2023 TO HELP US RETURN TO
LONGER-TERM GROWTH, INCLUDING:
X SIMPLIFYING OUR OPERATIONS. We made significant progress simplifying our
operations to enhance our focus on our core banners and regions. This included exiting the
Sidestep banner in Europe; exiting the Macau and Hong Kong markets; and converting our
owned stores in Singapore and Malaysia to a license model. We also exited atmos from the
United States, with the closure of three stores and its website, to align our focus on driving
the brand’s future growth in its core Japanese market. Finally, we made changes to our
merchandising and finance organizations to drive greater connectivity across our banners.
X LEANING INTO OUR BASKETBALL LEADERSHIP. In November, we were pleased
to announce that Foot Locker and the National Basketball Association (NBA) entered into a
multi-year partnership under which Foot Locker will serve as an official league marketing
partner in the United States. This collaboration, which builds on a partnership dating back to
1999, will enable Foot Locker to meaningfully engage with fans throughout the NBA season,
while celebrating the intersection of basketball and sneaker culture. We are also excited about
the ongoing rollout of our new, multi-branded, basketball-focused experience — Home Court
— in select stores to bring the excitement and passion of the sport to our customers. We are
well-positioned to continue our basketball momentum into 2024 and beyond.
3
3
FINANCIAL HIGHLIGHTS
Sales**
Sales per Gross Square Foot
Adjusted EBIT**
Adjusted EBIT Margin
Adjusted Net Income**
Adjusted Net Income Margin
Adjusted Diluted EPS
Return on Invested Capital
2019
2020
2021
2022
2023
$ 8,005
$ 7,548
$ 8,958
$ 8,747
$ 8,154
$
$
510
722
9.0%
$
$
417
428
5.7%
$
540
$ 1,049
11.7%
$
$
548
692
7.9%
$
$
510
214
2.6%
$
538
$
296
$
755
$
473
$
134
6.7%
3.9%
8.4%
5.4%
1.6%
$
4.93
$
2.81
$
7.27
$
4.95
$
1.42
12.5%
8.6%
16.4%
9.2%
3.8%
* 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
$7.8
$7.8
$7.9
$8.0
$7.5
$9.0
$8.7
$8.2
EARNINGS PER SHARE
adjusted diluted EPS (non-GAAP)
$7.27
$4.82
$4.71
$4.93
$4.95
$4.29
$3.58
$3.99
$2.81
$1.42
2014
2015
2016
2017
2018
2019
2020
2021
2022
2023
2014
2015
2016
2017
2018
2019
2020
2021
2022
2023
SALES PER SQUARE FOOT
RETURN ON INVESTED CAPITAL %
$504
$515
$495
$504
$510
$490
$540
$548
$510
15.0
15.8
15.1
16.4
$417
12.0
12.5
11.0
8.6
9.2
3.8
2014
2015
2016
2017
2018
2019
2020
2021
2022
2023
2014
2015
2016
2017
2018
2019
2020
2021
2022
2023
4
The focus of 2023 being a transition and investment year for the Company is reflected
in our results. As we navigated shifting Nike allocations and the dynamic consumer
environment, combined with being in the early stages of implementing our Lace Up Plan,
total sales decreased 6.8% in 2023 (or 7.0% excluding foreign exchange fluctuations).
Overall comparable-store sales declined 6.7% for the year. Notably, declines were
concentrated in the first half of the year: We registered sequential improvements in the
back-half and finished the year on a high note, including comparable stores sales down
0.7% and ahead of plan in the fourth quarter.
In North America, Foot Locker and Kids Foot Locker sales for the year were down slightly,
although sales rose for both in the fourth quarter. Champs Sports sales fell over 20% as
the banner experienced the largest impacts of the changes in Nike allocation, while also
working to reposition the banner towards more of an active athlete consumer. Finally, WSS
continued to grow stores by over 20%. By region, EMEA and APAC saw sales flat to down
slightly, reflecting some regional macroeconomic pressures.
Against this backdrop, we leaned into higher promotions to support our top line and
manage our inventory levels. As a result, our gross margin declined by 420 basis points. We
de-levered SG&A by 90 basis points as wage and technology investments more than offset
ongoing progress against our cost optimization program. Adjusted EBIT margins fell to 2.6%
in 2023, from 7.9% in 2022. Earnings on an adjusted basis were $1.42 per share, down from
$4.95 per share in 2022.
Into 2024, we have tremendous confidence in our Lace Up Plan and continue to see
strong proof points that our strategies are resonating. We are making important progress
in strengthening our brand partnerships, increasing customer engagement, transforming
our real estate footprint, and driving growth in digital. This year, we will continue to achieve
important milestones in our Lace Up Plan, including the rollout of our enhanced loyalty
program across the remainder of North America and the launch of our new mobile app.
Looking ahead, as our strategic imperatives build momentum, we are well positioned for
sales and margin recapture longer-term and target an 8.5%-9% EBIT margin by 2028.
“Looking ahead,
as our Lace Up Plan
imperatives build
momentum, we
are well positioned
for sales and
margin recapture
longer-term.”
5
Building Our Team for the Future
We continued to strengthen our executive leadership team in 2023, with a focus on creating a team that has leaders that
represent the best of Foot Locker and industry expertise combined with leaders that bring new capabilities and perspectives to
Foot Locker, Inc. Joining our EVP and Chief Commercial Officer, Frank Bracken, and our EVP and Chief Operations Officer,
Elliott Rodgers, the team represents the ideal combination of functional expertise, enterprise thinking, and collaboration
required to meet customer expectations in a rapidly changing retail environment.
KEY HIRES AND APPOINTMENTS DURING THE YEAR INCLUDED:
X MIKE BAUGHN JOINED US AS
X BRYON MILBURN WAS NAMED
SVP AND CHIEF MERCHANDISING OFFICER,
bringing to the role industry experience in operations,
buying, and as a general manager with over 35 years at
Foot Locker, Inc.;
X KIM WALDMANN JOINED US AS
SVP AND CHIEF CUSTOMER OFFICER,
bringing more than 10 years of digital and marketing
experience in retail;
X In 2024, we welcomed CINDY CARLISLE AS OUR NEW
EVP AND CHIEF HUMAN RESOURCES OFFICER,
with more than 24 years of experience as an accomplished
HR professional.
EVP AND CHIEF FINANCIAL OFFICER,
bringing over 15 years of retail finance experience;
X JENNIFER KRAFT JOINED US AS
EVP AND GENERAL COUNSEL
with more than 25 years of legal and
public company experience;
X KRISTIN BAUER JOINED US AS
SVP AND CHIEF SUPPLY CHAIN OFFICER,
bringing two decades of experience developing and
implementing omnichannel retail strategies;
X ADRIAN BUTLER JOINED US AS
SVP AND CHIEF TECHNOLOGY OFFICER,
bringing more than 20 years of information technology
experience in the consumer sector;
X BLANCA GONZALEZ JOINED US AS
SVP AND GENERAL MANAGER OF WSS,
bringing more than 20 years of category leadership
experience across marketing, merchandising, and sales;
6
Community and Social Responsibility
are Core to our Culture, Vision, and Mission.
Community and social responsibility are deeply embedded in our culture, mission, and vision.
For the communities in which we operate, we support educational and economic development
programs, including through 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 our communities.
Through our LEED Initiative, we’ve committed to investing $200 million to enhance the
lives of our team members and the communities we serve through education and economic
development. This includes empowering entrepreneurs and designers; investing in venture capital
firms, and providing grants in under-resourced communities, as well as supporting our team
members through education and career development opportunities. LEED has achieved more
than $150 million in economic and educational impact, as measured at the end of 2023.
We embrace diversity and are proud of our commitment to drive an inclusive culture.
We are proud that 88% of our U.S. team members are POC, 49% of our global team members
are women, and 67% of my executive leadership team are diverse. In 2023, we focused on
elevating our team member experience and investing in our people by increasing pay for
more than 8,000 store team members and providing competitive benefits.
Each year, the Company publishes an Impact Report. The Impact Report provides details on our
global responsible business strategy which is focused on four pillars: Leveraging the Power of
Our People and Communities, Strengthening the Sustainability of Our Supply Chain, Managing
and Reducing Our Environmental Impacts, and Operating Ethically and Transparently. We are
fully committed to building on our progress over time and strengthening our vision for a more
sustainable world. For additional information regarding our responsible business efforts, see
our Impact Report, which is available at investors.footlocker-inc.com/impactreport.
COMMUNITY AND SOCIAL RESPONSIBILITY
ARE DEEPLY EMBEDDED IN OUR CULTURE,
MISSION, AND VISION.
7
Thank You
I thank you — our shareholders — for your ongoing support. I also
thank our Board of Directors for their expertise, guidance, and
support, and our 45,000 team members for their hard work and
passion for serving our customers.
I am excited to continue unlocking the inner sneakerhead in all of
us in 2024 and beyond.
MARY N. DILLON
(she/her/hers)
President and Chief Executive Officer
8
8
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 February 3, 2024
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. ☒
If securities are registered pursuant to Section 12(b) of the Act, indicate by check mark whether the financial statements of the registrant included in the filing reflect the correction
of an error to previously issued financial statements. ☐
Indicate by check mark whether any of those error corrections are restatements that required a recovery analysis of incentive-based compensation received by any of the
registrant's executive officers during the relevant recovery period pursuant to §240.10D-1(b). ☐
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 21, 2024:
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 29, 2023 was approximately:
94,494,579
$1,284,060,971*
* 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 21, 2024:
Parts III and IV.
DOCUMENTS INCORPORATED BY REFERENCE
(THIS PAGE INTENTIONALLY LEFT BLANK)
TABLE OF CONTENTS
Business
Risk Factors
Unresolved Staff Comments
Cybersecurity
Properties
Legal Proceedings
Mine Safety Disclosures
Information about our Executive Officers
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
Quantitative and Qualitative Disclosures About Market Risk
Consolidated Financial Statements and Supplementary Data
Changes in and Disagreements with Accountants on Accounting and Financial Disclosure
Controls and Procedures
Other Information
Disclosure Regarding Foreign Jurisdictions that Prevent Inspections
Directors, Executive Officers, and Corporate Governance
Executive Compensation
Security Ownership of Certain Beneficial Owners and Management and Related Shareholder Matters
Certain Relationships and Related Transactions, and Director Independence
Principal Accounting Fees and Services
PART I
Item 1.
Item 1A.
Item 1B.
Item 1C.
Item 2.
Item 3.
Item 4.
Item 4A.
PART II
Item 5.
Item 6.
Item 7.
Item 7A.
Item 8.
Item 9.
Item 9A.
Item 9B.
Item 9C.
PART III
Item 10.
Item 11.
Item 12.
Item 13.
Item 14.
PART IV
Item 15.
Item 16.
Exhibits and Financial Statement Schedules
Form 10-K Summary
INDEX OF EXHIBITS
SIGNATURES
1
3
15
15
16
16
16
17
17
20
21
33
33
74
74
77
77
77
77
77
77
77
78
78
79
83
CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS
This Annual Report on Form 10-K 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 access to premium products, volume discounts, cooperative advertising, markdown
allowances, or the ability to cancel orders or return merchandise; inventory management; our ability to fund our planned
capital investments; execution of the Company's long-term strategic plan; a recession, volatility in the financial markets,
and other global economic factors, including inflation; capital and resource allocation among our strategic opportunities;
our ability to realize the expected benefits from acquisitions; business opportunities and expansion; investments;
expenses; dividends; share repurchases; cash management; liquidity; cash flow from operations; access to credit markets
at competitive terms; borrowing capacity under our credit facility; cash repatriation; supply chain issues; labor shortages
and wage pressures; consumer spending levels; licensed store arrangements; the effect of certain governmental
assistance programs; the success of our marketing and sponsorship arrangements; 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 or government investigation that affects us or our industry generally; the effects of
weather; ESG risks; increased competition; geopolitical events; the financial effects of accounting regulations and critical
accounting policies; counterparty risks; and any other factors set forth in the section entitled "Risk Factors" of our most
recent Annual Report on Form 10-K.
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 on Form 10-K 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
February 3, 2024, we operated 2,523 stores in 26 countries across North America, Europe, Australia, New Zealand, and
Asia, and a licensed 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
websites, or on our mobile applications, 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 our largest product selections and provide a seamless link between our e-commerce experience and physical stores.
The service marks, tradenames, and trademarks appearing in this report (except for Nike, Jordan, adidas, and New Balance)
are owned by Foot Locker, Inc. or its subsidiaries.
Store and Operations Profile
January 28,
2023
Opened
Closed
2024
Remodels
Selling
Gross
February 3, Relocations/
Square Footage
(in thousands)
Foot Locker U.S.
Foot Locker Canada
Champs Sports
Kids Foot Locker
WSS
Footaction
North America
Foot Locker Europe(1)
Sidestep
EMEA
Foot Locker Pacific
Foot Locker Asia
atmos
Asia Pacific
Total owned stores
Licensed stores
Grand Total
747
86
486
394
115
2
1,830
644
78
722
94
33
35
162
2,714
159
2,873
7
1
1
11
28
—
48
25
—
25
5
—
1
6
79
56
135
31
2
83
15
2
1
134
32
78
110
1
20
5
26
270
13
283
723
85
404
390
141
1
1,744
637
—
637
98
13
31
142
2,523
202
2,725
(1)
Includes 16 and 13 Kids Foot Locker Stores as of January 28, 2023 and February 3, 2024, respectively.
50
6
14
23
—
—
93
30
—
30
13
—
—
13
136
2,401
259
1,539
780
1,458
3
6,440
1,208
—
1,208
243
52
28
323
7,971
4,080
426
2,421
1,304
1,757
6
9,994
2,470
—
2,470
366
98
48
512
12,976
2023 Form 10-K Page 1
As part of our Lace Up strategic plan, we aim to draw customers to our compelling new store concepts and build our off-
mall portfolio to be the destination for all things sneakers. As of February 3, 2024, we operate 242 "Community," "House of
Play," and "Power Stores" across our banners and geographies. 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. Kids Foot Locker's House of Play concepts are rooted in play by offering a kids-first experience,
including interactive playscapes, engaging activity areas, and the best styles for kids of all ages. Our Power Stores provide
an elevated, seamless, and convenient shopping journey for the full family. Community, House of Play, and Power Stores
provide pinnacle retail experiences that deliver connected customer interactions through service, experience, product, and
a sense of community. As of February 3, 2024 and January 28, 2023, off-mall stores represented 39% and 34% of gross
square footage in North America, respectively.
The following is a brief description of each of our banners:
Foot Locker — Foot Locker, celebrating its 50th year in 2024, is a leading global brand at the "heart of sneakers." Our iconic
"striper" store associates invite everyone to be part of sneaker culture by curating new, exclusive and freshly picked
sneakers and apparel from leading global brands such as Nike, Jordan, adidas, and New Balance, 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. The new Home Court store concept serves as the ultimate expression of Foot Locker's ambitions around
basketball, with 29 stores primarily in North America. Foot Locker's 1,543 stores are located in 25 countries including 723 in
the United States, Puerto Rico, U.S. Virgin Islands, and Guam, 85 in Canada, 624 in Europe, a combined 98 in Australia
and New Zealand, and 13 in Asia. Our domestic stores have an average of 3,300 selling square feet and our international
stores have an average of 2,100 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 "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 390 North
America stores, 375 are located in the United States, and Puerto Rico, and 15 in Canada. There are an additional 13 stores
in Europe. These stores have an average of 2,000 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 is 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 sports style. Of our 404 stores, 375 are located in the United States, Puerto Rico, and the U.S.
Virgin Islands and 29 in Canada. The Champs Sports stores have an average of 3,800 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 141 off-mall stores in key markets across California, Texas, Arizona, Florida, and Nevada.
WSS's community-driven business benefits from deep relationships with customers. WSS stores have an average of
10,300 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 31 stores in Japan, with an average of 900 selling square feet.
The brand is also licensed to various entities in 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.
2023 Form 10-K Page 2
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 believe that our team members are one of our strongest competitive advantages and the high-quality service that they
provide sets us apart from others in our industry. We had 14,335 full-time and 32,511 part-time employees as of
February 3, 2024, and we consider employee relations to be satisfactory. Our Board of Directors, through the Human Capital
and Compensation Committee, oversees human capital and management resources matters.
We believe the strength of our workforce is a significant contributor to our success as a global brand that leads with purpose.
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. For example, we seek to be a great place to work by cultivating
and celebrating a culture that promotes diversity, inclusion, and belonging (DIBs). 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. In addition, 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 full potential. We provide career growth and
professional development through formal learning and on-the-job experiences to advance our team members' capabilities,
confidence, and contributions.
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 offer competitive compensation (including salary, incentive bonus, and equity) and benefits packages to eligible team
members in each of our locations around the globe. Our compensation and benefits programs are designed to support the
financial, mental, and physical well-being of our team members and their families. We believe in paying team members
equitably, regardless of gender, race, or ethnicity, and we regularly review pay data to confirm we are doing so.
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 or locations, our loyalty program, our
digital e-commerce, 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.
2023 Form 10-K Page 3
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.
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 products 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 84% of our merchandise in 2023 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 2023 was purchased from one supplier — Nike, Inc. ("Nike"). Each of our banners is highly dependent on
Nike. 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.
2023 Form 10-K Page 4
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 negatively affect our
gross margins and have a material adverse effect on our business, financial condition, and results of operations.
We have key strategic initiatives designed to optimize our inventory levels and increase the efficiency and responsiveness
of our supply chain. We are also developing additional capabilities to analyze customer behavior and demand, which we
believe will allow us to better localize assortment and improve store-level allocations to further tailor our assortments to
customer needs and increase sell-through. Further, we are leveraging technology and data science to optimize our product-
to-market processes and supply chain which we anticipate will enhance our in-season responsiveness. These initiatives
and additional capabilities involve significant changes to our inventory management systems and processes. If we are
unable to implement these initiatives, integrate these additional capabilities successfully, or properly utilize them, we may
not realize the return on our investments that we anticipate, and our results of operations could be adversely affected.
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 39% 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. One of our strategic
imperatives is to further increase the penetration of our North American fleet of off-mall locations to 50%.
Further, any terrorist act, natural disaster, public health issue, including 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 future growth may depend on our ability to expand operations in international markets, including through
licensed arrangements.
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, such as
through licensing agreements. 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.
2023 Form 10-K Page 5
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 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 ongoing conflicts in Ukraine and the Middle East may lead to disruption in the global supply chain, rising fuel
costs, or cybersecurity risks, and economic instability generally, any of which could materially and adversely affect our
business and results of operations.
Public health issues, including 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.
Social unrest, including 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.
Risk of loss or theft of assets, including inventory shrinkage, is inherent in the retail business. Loss may be caused by error
or misconduct of employees, customers, vendors or other third parties including through organized retail crime and
professional theft. While some level of inventory shrinkage is unavoidable, if we were to experience higher rates of inventory
shrinkage, or if we were unable to effectively reduce losses or theft of assets, our results of operations could be affected
adversely.
2023 Form 10-K Page 6
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.
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.
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.
On July 26, 2023, the SEC adopted a final rule on cybersecurity risk management, strategy, governance, and incident
disclosure (the "SEC Cyber Rule"). The SEC Cyber Rule requires public companies to make current disclosures about
material cybersecurity incidents, as well as annual disclosures of material information about their cybersecurity risk
management, strategy, and governance. The SEC Cyber Rule became effective on September 5, 2023. New data security
laws add additional complexity, requirements, restrictions and potential legal risk, and compliance programs may require
additional investment in resources, and could affect strategies and availability of previously useful data.
2023 Form 10-K Page 7
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.
Our inability to successfully manage the implementation of a new Enterprise Resource Planning ("ERP") system
may adversely affect our business and results of operations or the effectiveness of our internal controls over
financial reporting.
We are currently in the preliminary states of implementing a new ERP system, as part of a plan to integrate and upgrade
our systems and processes. This initiative includes a fully-integrated global accounting, operations, and finance enterprise
resource planning system. It will also include warehouse management, order management, as well as various interfaces
between these systems, and supporting back-office systems. Additional implementation activities are expected to continue
in phases over the next few years. ERP implementations are complex, labor intensive, and time-consuming projects, which
also involve substantial expenditures on system software and implementation activities. The ERP system is critical to our
ability to provide important information to our management, obtain, and deliver products, provide services and customer
support, accurately maintain books and records, provide accurate, timely and reliable reports on our financial and operating
results, and otherwise operate our business. ERP implementations also require transformation of business and financial
processes in order to reap the benefits of the ERP system. Any such implementation involves risks inherent in the conversion
to a new computer system, including loss of information and potential disruption to our normal operations. The
implementation and maintenance of the new ERP system has required, and will continue to require, the investment of
significant financial and human resources, the re-engineering of processes of our business, and the attention of many
employees who would otherwise be focused on other aspects of our business. Our results of operations could be adversely
affected if we experience time delays or cost overruns during the ERP implementation process, or if we are unable to reap
the benefits we expect from the ERP system. Any material deficiencies in the design and implementation of the new ERP
system could also result in potentially materially higher costs and could adversely affect our ability to operate our business
and otherwise negatively affect our financial reporting and the effectiveness of our internal control over financial reporting.
Any of these consequences could have a material adverse effect on our results of operations and financial condition.
The technology enablement of omni-channel initiatives 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, including technology and software associated with our ERP implementation, 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.
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 have a high expectation
that we will adequately protect their personal information. Any actual or perceived misappropriation, breach or misuse
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.
2023 Form 10-K Page 8
Regulatory scrutiny of privacy, user data protection, use of data and data collection is increasing on a global basis and
regulations will likely continue to evolve over time. We are subject to numerous laws and regulations in the U.S. and
internationally designed to protect the information of clients, customers, employees, and other third parties that we collect
and maintain, including the European Union General Data Protection Regulation (the "EUGDPR") and the United Kingdom
General Data Protection Regulation (the "UKGDPR"). Both the EUGDPR and UKGDPR, among other things, mandate
requirements regarding the handling of personal data of employees and customers, including its use, protection, and the
ability of persons whose data is stored to correct or delete such data about themselves. The state of California has a similar
law called the California Consumer Privacy Act, recently amended and effective January 1, 2023, by the California Privacy
Rights Act (as so amended, the "CCPA"). In addition to enforcement authority granted to the California Attorney General,
the CCPA established the "California Privacy Protection Agency," a dedicated state agency charged with the authority to
audit and enforce privacy rules, among other responsibilities, and the CCPA permits a private right of action for certain
violations of law. Other U.S. states have also enacted comprehensive consumer privacy laws, and additional states may
follow. We have from time to time received inquiries from governmental authorities regarding our practices. 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.
These laws pose increasingly complex and rigorous compliance challenges, which may increase our compliance costs and
related risk. If we fail to comply with these laws or other similar regulations applicable to our business, we could be subject
to reputational harm and significant litigation, monetary damages, regulatory enforcement actions, or fines in one or more
jurisdictions. 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.
Risks Related to our Supply Chain and Operations
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. Our distribution center
capabilities may also be affected by disruptions caused by upgrades or changes to our warehouse management systems.
We also may be affected by disruptions in the global transportation network caused by events including delays caused by
acts of war or hostility and related military actions, 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.
2023 Form 10-K Page 9
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.
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.
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 February 3, 2024, we hold $152 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 Shareholder Activism, Geopolitics, Regulations, Internal Controls, and Other External Risks
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, affect our
allocation of capital, disrupt relationships with our vendor partners, 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.
2023 Form 10-K Page 10
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 2023 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.
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. Our international subsidiaries conduct most of their business in their local currency.
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:
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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.
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.
2023 Form 10-K Page 11
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 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 ongoing conflicts in Ukraine and the Middle East may lead
to disruption in the global supply chain, rising fuel costs, or cybersecurity risks, and economic instability generally, any of
which could materially and adversely affect our business and results of operations. Additionally, with the U.K.'s exit from the
European Union in January 2020, known as Brexit, the ongoing uncertainties of the trading relationship between the U.K.
and the European Union have yet to be completely realized and the ultimate outcome and long-term impacts for the U.K.
and Europe remain uncertain. Ongoing changes and uncertainties related to Brexit, including trade frictions and Britain's
high inflation rate, continue to subject us to heightened trade risks in that region. In addition, disruptions to trade and free
movement of goods, services, and people to and from the U.K., disruptions to the workforce of our business partners,
increased foreign exchange volatility with respect to the British pound, and additional legal, political, and economic changes
also subject us to further uncertainty in the region.
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.
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 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.
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, the conflict in the Middle East, 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.
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 February 3, 2024, our cash and cash equivalents totaled $297 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 February 3, 2024, 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.
2023 Form 10-K Page 12
Our U.S. pension plan trust holds assets totaling $359 million at February 3, 2024. 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.
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 increased scrutiny and evolving expectations regarding environmental, social, and governance ("ESG")
matters.
There is increasing scrutiny and evolving expectations from investors, customers, regulators, and other stakeholders on
ESG practices and disclosures, including those related to environmental stewardship, climate change, and diversity,
inclusion, and belonging. Legislators and regulators have imposed, and likely will continue to impose, ESG-related
legislation, rules, and guidance, which may conflict with one another and impose additional costs on us, impede our business
opportunities, or expose us to new or additional risks.
For example, developing and acting on ESG-related initiatives, including sourcing and operational decisions, collecting,
measuring, and reporting ESG-related information and metrics can be costly, difficult and time consuming and is subject to
evolving reporting standards, including the SEC's recently approved climate-related reporting requirements and
sustainability reporting requirements in the European Union.
2023 Form 10-K Page 13
In addition, state attorneys general and other state officials have spoken out against ESG-motivated investing by some
investment managers and terminated contracts with managers based on their following certain ESG-motivated strategies.
Moreover, proxy advisory firms that provide voting recommendations to investors have developed ratings for evaluating
companies on their approach to different ESG matters, and unfavorable ratings of our company or our industry may lead to
negative investor sentiment and the diversion of investment to other companies or industries. If we are unable to meet these
standards or expectations, whether established by us or third parties, it could result in adverse publicity, reputational harm,
or loss of customer and/or investor confidence, which could adversely affect our business, results of operations, financial
condition, and liquidity.
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 and demands, 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.
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.
Failure to fully comply with Section 404 of the Sarbanes-Oxley Act of 2002 could negatively affect our business,
market confidence in our reported financial information, and the price of our common stock.
We continue to document, test, and monitor our internal control over financial reporting in order to satisfy the requirements
of Section 404 of the Sarbanes-Oxley Act of 2002. However, we cannot be assured that our disclosure controls and
procedures and our internal control over financial reporting will prove to be completely adequate in the future. 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.
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.
We have $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.
2023 Form 10-K Page 14
We may be unable to draw on our credit facility in the future or we may be unable to secure a new credit facility
with similar terms.
We have a $600 million asset-based revolving credit facility that is scheduled to expire in July 2025. 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, not fund any new borrowing, 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. Additionally, our rates on our revolving credit facility
may be affected by our credit ratings which could result in higher interest expense in the future.
Item 1B. Unresolved Staff Comments
None
Item 1C. Cybersecurity
Cybersecurity risk management and strategy
Information security is an important part of the Company's culture and foundational to its management. This philosophy is
emphasized throughout the organization by the Board of Directors, senior leadership, and team members to help promote
a Company-wide culture of cybersecurity risk management.
We use information technology and third-party service providers to support our global business processes and activities,
which exposes us to cybersecurity risks. We have from time-to-time experienced cybersecurity incidents. In the event of a
cybersecurity incident, we respond in accordance with our policies, processes, applicable laws, and regulations. When
necessary, we also engage third parties, such as cybersecurity advisors, to assist in investigating and remediating incidents.
To date, the cybersecurity incidents have not had a material effect on our business strategy, results of operations, or financial
condition.
Key Program Components
We take cybersecurity seriously, and our cybersecurity program is aligned to well-known and established cybersecurity
frameworks. We use, and continue to improve, our cyber defense-in-depth strategy, which uses multiple layers of security
for holistic protection.
Our cybersecurity governance program is strategically integrated into our enterprise risk management and is periodically
presented to the audit committee, which is responsible for oversight of the enterprise risk management framework
associated with technology, security, data, and privacy, and the Board of Directors. These procedures include regular risk
monitoring by management to update current risks and identify potential new and emerging risks. The Technology
Committee receives regular briefings from our Chief Operations Officer, Chief Technology Officer, Chief Information Security
Officer, and outside experts on cybersecurity risks and cyber risk oversight. During these meetings, the Technology
Committee and management discuss these risks, risk management activities and efforts, best practices, lessons learned
from incidents at other companies, the effectiveness of our security measures, and other related matters. The Technology
Committee Chair reports on the committee's meetings, considerations, and actions to the Board at the next Board meeting
following each Technology Committee meeting. The Audit Committee also discusses and receives updates on cybersecurity
matters in connection with its oversight of enterprise risk management.
We also maintain a variety of incident response plans that are utilized when incidents are detected. We conduct periodic
tabletop exercises, in which different internal and external stakeholders, including from time to time our CEO, Non-Executive
Chair or, Board of Directors, participate in a simulated cyber scenario. The purpose of these exercises is to test our cyber
incident response plan, identify weaknesses or gaps, and ensure that all participants are aware of, and familiar with, their
roles and responsibilities.
We require employees with access to information systems to undertake data protection and cybersecurity training. In
addition, certain individuals with privileged access, such as system administrators and developers, are subject to additional
controls and monitoring activities. We also conduct periodic phishing campaigns to train users to better identify, report, and
avoid malicious content.
2023 Form 10-K Page 15
We recognize that third-party service providers may introduce cybersecurity risks to our organization. In an effort to mitigate
these risks, we have implemented a process before engaging with third-party service providers which are designed to
assess their cybersecurity practices. Additionally, we endeavor to include cybersecurity requirements in our contracts with
these providers, requiring them to adhere to certain cybersecurity standards and protocols.
Our Chief Information Security Officer, with oversight from the Chief Technology Officer and Chief Operations Officer, is
primarily responsible for assessing and managing cybersecurity risks. Our Chief Information Security Officer has extensive
cybersecurity knowledge and skills gained from over 25 years' experience in the field. Our Chief Information Security Officer
is continually informed about the latest developments in cybersecurity, including potential threats and innovative risk
management techniques. This ongoing knowledge acquisition is crucial for the effective prevention, detection, mitigation,
and remediation of cybersecurity incidents.
Several experienced information security professionals report to our Chief Information Security Officer and he is supported
by a team of trained cybersecurity team members. In addition to our extensive in-house cybersecurity capabilities, at times
we also engage assessors, consultants, auditors, or other third parties to assist with assessing, identifying, and managing
cybersecurity risks.
Notwithstanding the breadth of the Company's information security program, it may not be successful in preventing or
mitigating a cybersecurity incident that could have a material adverse impact. For a discussion of whether and how any
risks from cybersecurity threats have materially affected or are reasonably likely to materially affect the Company, including
its business strategy, results of operations, or financial condition, see Item 1A. "Risk Factors," which is incorporated by
reference into this Item 1C.
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 2023 were approximately 12.98 and 7.97 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 February 3, 2024, we operated eight distribution centers, of which two are owned and six are leased, occupying an
aggregate of 3.42 million square feet. Six of these distribution centers are in the United States, one in Canada, and one in
the Netherlands. During 2023, we closed the distribution center that supported the Eastbay business and opened a new
leased distribution center to support our Northeast operations. Additionally, we utilize the services of third-party providers
for our operations in the U.K., Australia, New Zealand, South Korea, and Japan. We also operate a leased warehouse in
the United States, which supports our Team Edition apparel business.
The Company plans to move two of its distribution centers to new leased locations to enhance capabilities and support
planned growth for our WSS and European businesses. Our WSS distribution center is expected to open mid-year 2024,
with our European distribution center expected to open in 2025. These new distribution centers will employ state-of-the-art
technologies to deliver improved logistics capabilities and operational efficiencies.
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.
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.
2023 Form 10-K Page 16
Item 4A. Information about our Executive Officers
The following table provides information with respect to all persons serving as executive officers as of March 28, 2024,
including business experience for the last five years.
Name
Mary N. Dillon
Michael Baughn
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 Financial Officer since June 2023.
Previously, Mr. Baughn served in various roles at Kohl's Corporation,
including Executive Vice President of Finance and Treasurer from July 2021
through May 2023 and Senior Vice President of Finance and Treasurer from
April 2018 through July 2021.
Cynthia Carlisle
Jennifer L. Kraft
Franklin R. Bracken 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, and Senior Vice President and General Manager
Foot Locker U.S., Lady Foot Locker, and Kids Foot Locker from October
2017 through July 2020.
Executive Vice President and Chief Human Resource Officer since March
2024. Previously, she served in various roles at Stryker Corporation,
including Group Vice President, Human Resources from July 2020 through
February 2024 and Vice President, Talent Management from November
2019 through July 2020. She served as Vice President, Human Resources
for Roche Diagnostics from September 2016 through October 2019.
Executive Vice President and General Counsel since July 2023. Previously,
she served as Senior Vice President, Deputy General Counsel and
Corporate Secretary for Starbucks Corporation from September 2020
through June 2023. Prior to Starbucks, she served in roles of increasing
responsibility at United Airlines Holdings, Inc. from July 2011 through
September 2020, most recently as Deputy General Counsel, Vice President
and Corporate Secretary.
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 in 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.
Senior Vice President and Chief Accounting Officer since May 2009.
Giovanna Cipriano
Elliott D. Rodgers
Executive
Officer Since
2022
Age
62
42
2023
51
2021
49
2024
53
2023
48
2022
54
2009
There are no family relationships among the executive officers or directors of the Company.
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 February 3, 2024, we had 8,741 shareholders of record owning 94,283,984
common shares.
We declared dividends of $0.40 per share in the first, second, and third quarters of 2023. The declaration of dividends and
the establishment of the per share amount, record dates and payment dates for any such future dividends are subject to
the final determination of our Board of Directors, and are dependent upon multiple factors, including future earnings, cash
flows, financial requirements, and other considerations. As previously announced, the Company has paused dividends to
increase balance sheet flexibility in support of longer-term strategic initiatives.
2023 Form 10-K Page 17
The following table is a summary of our fourth quarter share repurchases:
Date Purchased
October 29 to November 25, 2023
November 26 to December 30, 2023
December 31, 2023 to February 3, 2024
Total
Number of
Shares
Purchased
(1)
Average
Price Paid
Per Share (1)
—
29.53
28.97
29.21
— $
1,606
2,080
3,686 $
Total
Number of
Shares
Purchased
as Part of
Publicly
Announced
Program (2)
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)
(2)
These columns reflect shares acquired in satisfaction of the tax withholding obligation of holders of restricted stock awards, which vested during
the quarter.
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, this 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 600 Specialty Retailing Index
and the Russell 3000 Index.
Foot Locker, Inc.
S&P 600 Specialty Retailing Index
Russell 3000 Index
$
$
$
100.00 $
100.00 $
100.00 $
71.28 $
103.07 $
120.31 $
84.38 $
251.03 $
144.94 $
87.29 $
218.01 $
168.53 $
91.03 $
213.28 $
157.53 $
63.86
235.64
192.27
2/2/2019
2/1/2020
1/30/2021
1/29/2022
1/28/2023
2/3/2024
We previously used the S&P 400 Specialty Retailing Index and the Russell Midcap Index, however, due to the reduction in
size of our market capitalization it was determined that the S&P 600 Specialty Retailing Index and the Russell 3000
Index are more appropriate benchmarks as the median market capitalizations are the closest to the Company's.
2023 Form 10-K Page 18
The following graph compares the cumulative five-year total return to shareholders on our common stock relative to the total
returns of the S&P 400 Specialty Retailing Index and Russell Midcap Index, our prior benchmarks. It is our intention to use
the Russell 3000 Index and the S&P 600 Specialty Retailing Index for future performance graphs.
Foot Locker, Inc.
S&P 400 Specialty Retailing Index
Russell Midcap Index
$
$
$
100.00 $
100.00 $
100.00 $
71.28 $
101.35 $
116.37 $
84.38 $
150.57 $
137.00 $
87.29 $
162.13 $
152.05 $
91.03 $
155.60 $
149.72 $
63.86
174.28
163.09
2/2/2019
2/1/2020
1/30/2021
1/29/2022
1/28/2023
2/3/2024
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.
2023 Form 10-K Page 19
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.
$
$
$
$
$
($ 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 (expense) income, net
Net (loss) 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 (2)
SG&A as a percentage of sales
Net (loss) income margin
Adjusted net income margin (3)
Earnings (loss) before interest and taxes (EBIT) (3)
EBIT margin (3)
Adjusted EBIT (3)
Adjusted EBIT margin (3)
Return on assets (ROA)
Return on invested capital (ROIC) (3)
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)
$
$
$
$
2023 (1)
2022
2021
2020
2019
8,154
14
2,259
1,852
199
80
(9 )
(556 )
(330 )
(3.51 )
(3.51 )
1.20
94.2
94.2
297
1,509
930
6,868
447
2,890
510
22.7 %
(4.0 )%
1.6 %
(414 )
(5.1 )%
214
2.6 %
(4.5 )%
3.8 %
1.7
242
2,523
7.97
12.98
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
102.5
103.8
104.3
105.1
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
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
159
2,998
7.50
12.98
8,005
8
2,543
1,650
179
65
11
4
491
4.52
4.50
1.52
108.7
109.1
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
187
3,129
7.57
13.15
(1)
(2)
(3)
Results for fiscal year 2023 reflect 53 weeks of operations as compared to 52 weeks for all other years presented.
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.
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.
2023 Form 10-K Page 20
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 2023 and 2022 detail and year-over-year comparisons
between these years. For a comparison of our results for 2022 to our results of 2021 and other financial information related
to 2021, refer to our Annual Report on Form 10-K for the year ended January 28, 2023 filed with the SEC on March 27, 2023.
Our Business
Foot Locker, Inc. is a leading specialty retailer operating 2,523 stores in 26 countries across the North America, Europe,
Australia, New Zealand, and Asia. We also have licensed store presence in the Middle East and Asia, with other geographies
expected in 2024. Results for fiscal year 2023 reflect 53 weeks of operations as compared to 52 weeks for all other years
presented.
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
(Loss) income from continuing operations before income taxes
Net (loss) income attributable to Foot Locker, Inc.
Diluted earnings per share
Adjusted net income (non-GAAP)
Adjusted diluted earnings per share (non-GAAP)
Summary of our 2023 financial performance:
Sales (decrease) increase
Comparable-store sales (decrease) increase
2023
2022
2021
$
$
$
$
$
$
$
8,154 $
510
14
2,259
27.7 %
1,852
22.7 %
142 $
(423 ) $
(330 ) $
(3.51 ) $
134 $
1.42 $
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
2023
2022
2021
(6.8 )%
(6.7 )%
(2.4 )%
(1.9 )%
18.7 %
15.4 %
● Sales per square foot decreased to $510, from $548 per square foot in 2022, consistent with the overall sales
decline of 6.8%. Excluding the effect of foreign currency fluctuations, sales decreased by 7.0% as compared to
the prior-year period.
● Our footwear sales represented 81% of total sales, while apparel and accessory sales were 19%, reflecting a 1%
increase in footwear sales compared to the prior year.
● One of our strategic initiatives is improving our omni-channel capabilities. 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. During the year, we saw improvements
in our e-commerce capabilities and the percentage of our direct-to-customers sales channel increased to 17.6% of
total sales in 2023 as compared with 16.3% last year, excluding the sales from our Eastbay business that we
closed in late 2022.
● Gross margin, as a percentage of sales, decreased to 27.7% as a result of increased promotions during 2023 and
occupancy rate deleverage from the decline in sales. We prudently managed our markdowns to ensure that we
ended the year with an improved inventory position.
● Our cost optimization program provided benefits, however it was not enough to offset the decline in sales and our
strategic investments in technology and wages for our store team members. SG&A expenses were 22.7% of sales,
an increase of 90 basis points as compared with the prior year.
2023 Form 10-K Page 21
● We continued to rationalize our portfolio of store brands and geographies to focus on our core banners. During
2023 we made significant progress, we completed the wind down of the Sidestep and atmos U.S. businesses,
and we transitioned our businesses in Singapore and Malaysia to a license model. Additionally, we reduced our
business in Asia by closing our operations in Hong Kong and Macau.
● During the year, we incurred costs to streamline our operations in Asia as well other non-cash charges related to
our minority investments and our pension plan. See the "Other (Expense) Income," net section for further
information.
In 2023, we closed 270 stores, of which 83 related to our Champs Sports banner as we continued to shift this
banner to focus serving the active athlete. Additional closures are anticipated in early 2024 to finalize the
repositioning of this banner. Our closures were focused on stores that were underperforming and reflected the
actions taken to rationalize our portfolio.
●
● Our focus for 2023 was an intentional investment and repositioning period and that is reflected in our results.
Adjusted net income was $134 million, or $1.42 diluted earnings per share, as compared with adjusted net income
of $473 million, or $4.95 diluted earnings per share, in the prior year. See the "Reconciliation of Non-GAAP
Measures" section for detailed explanations of the various adjustments to our adjusted results.
Highlights of our financial position for the year ended February 3, 2024 include:
● We ended the year with cash and cash equivalents of $297 million at February 3, 2024.
● We reduced our merchandise inventories to $1.5 billion, or by 8.2%, as we focused on improving our inventory
position.
● Net cash provided by operating activities was $91 million as compared with $173 million last year. This reflected
lower net income, partially offset by a decrease in inventory.
● Cash capital expenditures during 2023 totaled $242 million and were primarily directed to the remodeling or
relocation of 136 stores and the build-out of 79 new stores, as well as various technology and infrastructure
projects. The new stores were focused on expanding our "Community," "House of Play," and "Power" stores, and
we opened 69 stores bringing the total to 242 new concept stores operating as of the end of the fiscal year. Our
capital plans for 2024 will continue to focus on the modernization of the store portfolio.
● During 2023, we returned $113 million of cash to our shareholders through dividends. As previously announced,
the Company has paused dividends to increase balance sheet flexibility in support of longer-term strategic
initiatives. We have embarked on a significant project to upgrade and update all of our enterprise planning
systems, including e-commerce, supply chain, and financial systems.
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 (Loss) 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.
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.
2023 Form 10-K Page 22
Reconciliation of Non-GAAP Measures
($ in millions)
Pre-tax (loss) income:
(Loss) income from continuing operations before income taxes
Pre-tax adjustments excluded from GAAP:
Impairment and other (1)
Other expense / income, net (2)
Adjusted income before income taxes (non-GAAP)
Calculation of Earnings (Loss) Before Interest and Taxes
(EBIT):
(Loss) 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 (loss) income attributable to Foot Locker, Inc.
After-tax adjustments excluded from GAAP:
2023
2022
2021
$
(423 )
$
524 $
1,240
$
$
$
$
$
80
548
205
(423 )
(9 )
(414 )
205
(9 )
214
$
$
$
$
$
(5.1 )%
2.6 %
112
41
677 $
172
(377 )
1,035
524 $
(15 )
539 $
677 $
(15 )
692 $
6.2 %
7.9 %
1,240
(14 )
1,254
1,035
(14 )
1,049
14.0 %
11.7 %
$
(330 )
$
342 $
893
Impairment and other, net of income tax benefit of $18, $21, and
$42, respectively (1)
Other expense / income, net of income tax (benefit) expense of
($142), ($9), and $99, respectively (2)
Net loss from discontinued operations, net of income tax benefit
of $-, $1, and $-, respectively (3)
Tax reserves benefit / charge (4)
Tax benefits related to tax law rate changes (5)
Tax charge related to revaluation of certain intellectual property
rights (6)
Adjusted net income (non-GAAP)
Earnings per share:
Diluted EPS
Diluted EPS amounts excluded from GAAP:
Impairment and other (1)
Other expense / income, net (2)
Net loss from discontinued operations (3)
Tax reserves benefit / 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 (loss) income margin %
Adjusted net income margin %
$
$
$
62
406
—
(4 )
—
91
32
3
5
—
—
134
$
—
473 $
130
(278 )
—
—
(1 )
11
755
(3.51 )
$
3.58 $
8.61
0.66
4.31
—
(0.04 )
—
—
1.42
$
(4.0 )%
1.6 %
0.95
0.33
0.04
0.05
—
—
4.95 $
3.9 %
5.4 %
1.24
(2.68 )
—
—
(0.01 )
0.11
7.27
10.0 %
8.4 %
2023 Form 10-K Page 23
Notes on Non-GAAP Adjustments
(1)
(2)
For 2023, 2022, and 2021, we recorded impairment and other of $80 million ($62 million after tax), $112 million ($91 million after tax), $172 million
($130 million after tax), respectively. See the "Impairment and Other" section for further information.
During 2023, 2022, and 2021, we recorded other expense of $548 million ($406 million after tax), and $41 million ($32 million after tax), and other
income of $377 million ($278 million after-tax), respectively. These adjustments represent fair value and other changes in minority investments,
pension settlement charges, and gains on sales of properties and businesses. See Note 5, "Other (Expense) Income, net" 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 first quarter of 2023, we recorded a $4 million benefit related to income tax reserves due to a statute of limitations release. 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 a tax charge of $1 million during the fourth quarters of 2021 in connection with tax law changes in the Netherlands.
(6) We recorded a tax charge related to the revaluation of certain intellectual property rights, pursuant to a non-U.S. advance pricing agreement of
$11 million for 2021.
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 (4.5)% as compared with 4.3% in the prior year. This decrease reflected a net loss in 2023 as compared with net income
in 2022. Our ROIC decreased to 3.8% in 2023, as compared with 9.2% in the prior year. The overall decrease in ROIC
reflected a decrease in adjusted return after taxes in 2023.
ROA (1)
ROIC %
2023
2022
2021
(4.5 )%
3.8 %
4.3 %
9.2 %
11.8 %
16.4 %
(1)
Represents net (loss) income attributable to Foot Locker, Inc. of ($330) million, $342 million, and $893 million divided by average total assets
of $7,388 million, $8,021 million, and $7,589 million for 2023, 2022, and 2021, respectively.
Calculation of ROIC
($ 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 %
$
$
$
$
2023
2022
2021
214 $
133
347
(107 )
—
240 $
7,388 $
(417 )
(927 )
(1,576 )
1,804
6,272 $
3.8 %
692 $
136
828
(244 )
1
585 $
8,021 $
(670 )
(1,109 )
(1,455 )
1,569
6,356 $
9.2 %
1,049
144
1,193
(321 )
1
873
7,589
(1,242 )
(1,060 )
(1,095 )
1,116
5,308
16.4 %
(1)
(2)
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.
The adjusted income tax expense represents the marginal tax rate applied to adjusted net operating profit for each of the periods presented.
2023 Form 10-K Page 24
Segment Reporting and Results of Operations
We have determined that we have three operating segments, North America, EMEA, and Asia Pacific. Our North America
operating segment includes the results of the following banners operating in the U.S. and Canada: Foot Locker, Champs
Sports, Kids Foot Locker, and WSS, including each of their related e-commerce businesses. Our EMEA operating segment
includes the results of the Foot Locker and Kids Foot Locker banners operating in Europe, including each of their related e-
commerce businesses. Our Asia Pacific operating segment includes the results of the Foot Locker banner and its related
e-commerce business operating in Australia, New Zealand, and Asia, as well as atmos, which operates primarily in Asia.
We have further aggregated these operating segments into one reportable segment based upon their shared customer
base and similar economic characteristics.
As previously announced, during the second quarter of 2023, we ceased operating the Sidestep banner and closed the
stores operating in Hong Kong and Macau. Additionally during the second quarter of 2023, we sold our Singapore and
Malaysia businesses to our license partner. Our license partner now operates those stores under a licensing agreement.
During the fourth quarter of 2023, we closed our atmos U.S. stores and e-commerce business.
Sales
Comparable 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. Comparable-store sales for 2023 do not include sales from the 53rd
week.
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 and atmos were included effective January 2023 and March 2023,
respectively.
The information shown below represents certain sales metrics by sales channel:
($ in millions)
Store sales
$ Change
% Change
% of total sales
Comparable sales (decrease) increase
Direct-to-customer sales
$ Change
% Change
% of total sales
Comparable sales decrease
Total sales
$ Change
% Change
Comparable sales (decrease) increase
$
$
$
$
$
$
2023
2022
$
6,751
(468 )
$
(6.5 )%
82.8 %
(6.5 )%
$
1,403
(125 )
$
(8.2 )%
17.2 %
(7.4 )%
8,154
$
$
(593 )
(6.8 )%
(6.7 )%
$
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 )%
2021
7,029
78.5 %
25.8 %
1,929
21.5 %
(10.6 )%
8,958
62.8 %
In 2023, sales decreased by 6.8% to $8,154 million from sales of $8,747 million in 2022. Excluding the effect of foreign
currency fluctuations, sales decreased by 7.0% as compared with 2022. Results from 2023 include the effect of the 53rd
week, which represented sales of $98 million.
2023 Form 10-K Page 25
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
(2.7 )%
(22.2 )
1.1
6.0
n.m.
(8.5 )%
1.0 %
n.m.
(3.1 )%
(3.1 )%
0.5
(2.0 )%
(7.0 )%
(2.3 )
(20.4 )
0.2
(6.8 )
n.m.
(8.7 )
(0.8 )
n.m.
(2.1 )
4.7
(2.1 )
2.6
(6.7 )
Comparable sales decreased by 6.7% as compared with the prior year. By operating segment, North America and EMEA
had decreases of 8.7% and 2.1%, respectively, while Asia Pacific generated an increase of 2.6%. Comparable sales
decreased in both our stores and direct-to-customer channels in 2023, due to ongoing macroeconomic headwinds as our
customers become more discerning due to inflation and other cost pressures, which affected customer traffic and
conversion, as well as changing vendor mix coupled with the repositioning of our Champs Sports banner. We are
repositioning the Champs Sports banner to serve the active athlete, which resulted in expected comparable sales declines
due to the transition.
For the combined channels, sales excluding foreign currency fluctuations, declined in all the regions we operate. North
America sales were negatively affected by the closure of Eastbay business, which ceased operating in late 2022, as well
as the repositioning of Champs Sports. Eastbay's sales primarily represent the other category, and excluding those sales
the decline for North America would have been decline of 6.9%. Constant currency sales for EMEA decreased
primarily from the closure of the Sidestep banner in the second quarter of 2023. Excluding the sales from the Sidestep
banner, constant currency sales for our Foot Locker stores operating in EMEA increased by 1.0%. Asia Pacific's sales
decreased primarily as a result of our strategic decisions to close our operations in Hong Kong and Macau and to sell our
Singapore and Malaysia operations to our licensing partner. Within Asia Pacific, combined sales for our operations in
Australia, New Zealand, and South Korea generated positive comparable sales. Our atmos operations were negatively
affected by foreign currency fluctuations, however generated a positive increase excluding currency movements. On a
comparable basis, atmos was negatively affected by declines in availability of key styles and reduced tourism.
From a product perspective for the combined channels, the sales decrease in 2023 was across footwear, apparel,
and accessories.
Gross Margin
Gross margin rate
Basis point decrease in the gross margin rate
Components of the change:
Merchandise margin rate decline
Higher occupancy and buyers' compensation expense rate
2023
2022
2021
27.7 %
(420 )
(340 )
(80 )
31.9 %
(250 )
(240 )
(10 )
34.4 %
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 2023 by 420 basis points as compared to the prior year, reflecting higher promotional
activity in the current marketplace and markdowns recorded to reduce overall inventory levels and improve aging. Other
factors that negatively affected the rate were higher cost of merchandise and increased shrink. The occupancy rate
deleverage reflected the fixed nature of these costs in relation to the decline in sales.
2023 Form 10-K Page 26
Selling, General and Administrative Expenses (SG&A)
($ in millions)
SG&A
$ Change
% Change
SG&A as a percentage of sales
$
$
2023
2022
2021
$
1,852
(51 )
$
(2.7 )%
22.7 %
1,903 $
52
2.8 %
21.8 %
1,851
20.7 %
SG&A decreased by $51 million, or 2.7%, in 2023, as compared with the prior year. As a percentage of sales, the SG&A
rate increased by 90 basis points as compared with 2022. Excluding the effect of foreign currency fluctuations, SG&A
decreased by $60 million, or 3.2%, as compared with the prior year.
The increase in SG&A, as a percentage of sales, primarily reflected deleverage from the decline in sales, coupled with
pressures from inflation and investments in front-line wages and technology aimed at improving the omnichannel experience
and customer data analytics. Partially offsetting these increases were lower incentive compensation expense due to the
Company's underperformance relative to targets and savings from our cost optimization program.
Depreciation and Amortization
($ in millions)
Depreciation and amortization
$ Change
% Change
2023
2022
2021
$
$
$
199
(9 )
$
(4.3 )%
208 $
11
5.6 %
197
Depreciation and amortization decreased by $9 million as compared with the prior year. Excluding the effect of foreign
currency fluctuations, depreciation and amortization decreased by $10 million primarily due operating fewer stores and the
effect from impairments recorded in the current and prior year.
Operating Results
Division profit was $264 million, or 3.2% of sales in 2023. This compares with $844 or 9.6% of sales, for the prior year. The
decrease was driven by both sales channels experiencing declines in sales coupled with lower gross margins due to the
promotional environment and deleveraging expenses, while cost-cutting program benefits were not enough to offset the
decline in sales.
Impairment and Other
For 2023, impairment and other included impairment charges of $30 million from a review of underperforming stores and
accelerated tenancy charges on right-of-use assets for closures of the Sidestep banner, certain Foot Locker Asia stores,
and our U.S. atmos stores. Additionally, we
transformation consulting expense of $27 million and
reorganization costs of $17 million primarily related to severance and the closures of the Sidestep banner, certain Foot
Locker Asia stores, and a North American distribution center. The results for 2023 also included intangible asset impairment
of $9 million on an atmos tradename, partially offset by a $4 million reduction in the fair value of the atmos contingent
consideration.
incurred
For 2022, impairment and other charges included $58 million of impairment of long-lived assets and right-of-use assets and
accelerated tenancy charges, $42 million of transformation consulting, $22 million of primarily severance costs related to a
reorganization, $9 million of litigation costs related to an employment matter, $8 million of Sidestep tradename asset
impairment, and $4 million of acquisition integration costs, partially offset by a $31 million reduction in the fair value of the
atmos contingent consideration liability.
See Note 4, "Impairment and Other" for additional information.
Corporate Expense
($ in millions)
Corporate expense
$ Change
2023
2022
2021
$
$
42 $
(109 ) $
151 $
22
129
2023 Form 10-K Page 27
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. The allocation of corporate expense to the operating
divisions is adjusted annually based upon an internal study.
Depreciation and amortization included in corporate expense was $36 million and $39 million in 2023 and 2022,
respectively. Excluding the changes in depreciation and amortization, corporate expense decreased primarily due to an
increase in the allocation of corporate expense to the banners in 2023 and lower incentive compensation expense, including
share-based compensation expense that is tied to performance, partially offset by our ongoing investments in information
technology.
Interest Expense, net
($ in millions)
Interest expense
Interest income
Interest expense, net
Weighted-average interest rate (excluding fees)
$
$
2023
2022
2021
(24 ) $
15
(9 ) $
3.9 %
(24 ) $
9
(15 ) $
3.8 %
(17 )
3
(14 )
4.8 %
We recorded net interest expense of $9 million in 2023, compared to $15 million in 2022. Interest income increased primarily
due to higher interest rates earned on our cash and cash equivalents coupled with higher interest earned on our cross-
currency swap.
Other (Expense) Income, net
($ in millions)
Other (expense) income, net
2023
2022
2021
$
(556 ) $
(42 ) $
384
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, gains on sales of businesses or assets, 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 2023, we recorded an impairment of $478 million on a minority investment due to the decreased valuation resulting
from the investee's underperformance and continued losses. The minority investment is accounted for using the fair value
measurement alternative, which is at cost adjusted for changes in observable prices minus impairment under the
practicability exception. We assess the carrying value of this investment for impairment whenever events or circumstances
indicate that the carrying value may not be recoverable, and consider factors including, but not limited to, expected cash
flows, underperformance relative to its plans and continued losses of the investee. We estimated the fair value using both
a discounted cash flow approach and a market approach, which consider forecasted cash flows provided by the investee's
management, as well as assumptions over discount rates, terminal values, and selected comparable companies.
During the fourth quarter of 2023, as part of efforts to reduce our pension plan obligations, we transferred approximately
$109 million of our U.S. Qualified pension plan registered assets and liabilities to an insurance company through the
purchase of a group annuity contract, under which an insurance company is required to directly pay and administer pension
payments to certain of our pension plan participants, or their designated beneficiaries. In connection with this transaction,
we recorded a non-cash pretax settlement charge of $75 million. This settlement charge accelerated the recognition of
previously unrecognized losses in "Accumulated Other Comprehensive Loss."
During 2022, we sold our investment in a publicly traded stock, Retailors, Ltd. for a loss of $62 million, offset by $1 million
of dividend income. Partially offsetting the loss was a $19 million gain on the divestiture of our Team Sales business.
See Note 5, "Other (Expense) Income, net" for additional information.
Income Taxes
($ in millions)
Income tax (benefit) expense
Effective tax rate
2023 Form 10-K Page 28
2023
2022
2021
$
(93 ) $
22.0 %
180 $
34.3 %
348
28.1 %
We recorded an income tax benefit of $93 million in 2023, or an effective rate of 22.0%, as compared with income tax
expense of $180 million or 34.3% in 2022. The change in the effective tax rate reflected several factors, including the effects
of non-deductible losses, as well as the level and geographic mix of income. The effective tax rate in 2023 included a 200-
basis point deferred tax asset adjustment which negatively affected the tax rate.
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. We recorded a $4 million reserve release in 2023
from a statute of limitations expiration on our foreign income taxes, as well as other various reserve releases totaling
$4 million due to settlements of international tax examinations. 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 in 2022 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.
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. There were no share repurchases during 2023, thus no incremental excise
tax paid.
The Organization for Economic Co-operation and Development Pillar Two guidelines published to date include transition
and safe harbor rules around the implementation of the Pillar Two global minimum tax of 15%. Based on current enacted
legislation effective in 2024 and our structure, we do not currently expect a significant effect on our overall effective tax rate
for 2024. We are monitoring developments and evaluating the effects that these new rules will have on our future effective
income tax rate, tax payments, financial condition, and results of operations.
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 pay down
liabilities 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, including through Rule 10b5-1 trading plans. 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. The new share repurchase program does not have an expiration date and as of
February 3, 2024, approximately $1.1 billion remained available. Our board's authorization of the share repurchase program
does not obligate us to acquire any particular amount of common stock, and the repurchase program may be commenced,
suspended, or discontinued at any time.
The Board of Directors regularly reviews the dividend policy and rate, taking into consideration the overall financial and
strategic outlook of our earnings, liquidity, and cash flow. We do not currently expect to pay dividends to allow us to invest
in our strategic priorities, such as modernizing our technology infrastructure and stores.
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.
2023 Form 10-K Page 29
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 84% and 86% of our merchandise from our top five suppliers in 2023 and 2022,
respectively. Approximately 65% was purchased from one supplier, Nike, Inc., in both 2023 and 2022.
Planned capital expenditures in 2024 are $285 million, of which $200 million is dedicated to real estate projects designed
to elevate our customers' in-store experience. This includes the updating of approximately 400 existing stores to our current
design standards and will incorporate key elements of our current brand design specifications. Spending for 2024 also
includes the planned opening of approximately 20 new WSS stores and 15 new Foot Locker and Kids Foot Locker stores,
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. Finally, the capital plan for 2023 also includes $85 million primarily for our technology and supply chain
initiatives, including capital expenditures related to two new distribution centers. We also expect to spend an additional
$60 million in software-as-a-service implementation costs related to our technology initiatives as we modernize our
enterprise resource planning tools including e-commerce, supply chain, and finance. We have the ability to revise and
reschedule some of the anticipated spending program should our financial position require it.
Operating Activities
($ in millions)
Net cash provided by operating activities
$ Change
2023
2022
2021
$
$
91 $
(82 )
173 $
666
The amount provided by operating activities reflects net (loss) income adjusted for non-cash items and working capital
changes. Adjustments to net income for non-cash items include impairment and other, pension settlement charge, fair value
adjustments to our minority investments, depreciation and amortization, deferred income taxes, and share-based
compensation expense. The decrease in cash from operating activities reflected lower net income, partially offset by timing
of merchandise purchases and payments of accounts payable, as compared to the prior year.
Investing Activities
($ in millions)
Net cash used in investing activities
$ Change
2023
2022
2021
$
$
(222 ) $
(60 )
(162 ) $
(1,376 )
The increase in cash used in investing activities primarily reflected lower capital expenditures coupled with the prior-year
sale of one of our minority investments and a sale of a business.
Capital expenditures in 2023 decreased to $242 million from $285 million in the prior year, which was elevated as several
large projects related to 2021 were paid in the first quarter of 2022. During 2023, we completed the remodeling or relocation
of 136 existing stores, the build-out of 79 new stores, and made progress on the development of information systems,
websites, and infrastructure, including supply chain initiatives. During 2023 we made meaningful progress as we continue
to implement our strategic initiative to power-up our portfolio of stores. Capital expenditures in 2023 included 69 new stores
in our "power" or "community" doors concept, bringing the total to 242 in operation as of February 3, 2024.
During 2023, we sold our businesses operating in Singapore and Malaysia for total cash consideration of $24 million,
or $16 million net of $8 million of cash in the business. We also sold a corporate office property in North America for
proceeds of $6 million. Additionally, we invested $2 million and $5 million in 2023 and 2022, respectively, in minority
investments with 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.
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 2022, we sold our Eastbay Team Sales business receiving proceeds of
$47 million.
Financing Activities
($ in millions)
Net cash used in financing activities
$ Change
2023 Form 10-K Page 30
2023
2022
2021
$
$
(120 ) $
159
(279 ) $
(152 )
Cash used in financing activities consisted primarily of our return to shareholders initiatives, as follows:
($ in millions)
Dividends paid on common stock
Share Repurchases
Total returned to shareholders
2023
2022
2021
$
$
113 $
—
113 $
150 $
129
279 $
101
348
449
We declared and paid $113 million in dividends representing a quarterly rate of $0.40 per share paid out in the first, second
and third quarters of 2023, as compared with $129 million in dividends in 2022, representing a quarterly rate of $0.40 per
share paid out in each quarter in the prior year. No shares of our common stock were repurchased pursuant to our share
repurchase program during 2023, as compared with $129 million repurchased during 2022. We paid $10 million during 2023
to satisfy tax withholding obligations related to vesting of share-based equity awards.
From November 3, 2023 through December 5, 2023, in order to fund working capital needs for the holiday selling season,
we borrowed varying amounts under our credit facility, with $146 million of aggregate borrowings and no more than
$89 million outstanding during that time. No borrowings remained outstanding as of February 3, 2024.
Free Cash Flow (non-GAAP measure)
In addition to net cash provided by operating activities, we use free cash flow as a useful measure of performance and as
an indication of our financial strength and our ability to generate cash. We define free cash flow as net cash provided by
operating activities less capital expenditures (which is classified as an investing activity). We believe the presentation of
free cash flow is relevant and useful for investors because it allows investors to evaluate the cash generated from underlying
operations in a manner similar to the method used by management. Free cash flow is not defined under U.S. GAAP.
Therefore, it should not be considered a substitute for income or cash flow data prepared in accordance with U.S. GAAP
and may not be comparable to similarly titled measures used by other companies. It should not be inferred that the entire
free cash flow amount is available for discretionary expenditures. The following table presents a reconciliation of net cash
flow provided by operating activities, the most directly comparable U.S. GAAP financial measure, to free cash flow.
($ in millions)
Net cash provided by operating activities
Free cash flow
Capital Structure
2023
2022
2021
$
$
91 $
(151 ) $
173 $
(112 ) $
666
457
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
February 3, 2024. The amount of borrowing availability 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 28, 2024, our corporate credit ratings from Standard & Poor's and Moody's Investors Service are BB and Ba2,
respectively. In addition, Moody's Investors Service has rated our senior unsecured notes Ba3.
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.
2023 Form 10-K Page 31
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.
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. 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.
2023 Form 10-K Page 32
Fair Value Measurements of Minority Investments
We account for certain minority investments using the fair value measurement alternative, which is at cost, adjusted for
changes in observable prices minus impairment under the practicability exception. We evaluate our minority investments
for impairment when events or circumstances indicate that the carrying value of the investment may not be recoverable and
that impairment is other than temporary. If an indication of impairment occurs, we evaluate the recoverability of our carrying
value based on the fair value of the investment. If an impairment is indicated, we adjust the carrying values of the investment
downward, if necessary, to their estimated fair values.
We estimate the fair value of our minority investments using a discounted cash flow approach and/or a market approach,
which consider forecasted cash flows provided by the investee's management, as well as assumptions over discount rates,
terminal values, and selected comparable companies. Therefore, the valuation results cannot be determined with precision
and may not be realized in an actual sale the investment. Additionally, there are inherent uncertainties in any valuation
technique, and changes in the underlying assumptions used, including discount rates and estimates of future cash flows,
could significantly affect the results of current or future values.
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."
Recent SEC Ruling
In March 2024, the SEC adopted rules to enhance and standardize climate-related disclosures by public companies. The
final rules will require us to provide information about the financial effects of climate-related risks on our operations and how
we manage those risks. As a large accelerated filer, our compliance with the new climate disclosures will be phased in,
beginning in the fiscal year 2025 Annual Report on Form 10-K.
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 (Loss) Income
● Consolidated Balance Sheets
● Consolidated Statements of Changes in Shareholders' Equity
● Consolidated Statements of Cash Flows
● Notes to the Consolidated Financial Statements
2023 Form 10-K Page 33
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 February 3, 2024 and January 28, 2023, the related consolidated statements of operations, comprehensive (loss) income,
changes in shareholders' equity, and cash flows for each of the years in the three-year period ended February 3, 2024, 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 February 3, 2024 and January 28, 2023,
and the results of its operations and its cash flows for each of the years in the three-year period ended February 3, 2024,
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 February 3, 2024, 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 28, 2024 expressed an unqualified 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 Matters
The critical audit matters communicated below are matters arising from the current period audit of the consolidated financial
statements that were communicated or required to be communicated to the audit committee and that: (1) relate 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 critical audit matters 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 matters below,
providing separate opinions on the critical audit matters or on the accounts or disclosures to which they relate.
Sufficiency of audit evidence over merchandise inventories
As discussed in Note 1 to the consolidated financial statements, 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. 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. The recognition of inventory is reliant upon multiple information technology (IT)
systems. The Company's merchandise inventories were $1,509 million as of February 3, 2024.
2023 Form 10-K Page 34
We identified the sufficiency of audit evidence over merchandise inventories as a critical audit matter. Evaluating the
sufficiency of audit evidence required subjective auditor judgment due to the highly automated nature of certain processes
to record merchandise inventories that involves interfacing significant volumes of data across multiple IT systems. IT
professionals with specialized skills and knowledge were required to assess the Company's IT systems used in the
merchandise inventories process.
The following are the primary procedures we performed to address this critical audit matter. We applied auditor judgment
to determine the nature and extent of procedures to be performed over the recording of merchandise inventory, including
the IT systems. We evaluated the design and tested the operating effectiveness of certain internal controls related to the
recording of merchandise inventories. We tested IT dependent controls and involved IT professionals with specialized skills
and knowledge who assisted in testing certain IT application and general IT controls used for calculating merchandise
inventories. We selected a sample of transactions used in the calculation of merchandise inventories and compared
inventory prices to vendor invoices and cash payments, and observed counts of inventories. For each sample, we also
compared the inventory retail prices to inventory records. We assessed the sufficiency of audit evidence obtained over
merchandise inventories by assessing the results of procedures performed, including the appropriateness of such evidence.
Fair value of minority investment
As discussed in Notes 1, 5 and 19 to the consolidated financial statements, the Company accounts for a minority investment
using the fair value measurement alternative, which is at cost, adjusted for changes in observable prices minus impairment
under the practicability exception. The Company evaluates the minority investment for impairment whenever events or
circumstances indicate that the carrying value of the investment may not be recoverable and that impairment is other than
temporary. If an indication of impairment occurs, the Company evaluates recoverability of the carrying value based on the
fair value of the minority investment. If an impairment is indicated, the Company adjusts the carrying values of the investment
downward, if necessary, to their estimated fair values. The carrying value of the Company's minority investment as of
February 3, 2024 was $134 million. During the fourth quarter of 2023, the fair value of a minority investment was determined
using a discounted cash flow approach and a market approach and an impairment charge of $478 million was recorded.
We identified the evaluation of the fair value of a minority investment as a critical audit matter. Subjective auditor judgment
was required to evaluate the discount rate used within the discounted cash flow method to estimate the fair value of the
investment. Changes in the discount rate could have had a significant impact on the fair value. Additionally, the evaluation
of the discount rate required the involvement of valuation professionals with specialized skills and knowledge.
The following are the primary procedures we performed to address this critical audit matter. We evaluated the design and
tested the operating effectiveness of certain internal controls related to the Company's fair value measurement process.
This included a control related to the discount rate. In addition, we involved valuation professionals with specialized skills
and knowledge, who assisted in evaluating the Company's discount rate by comparing it to a discount rate range that was
independently developed using publicly available market data for comparable entities.
/s/ KPMG LLP
We have served as the Company's auditor since 1995.
New York, New York
March 28, 2024
2023 Form 10-K Page 35
CONSOLIDATED STATEMENTS OF OPERATIONS
($ 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 (expense) income, net
(Loss) income from continuing operations before income taxes
Income tax (benefit) expense
Net (loss) income from continuing operations
Net loss from discontinued operations, net of tax
Net (loss) income
Net loss attributable to noncontrolling interests
Net (loss) income attributable to Foot Locker, Inc.
Basic (loss) per share
(Loss) earnings per share from continuing operations
attributable to Foot Locker, Inc.
Loss per share from discontinued operations, net of tax
Net (loss) earnings per share attributable to Foot Locker, Inc.
Weighted-average shares outstanding
Diluted earnings (loss) per share
(Loss) earnings per share from continuing operations
attributable to Foot Locker, Inc.
Net loss per share from discontinued operations, net of tax
Net (loss) earnings per share attributable to Foot Locker, Inc.
Weighted-average shares outstanding, assuming dilution
$
$
$
$
$
$
$
$
2023
2022
2021
8,154 $
14
8,168
5,895
1,852
199
80
142
(9 )
(556 )
(423 )
(93 )
(330 )
—
(330 )
—
(330 ) $
8,747 $
12
8,759
5,955
1,903
208
112
581
(15 )
(42 )
524
180
344
(3 )
341
1
342 $
8,958
10
8,968
5,878
1,851
197
172
870
(14 )
384
1,240
348
892
—
892
1
893
(3.51 ) $
— $
(3.51 ) $
94.2
3.66 $
(0.04 ) $
3.62 $
94.3
8.72
—
8.72
102.5
(3.51 ) $
— $
(3.51 ) $
94.2
3.62 $
(0.04 ) $
3.58 $
95.5
8.61
—
8.61
103.8
See Accompanying Notes to Consolidated Financial Statements.
2023 Form 10-K Page 36
CONSOLIDATED STATEMENTS OF COMPREHENSIVE (LOSS) INCOME
($ in millions)
Net (loss) income attributable to Foot Locker, Inc.
Other comprehensive income (loss), net of income tax
2023
2022
2021
$
(330 ) $
342 $
893
Foreign currency translation adjustment:
Translation adjustment arising during the period, net of income
tax benefit of $(1), $-, and $(1), respectively
Hedges contracts:
Change in fair value of derivatives, net of income tax benefit of
$-, $-, and $-, respectively
Pension and postretirement adjustments:
Net actuarial (loss) gain and foreign currency fluctuations arising
during the year, net of income tax (benefit) expense of $(5),
$(4), and $8, respectively
Amortization of net actuarial loss included in net periodic benefit
costs, net of income tax expense of $3, $3, and $3,
respectively
Recognition of net actuarial loss on settlement included in net
benefit costs, net of income tax expense of $19, $-, and $-,
respectively
Comprehensive (loss) income
(25 )
(41 )
(43 )
1
(3 )
1
(13 )
(12 )
7
7
$
56
(304 ) $
—
293 $
23
7
—
881
See Accompanying Notes to Consolidated Financial Statements.
2023 Form 10-K Page 37
CONSOLIDATED BALANCE SHEETS
February 3,
January 28,
2024
2023
$
$
$
$
297 $
1,509
419
2,225
930
2,188
114
768
399
152
92
6,868 $
366 $
428
5
492
1,291
442
2,004
241
3,978
776
2,482
(366 )
(2 )
2,890
6,868 $
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
($ 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: 94,283,984 and 93,396,901 shares issued,
respectively
Retained earnings
Accumulated other comprehensive loss
Less: Treasury stock at cost: 60,308 and 1,489 shares, respectively
Total shareholders' equity
See Accompanying Notes to Consolidated Financial Statements.
2023 Form 10-K Page 38
CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY
Accumulated
Other
Comprehensive
Loss
Non-
Controlling
interest
Total
Shareholders'
Equity
(shares in thousands,
amounts in millions)
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 ‐ Employee Stock Purchase
Plan ("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
Restricted stock issued
Issued under director and stock plans
Share-based compensation expense
Shares of common stock used to satisfy
tax withholding obligations
Reissued ‐ ESPP
Net loss
Cash dividends on common stock ($1.20
per share)
Translation adjustment, net of tax
Change in hedges, net of tax
Pension and postretirement adjustments,
Additional Paid-In
Capital & Common
Stock
Treasury Stock
Retained
Shares Amount Shares Amount Earnings
103,693 $
499
353
—
(3 ) $ 2,326 $
—
—
—
—
—
—
(74 ) $
—
—
—
779
—
11
29
—
—
—
—
(205 )
(7,546 )
(11 )
(348 )
—
—
—
(5,474 )
—
(7 )
(42 )
—
301
5,474
—
—
—
—
—
—
—
—
—
—
14
260
—
—
—
—
—
(218 )
893
(101 )
—
—
—
99,071 $
117
228
—
—
770
—
7
31
—
(2,050 ) $
—
—
—
—
—
(88 ) $ 2,900 $
—
—
—
—
—
—
—
—
—
(6,019 )
—
—
—
—
—
—
93,397 $
678
209
—
—
—
—
—
—
—
—
—
(2 )
(46 )
—
—
—
—
—
—
760
—
6
13
—
(3 )
—
—
—
—
(40 )
(4,050 )
120
6,019
—
—
—
—
—
—
(1 ) $
—
—
—
(274 )
215
—
—
—
—
(1 )
(129 )
5
213
—
—
—
—
—
—
—
—
(167 )
—
342
(150 )
—
—
—
—
— $ 2,925 $
—
—
—
—
—
—
(10 )
8
—
—
—
—
—
—
(330 )
(113 )
—
—
net of tax
Balance at February 3, 2024
—
94,284 $
—
776
—
(60 ) $
—
—
(2 ) $ 2,482 $
50
(366 ) $
See Accompanying Notes to Consolidated Financial Statements.
(331 ) $
—
—
—
—
—
—
—
—
—
(43 )
1
30
(343 ) $
—
—
—
—
—
—
—
—
—
—
(41 )
(3 )
(5 )
(392 ) $
—
—
—
—
—
—
—
(25 )
1
5 $
—
—
—
—
—
—
—
(1 )
—
—
—
—
4 $
—
—
—
—
—
—
—
(3 )
(1 )
—
—
—
—
— $
—
—
—
—
—
—
—
—
—
—
— $
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
—
6
13
(10 )
5
(330 )
(113 )
(25 )
1
50
2,890
2023 Form 10-K Page 39
CONSOLIDATED STATEMENTS OF CASH FLOWS
($ in millions)
From operating activities:
2023
2022
2021
Net (loss) income
Adjustments to reconcile net income to net cash from operating activities:
$
(330 ) $
341 $
Non-cash impairment and other
Pension settlement charge
Fair value adjustments to minority investments
Fair value change in contingent consideration
Depreciation and amortization
Deferred income taxes
Share-based compensation expense
Gain on sales of businesses
Gain on sale of property
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 sales of businesses
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:
Repayment of the revolving credit facility
Dividends paid on common stock
Shares of common stock repurchased to satisfy tax withholding obligations
Payment of long-term debt and obligations under finance leases
Treasury stock reissued under employee stock plan
Proceeds from exercise of stock options
Proceeds from the revolving credit facility
Purchase of treasury shares
Purchase of non-controlling interest
Payment of debt issuance costs
Proceeds from debt issuance, net
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
$
40
75
478
(4 )
199
(136 )
13
(3 )
(3 )
120
(122 )
(109 )
—
(127 )
91
(242 )
—
(2 )
16
—
6
—
(222 )
(146 )
(113 )
(10 )
(6 )
4
5
146
—
—
—
—
(120 )
3
(248 )
582
334 $
18 $
97
681
8
295
1
67
—
61
(31 )
208
21
31
(19 )
—
(397 )
(101 )
(1 )
—
(7 )
173
(285 )
(14 )
(5 )
47
95
—
—
(162 )
—
(150 )
(1 )
(6 )
3
6
—
(129 )
(2 )
—
—
(279 )
—
(268 )
850
582 $
17 $
153
704
9
458
—
See Accompanying Notes to Consolidated Financial Statements.
892
148
—
(367 )
—
197
74
29
—
—
(259 )
161
1
10
(220 )
666
(209 )
(1,056 )
(118 )
—
—
3
4
(1,376 )
—
(101 )
(11 )
(102 )
7
10
—
(348 )
—
(2 )
395
(152 )
(6 )
(868 )
1,718
850
11
387
790
5
417
4
2023 Form 10-K Page 40
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.
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
2023 represented the 53 weeks ended February 3, 2024, while fiscal years 2022 and 2021 represented the 52 weeks
ended January 28, 2023, and January 29, 2022, 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. Reimbursements
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.
in excess of expenses
to specific,
received
incurred
related
Digital advertising costs are expensed as incurred, net of reimbursements for cooperative advertising. Digital advertising
includes social media, search engine marketing, such as display ads and keyword search terms, and other various forms
of digital advertising.
2023 Form 10-K Page 41
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
Cooperative advertising reimbursements
Net advertising expense
Share-Based Compensation
2023
2022
2021
$
$
216 $
(35 )
181 $
222 $
(37 )
185 $
223
(29 )
194
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 21, 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. We recognize forfeitures as they occur. 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
("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.
PSU awards granted in 2023 and 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.
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)
Net (loss) income from continuing operations
Net loss attributable to noncontrolling interests
(Loss) income from continuing operations attributable to
Foot Locker, Inc.
Net loss from discontinued operations, net of tax
Net (loss) income attributable to Foot Locker, Inc.
$
$
Weighted-average common shares outstanding
Dilutive effect of potential common shares
Weighted-average common shares outstanding assuming dilution
2023
2022
2021
(330 ) $
—
(330 )
—
(330 ) $
94.2
—
94.2
344 $
1
345
(3 )
342 $
94.3
1.2
95.5
892
1
893
—
893
102.5
1.3
103.8
2023 Form 10-K Page 42
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
1. Summary of Significant Accounting Policies (continued)
(in millions, except per share data)
Basic earnings per share:
(Loss) earnings per share from continuing operations attributable
to Foot Locker, Inc.
Loss per share from discontinued operations, net of tax
Net (loss) earnings per share attributable to Foot Locker, Inc.
Diluted earnings per share:
(Loss) earnings per share from continuing operations attributable
to Foot Locker, Inc.
Net loss per share from discontinued operations, net of tax
Net (loss) earnings per share attributable to Foot Locker, Inc.
$
$
$
$
2023
2022
2021
(3.51 ) $
—
(3.51 ) $
3.66 $
(0.04 )
3.62 $
(3.51 ) $
—
(3.51 ) $
3.62 $
(0.04 )
3.58 $
Anti-dilutive share-based awards excluded from diluted calculation
4.5
2.7
8.72
—
8.72
8.61
—
8.61
1.8
Performance stock units related to our long-term incentive programs of 0.8 million for 2023, 0.4 million for 2022, and 0.4
million for 2021, 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
February 3,
January 28,
January 29,
2024
2023
2022
$
$
297 $
4
33
334 $
536 $
13
33
582 $
804
8
38
850
(1)
Includes cash equivalents of $40 million, $41 million, and $48 million as of February 3, 2024, January 28, 2023, and January 29, 2022, respectively.
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.
2023 Form 10-K Page 43
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
1. Summary of Significant Accounting Policies (continued)
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.
We have a minority investment that is accounted for using the fair value measurement alternative, which is at cost, adjusted
for changes in observable prices minus impairment under the practicability exception.
We evaluate our minority investments for impairment when events or circumstances indicate that the carrying value of the
investment may not be recoverable and an impairment is other than temporary. If an event occurs, we evaluate the
recoverability of our carrying value based on the fair value of the investment. We estimate the fair value of our minority
investments using both a discounted cash flow approach and a market approach, which consider forecasted cash flows
provided by the investee's management, as well as assumptions over discount rates, terminal values, and selected
comparable companies. If an impairment is indicated, we adjust the carrying values of the investment downward, if
necessary, to their estimated fair values.
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
2023 Form 10-K Page 44
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 $63 million and $87 million at February 3, 2024 and January 28, 2023, respectively.
Cloud computing arrangement (software-as-a-service contract) 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.
2023 Form 10-K Page 45
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 fourth quarter of each
fiscal year, or more frequently if impairment indicators arise. 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 2023, 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. The change in the goodwill amount represents foreign currency fluctuations.
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.
Contingent Consideration
As a result of our purchase of atmos in 2021, we recognized contingent consideration, as a component of the purchase
consideration is payable contingent on the achievement of certain sales and EBITDA performance. Contingent
consideration is classified as a liability. 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.
2023 Form 10-K Page 46
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
1. Summary of Significant Accounting Policies (continued)
The contingent consideration liability will be measured at fair value on a recurring basis until the contingency is resolved
at the conclusion of 2025. 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. The contingent consideration was initially
valued at $35 million. During 2023 and 2022, the amount was reduced by $4 million and $31 million, respectively, through
impairment and other in our 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. We
classify cash receipts and payments according to their nature in the statement of cash flows; however, cash flows from a
derivative instrument that is accounted for as a fair value hedge or cash flow hedge are classified in the same category as
the cash flows from the items being hedged.
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.
2023 Form 10-K Page 47
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 $14 million for February 3, 2024, $13 million
for January 28, 2023 and $14 million for January 29, 2022. 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 did not retire shares in 2023. We retired 6,019,212 shares of our common stock held in treasury during 2022 and the
shares were returned to the status of authorized but unissued.
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.
2023 Form 10-K Page 48
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
1. Summary of Significant Accounting Policies (continued)
Recent Accounting Pronouncements Not Yet Adopted
In November 2023, the Financial Accounting Standards Board ("FASB")
issued Accounting Standards Update
("ASU") 2023-07, Improvements to Reportable Segment Disclosures. ASU 2023-07 requires additional disclosures,
including more detailed information about segment expenses about a public entity's reportable segments on an annual and
interim basis. The new segment disclosures are effective for fiscal years beginning after December 15, 2023, and interim
periods within fiscal years beginning after December 15, 2024. Management will review the extent of new disclosures
necessary in the coming quarters, prior to implementation in our 2024 Annual Report on Form 10-K. Other than additional
disclosure, we do not expect a change to our consolidated statements of operations, financial position, or cash flows.
In December 2023, the FASB issued ASU 2023-09, Improvements to Income Tax Disclosures. ASU 2023-09 requires
disaggregated information about a reporting entity's effective tax rate reconciliation and income taxes paid. The new income
tax disclosures are effective for fiscal years beginning after December 15, 2024. Management will review the extent of new
disclosures necessary, prior to implementation in our 2025 Annual Report on Form 10-K. Other than additional disclosure,
we do not expect a change to our consolidated statements of operations, financial position, or cash flows.
Other 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.
2. Revenue
The table below presents sales disaggregated by sales channel as well as licensing revenue earned from our various
licensed 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
2023
2022
2021
$
$
6,751 $
1,403
8,154
14
8,168 $
7,219 $
1,528
8,747
12
8,759 $
7,029
1,929
8,958
10
8,968
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
2023
2022
2021
$
$
5,409 $
2,759
8,168 $
5,981 $
2,778
8,759 $
6,477
2,491
8,968
For the year ended February 3, 2024, 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.
2023 Form 10-K Page 49
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
2. Revenue (continued)
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
EMEA
Foot Locker
atmos
Asia Pacific
Total sales
Contract Liabilities
2023
2022
2021
$
$
3,205 $
1,304
716
640
1
5,866
1,697
26
1,723
387
178
565
8,154 $
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
The table below presents the activity of our gift card liability balance:
($ in millions)
Gift card liability at beginning of year
Redemptions
Breakage recognized in sales
Activations
Gift card liability
February 3,
January 28,
2024
2023
$
$
36 $
(278 )
(6 )
277
29 $
46
(259 )
(17 )
266
36
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 2023 and 2022.
We have integrated all available shopping channels including stores, websites, apps, and social channels. 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.
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, Champs Sports, and WSS, including each of their related e-commerce businesses,
as well as banners we previously operated including Lady Foot Locker, Footaction, and the Eastbay business that included
internet, catalog, and team sales. Our EMEA operating segment includes the results of the following banners in Europe:
Foot Locker and Kids Foot Locker, including each of their related e-commerce businesses, as well as the Sidestep banner
we previously operated. 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.
2023 Form 10-K Page 50
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
3. Segment Information
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 (expense) income, 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 (expense) income, net (3)
(Loss) income from continuing operations before income taxes
$
$
2023
2022
2021
264 $
80
42
142
(9 )
(556 )
(423 ) $
844 $
112
151
581
(15 )
(42 )
524 $
1,171
172
129
870
(14 )
384
1,240
(1) See Note 4, 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. Based upon annual
internal studies of corporate expense, the allocation of such expenses to the operating divisions was increased by $19 million for 2022 and $28
million for 2021, thereby reducing corporate expense. No change was made during 2023.
(3) See Note 5, Other (Expense) Income, net for additional information on these amounts.
Long-lived asset information as of and for the fiscal years ended February 3, 2024, January 28, 2023, and January 29,
2022 is presented in the following table. Long-lived assets reflect property and equipment and lease right-of-use assets.
($ in millions)
Long-Lived Assets:
United States
International
Total long-lived assets
2023
2022
2021
$
$
2,025 $
1,093
3,118 $
2,152 $
1,211
3,363 $
2,285
1,248
3,533
For the year ended February 3, 2024, 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 February 3, 2024.
Depreciation and
Amortization
Capital Expenditures (1)
Total Assets
($ in millions)
Division
Corporate
Total
2023 2022 2021 2023 2022
$
163 $
36
199 $
169 $
39
208 $
163 $
34
197 $
173 $
69
242 $
2021 2023 2022 2021
127 $ 6,256 $ 7,178 $ 7,184
951
209 $ 6,868 $ 7,907 $ 8,135
200 $
85
285 $
612
729
82
$
(1) Represents cash capital expenditures for all years presented.
2023 Form 10-K Page 51
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
4. Impairment and Other
($ in millions)
Impairment of long-lived assets and right-of-use assets
Transformation consulting
Reorganization costs
Other intangible asset impairments
Insurance recovery (losses) related to social unrest
Change in fair value of contingent consideration
Litigation costs
Acquisition and integration costs
Impairment of investments
Lease termination costs
Total impairment and other
2023
2022
2021
30 $
27
17
9
1
(4 )
—
—
—
—
80 $
58 $
42
22
8
—
(31 )
9
4
—
—
112 $
92
—
4
2
(7 )
—
—
24
42
15
172
$
$
For 2023, impairment and other included impairment charges of $30 million from a review of underperforming stores and
accelerated tenancy charges on right-of-use assets for closures of the Sidestep banner, certain Foot Locker Asia stores,
and our U.S. atmos stores. Additionally, we
transformation consulting expense of $27 million and
reorganization costs of $17 million primarily related to severance and the closures of the Sidestep banner, certain Foot
Locker Asia stores, and a North American distribution center. This year also included intangible asset impairment of
$9 million on an atmos tradename, partially offset by a $4 million reduction in the fair value of the atmos contingent
consideration.
incurred
For 2022, impairment and other charges included $58 million of impairment of long-lived assets and right-of-use assets and
accelerated tenancy charges, $42 million of transformation consulting, $22 million of primarily severance costs related to a
reorganization, $9 million of litigation costs related to an employment matter, $8 million of Sidestep tradename asset
impairment, and $4 million of acquisition integration costs related to the acquisitions of WSS and atmos, partially offset by
a $31 million reduction in the fair value of the atmos contingent consideration liability.
For 2021, impairment and other charges included $92 million of impairment of long-lived assets and right-of-use assets
related primarily to the decision to shut down the Footaction banner, $24 million of acquisition and integration costs primarily
represented investment banking and integration consulting fees related to the WSS and atmos acquisitions and $42 million
related to the write-down of certain minority investments due to their underperformance.
5. Other (Expense) Income, net
($ in millions)
Fair value changes in minority investment
Pension settlement charge
Pension and postretirement net benefit (expense) income,
excluding service cost
Share of (losses) earnings related to other minority investments
Minority investment in Retailors, Ltd.
Gain on sale of property
Foot Locker Singapore and Malaysia divestiture
Team Sales divestiture
Other
Total other (expense) income, net
$
$
2023
2022
2021
(478 ) $
(75 )
(8 )
(1 )
—
3
3
—
—
(556 ) $
— $
—
—
1
(61 )
—
—
19
(1 )
(42 ) $
290
—
7
3
77
—
—
—
7
384
2023 Form 10-K Page 52
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
5. Other (Expense) Income, net (continued)
Other (expense) income, 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.
During the fourth quarter of 2023, we recognized a $478 million non-cash impairment charge related to a minority investment
that is accounted for using the fair value measurement alternative, which is cost, adjusted for changes in observable prices
minus impairment under the practicability exception. We estimated the fair value using both a discounted cash flow approach
and a market approach. There was no impairment recognized in prior years based upon a qualitative assessment. The non-
cash gain recorded in 2021 of $290 million was a result of application of the fair value measurement alternative, based on
transactions at observable prices.
As part of our efforts to reduce pension plan obligations, during the fourth quarter of 2023 we transferred approximately
$109 million of our U.S. Qualified pension plan registered assets and liabilities to an insurance company through the
purchase of a group annuity contract, under which an insurance company is required to directly pay and administer pension
payments to certain of our pension plan participants, or their designated beneficiaries. In connection with this transaction,
we recorded a non-cash pretax settlement charge of $75 million. This settlement charge accelerated the recognition of
previously unrecognized losses in "Accumulated Other Comprehensive Loss."
Effective July 1, 2023, the Company sold its Foot Locker Singapore and Malaysia businesses, consisting primarily of
inventory and fixed assets. We received proceeds of $16 million (net of cash of $8 million), resulting in a gain of $3 million.
In addition, we sold a corporate office property in North America for proceeds of $6 million, resulting in a gain of $3 million.
During 2022, we sold our investment in a publicly traded stock, Retailors, Ltd. for a loss of $62 million, offset by $1 million
of dividend income. In the prior year, the changes in this investment generated non-cash gains of $68 million representing
changes in fair value as well as a $9 million discount to the initial public offering price. Also in 2022, we divested our Team
Sales business for a gain of $19 million.
6. Merchandise Inventories
($ in millions)
LIFO inventories
FIFO inventories
Total merchandise inventories
February 3,
2024
January 28,
2023
$
$
956 $
553
1,509 $
1,093
550
1,643
The value of our LIFO inventories as calculated on a LIFO basis, approximates their value as calculated on a FIFO basis.
2023 Form 10-K Page 53
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
7. Other Current Assets
($ in millions)
Net receivables
Other prepaid expenses
Prepaid income taxes
Prepaid rent
Restricted cash
Other
8. 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
February 3,
2024
January 28,
2023
$
$
160 $
89
82
73
4
11
419 $
160
71
62
19
13
17
342
February 3,
2024
January 28,
2023
$
$
3 $
51
1,403
1,457
(988 )
469
65
(18 )
47
996
(582 )
414
930 $
4
53
1,379
1,436
(948 )
488
65
(12 )
53
967
(588 )
379
920
9. Other Intangible Assets, net
($ in millions)
Amortized intangible assets: (1)
Lease acquisition costs
Trademarks/tradenames
Customer lists
February 3, 2024
January 28, 2023
Gross Accum. Net
amort. value
value
Life in Gross
Years (3) value
Accum. Net
amort. value
$
$
91 $
18
20
129 $
(90 ) $
(18 )
(15 )
(123 ) $
1
—
5
6
9.8 $
—
3.0
4.8 $
102 $
18
20
140 $
(100 ) $
(18 )
(9 )
(127 ) $
2
—
11
13
Indefinite life intangible assets: (1)
Trademarks/tradenames (2)
$
$
393
399
$
$
413
426
(1) The change in the ending balances reflect the derecognition of fully amortized leases during 2023 and the effect of foreign currency fluctuations due
primarily to the movements of the Yen in relation to the U.S. dollar.
Includes a non-cash impairment charge of $9 million and $8 million recorded in 2023 and 2022, respectively, see Note 4, Impairment and Other.
(2)
(3) Represents the weighted-average useful life as of February 3, 2024 and excludes those assets that are fully amortized.
2023 Form 10-K Page 54
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
9. Other Intangible Assets, net (continued)
Amortizing intangible assets primarily represent the WSS and atmos customer lists and lease acquisition costs, which are
amounts that are required to secure prime lease locations, primarily in Europe. Amortization expense recorded is as follows:
($ in millions)
Amortization expense
2023
2022
2021
$
7 $
8 $
5
Estimated future amortization expense for finite lived intangibles is as follows:
($ in millions)
2024
2025
10. Other Assets
($ in millions)
Restricted cash
Security deposits
Cross-currency swap contract
Auction rate security
Pension asset
Other
11. 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)
Rent related costs
Customer deposits
Advertising
Loyalty program
Income taxes payable
Other
$
5
1
February 3,
2024
January 28,
2023
$
$
33 $
25
7
6
4
17
92 $
33
29
—
6
4
20
92
February 3,
January 28,
2024
2023
$
$
72 $
11
60
48
33
31
31
31
6
105
428 $
99
72
69
39
35
39
30
29
39
117
568
(1) Accruals for property and equipment are excluded from the Statements of Cash Flows for all years presented.
12. 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").
2023 Form 10-K Page 55
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
12. Revolving Credit Facility (continued)
In 2023 and 2021, we entered into amendments to the 2020 Credit Agreement ("Amended Credit Agreement"). The
amendments provide 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 amendments provide 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 Secured Overnight Financing Rate ("SOFR") plus 1%, 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 2023.
Our obligations under the Amended Credit Agreement are secured by a first priority lien on certain assets, including
inventory and accounts receivable, cash deposits, and certain insurance proceeds. 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 February 3, 2024 were not significant.
During the fourth quarter of 2023, we borrowed varying amounts under our credit facility, with $146 million of aggregate
borrowings and no more than $89 million outstanding at any given time. As of February 3, 2024, we had no outstanding
borrowings under the credit facility.
The unamortized balance of fees paid in connection with the credit facility at February 3, 2024 was $2 million. Interest
expense, including facility fees, related to the revolving credit facility was $3 million for each of 2023, 2022, and 2021.
13. Long-Term Debt and Obligations Under Finance Leases
The components of long-term debt and obligations under finance leases are as follows:
($ in millions)
4% Senior Notes due 2029
Obligations under finance leases
Current portion of debt and obligations under finance leases
February 3,
January 28,
2024
2023
$
$
$
395 $
52
447 $
5
442 $
395
57
452
6
446
Interest expense related to long-term debt and the amortization of the associated debt issuance costs was $17 million,
$17 million, and $12 million for 2023, 2022, and 2021, respectively.
14. Other Liabilities
($ in millions)
Deferred taxes
Pension benefits
Income taxes
Contingent consideration
Other
2023 Form 10-K Page 56
February 3,
2024
January 28,
2023
$
$
140 $
38
31
—
32
241 $
237
21
31
4
35
328
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
15. Leases
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
February 3,
January 28,
2024
2023
$
$
$
2,188 $
2,443
492 $
2,004
2,496 $
544
2,230
2,774
February 3,
January 28,
2024
2023
$
$
$
47 $
5 $
47
52 $
53
6
51
57
Other information related to our leases as of February 3, 2024 and January 28, 2023 consisted of the following:
Weighted-average remaining lease term (years):
Operating leases
Finance leases
Weighted-average discount rate:
Operating leases
Finance leases
February 3, January 28,
2024
2023
6.5
14.5
5.5 %
4.3 %
6.5
14.7
5.0 %
4.3 %
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.
2023 Form 10-K Page 57
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
15. Leases (continued)
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 2023, 2022, and 2021 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 February 3, 2024 are as follows:
($ in millions)
2024
2025
2026
2027
2028
Thereafter
Total lease payments
Less: Interest
Total lease liabilities
2023
2022
2021
613 $
304
48
(1 )
964
6
2
8
972 $
657 $
308
19
(1 )
983
6
3
9
992 $
653
331
23
(1 )
1,006
4
1
5
1,011
Operating
leases
Finance
leases
Total
598 $
523
431
351
285
797
2,985
489
2,496 $
8 $
6
4
4
4
45
71
19
52 $
606
529
435
355
289
842
3,056
508
2,548
$
$
$
$
As of February 3, 2024, we signed operating leases that have not yet commenced and the total future undiscounted lease
payments under these leases are $227 million. This amount reflected leases for retail stores and two new distribution
centers to support WSS and our European businesses.
16. Accumulated Other Comprehensive Loss
($ in millions)
Foreign currency translation adjustments
Hedge contracts
Unrecognized pension cost and postretirement benefit
2023
2022
2021
$
$
(173 ) $
(2 )
(191 )
(366 ) $
(148 ) $
(3 )
(241 )
(392 ) $
(107 )
—
(236 )
(343 )
2023 Form 10-K Page 58
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
16. Accumulated Other Comprehensive Loss (continued)
The changes in AOCL for the year ended February 3, 2024 were as follows:
($ in millions)
Balance as of January 28, 2023
Foreign
Currency
Translation
Adjustments
Hedge
Contracts
Items Related
to Pension
and
Postretirement
Benefits
Total
$
(148 ) $
(3 ) $
(241 ) $
(392 )
OCI before reclassification
Reclassification of hedges, net of tax
Amortization of pension actuarial loss, net of tax
Pension and postretirement remeasurement, net of
tax
Pension settlement charge, net of tax
Other comprehensive income
Balance as of February 3, 2024
$
(25 )
—
—
—
—
(25 )
(173 ) $
10
(9 )
—
—
—
1
(2 ) $
—
—
7
(13 )
56
50
(191 ) $
Reclassifications to income from AOCL for the year ended February 3, 2024 were as follows:
($ in millions)
Reclassification of hedges:
Cross-currency swap
Income tax
Reclassification of hedges, net of tax
Reclassification of actuarial loss:
Amortization of pension and postretirement benefits
Settlement charge
Total before tax
Income tax
Reclassification of actuarial loss, net of tax
Total, net of tax
17. Income Taxes
$
$
$
$
$
(15 )
(9 )
7
(13 )
56
26
(366 )
(9 )
—
(9 )
10
75
85
(22 )
63
54
The domestic and international components of pre-tax (loss) income are as follows:
($ in millions)
Domestic
International
Total pre-tax (loss) income
2023
2022
2021
$
$
(381 ) $
(42 )
(423 ) $
440 $
84
524 $
1,244
(4 )
1,240
Domestic pre-tax (loss) 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.
2023 Form 10-K Page 59
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
17. Income Taxes (continued)
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
2023
2022
2021
$
$
8 $
2
33
43
(88 )
(24 )
(24 )
(136 )
(93 ) $
64 $
27
68
159
23
4
(6 )
21
180 $
192
66
16
274
49
15
10
74
348
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 February 3, 2024, we had accumulated undistributed foreign earnings of $511 million. This amount consists of historical
earnings that were previously taxed under the Tax Act and post-Tax Act earnings. Investments in our foreign subsidiaries,
including working capital, will continue to be permanently reinvested. Cash balances in excess of working capital needs are
considered to be available for repatriation to the United States and foreign withholding taxes will be accrued as necessary
on these amounts.
We have not recorded a deferred tax liability for the difference between the financial statement carrying amount and the tax
basis of our investments in foreign subsidiaries. The determination of any unrecorded deferred tax liability on this amount
is not practicable due to the uncertainty of how these investments would be recovered.
A reconciliation of the significant differences between the federal statutory income tax rate and the effective income tax rate
on pre-tax (loss) income is as follows:
Federal statutory income tax rate
Increase in valuation allowance
State and local income taxes, net of federal tax benefit
International income taxed at varying rates
Foreign tax credits
Domestic/foreign tax settlements
Federal tax credits
Foreign deferred adjustment
Other, net
Effective income tax rate
2023
2022
2021
21.0 %
(0.6 )
5.4
(4.4 )
1.4
1.0
0.5
(2.0 )
(0.3 )
22.0 %
21.0 %
2.6
5.0
8.4
(3.6 )
(0.5 )
(0.4 )
—
1.8
34.3 %
21.0 %
0.7
5.4
2.4
(1.4 )
(0.3 )
(0.1 )
—
0.4
28.1 %
2023 Form 10-K Page 60
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
17. Income Taxes (continued)
Deferred income taxes are provided for the effects of temporary differences between the amounts of assets and liabilities
recognized for financial reporting purposes and the amounts recognized for income tax purposes. Items that give rise to
significant portions of our deferred tax assets are as follows:
($ in millions)
Deferred tax assets:
Tax loss/credit carryforwards and capital loss
Employee benefits
Operating leases - liabilities
Other
Total deferred tax assets
Valuation allowance
Total deferred tax assets, net
Items that give rise to significant portions of our deferred tax liabilities are as follows:
($ in millions)
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
February 3,
2024
January 28,
2023
$
$
$
166 $
32
668
62
928 $
(95 )
833 $
123
42
725
61
951
(93 )
858
February 3,
2024
January 28,
2023
$
$
$
$
$
97 $
611
118
—
24
9
859 $
(26 ) $
114 $
(140 )
(26 ) $
87
667
123
115
6
7
1,005
(147 )
90
(237 )
(147 )
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 February 3, 2024, we have a valuation allowance of $95 million to reduce our deferred tax assets to an amount that
is more likely than not to be realized. A valuation allowance of $73 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 February 3, 2024, a valuation allowance of $20 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 capital gains in the U.S. or Canada, a valuation allowance of $2 million was
established to offset deferred tax assets on capital losses.
2023 Form 10-K Page 61
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
17. Income Taxes (continued)
At February 3, 2024, 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 $132 million, a portion of which will expire between 2024 and
2038 and a portion of which will never expire. The international operating loss carryforwards include unrecognized tax
benefits. The Canadian capital loss of $1 million will carry forward indefinitely and the U.S. capital losses of $10 million can
be carried back 3 years and forward for 5 years after realization. We also have foreign tax credit carryforwards with a
potential tax benefit of $20 million that will expire between 2029 and 2033.
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 2022 U.S. Federal income tax filing
was concluded in February 2024. 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 February 3, 2024, we had $50 million of gross unrecognized tax benefits, of which $43 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. We recognized interest income of $2 million in 2023 and interest expense of $6 million in
2022, the amount in 2021 was not significant.
The following table summarizes the activity related to unrecognized tax benefits:
($ 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
2023
2022
2021
$
$
52 $
—
5
2
—
(5 )
(4 )
50 $
41 $
(1 )
9
7
—
—
(4 )
52 $
47
(2 )
3
2
(3 )
(1 )
(5 )
41
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 2024 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.
18. 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.
2023 Form 10-K Page 62
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
18. Financial Instruments and Risk Management (continued)
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. In 2024, our business in the United Kingdom plans to begin purchasing merchandise inventory in its local currency.
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 February 3, 2024 and January 28, 2023, the cross-currency swap had a fair value of $7 million included in other assets
and $3 million liability included in other liabilities, respectively. 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 February 3, 2024 and
January 28, 2023, there was $2 million and $3 million in AOCL, net of tax, related to the cross-currency swap, respectively.
In addition, we recognize swap interest income based on the differential in fixed interest rates per the contract.
During 2023 and 2022, we recorded $3 million and $2 million of income in interest expense, net, respectively. Refer to Note
16 for further information regarding amounts recorded in AOCL.
Derivative Holdings Not Designated as Hedges
We enter into certain derivative contracts that are not designated as hedges, such as foreign exchange forward contracts
and currency option contracts. These derivative contracts are used to manage certain costs of foreign currency-
denominated merchandise purchases, intercompany transactions, and the effect of fluctuating foreign exchange rates on
the reporting of foreign currency-denominated earnings. Changes in the fair value of derivative holdings not designated as
hedges, as well as realized gains and premiums paid, are recorded in earnings immediately within SG&A or Other (expense)
income, net, depending on the type of transaction. The aggregate amount recognized for these contracts was not significant
for any of the periods presented.
2023 Form 10-K Page 63
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
18. Financial Instruments and Risk Management (continued)
Fair Value of Derivative Contracts
The following represents the fair value of our derivative contracts.
($ in millions)
Hedging Instruments:
Foreign exchange forward contracts
Cross-currency swap contract
Cross-currency swap contract
Business Risk
Balance Sheet
Caption
February 3,
January 28,
2024
2023
Current assets
Non-current assets
Non-current liabilities
$
$
$
1 $
7 $
— $
—
—
3
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 26 countries and purchased 84%
and 86% of our merchandise from our top 5 suppliers in 2023 and 2022, respectively. In both 2023 and 2022, we purchased
65% of our athletic merchandise from one major supplier, Nike, Inc. ("Nike").
Included in our Consolidated Balance Sheet at February 3, 2024, are the net assets of our European operations, which total
$537 million and are located in 20 countries, 11 of which have adopted the euro as their functional currency.
19. 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.
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 (expense) 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.
2023 Form 10-K Page 64
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
19. Fair Value Measurements (continued)
Assets and Liabilities Measured at Fair Value on a Recurring Basis
($ in millions)
Level 1
February 3, 2024
Level 2
Level 3
Level 1
January 28, 2023
Level 2
Level 3
Assets:
Available-for-sale security
Foreign exchange forward
contracts
Cross-currency swap contract
Total assets
Liabilities:
Contingent consideration
Cross-currency swap contract
Total liabilities
$
$
$
$
— $
—
—
— $
— $
—
— $
6 $
— $
— $
6 $
1
7
14 $
— $
—
— $
—
—
— $
— $
—
— $
—
—
— $
— $
—
— $
—
—
6 $
— $
3
3 $
—
—
—
—
4
—
4
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.
We have a minority investment that is accounted for using the fair value measurement alternative, which is at cost adjusted
for changes in observable prices minus impairment under the practicability exception. During 2023, we recognized
a $478 million non-cash impairment charge related to our investment, thereby reducing the carrying value to $134 million.
We estimated the fair value using both a discounted cash flow approach and a market approach, which consider forecasted
cash flows provided by the investee's management, as well as assumptions over discount rates, terminal values, and
selected comparable companies.
As of February 3, 2024, cumulative impairments on our portfolio of minority investments, including the impairment of
$478 million recorded during 2023, were $531 million.
Long-Term Debt
The fair value of long-term debt is determined by using model-derived valuations in which all significant inputs or significant
value-drivers are observable in active markets and therefore are classified as Level 2.
($ in millions)
Carrying value (1)
Fair value
February 3,
2024
January 28,
2023
$
$
395 $
337 $
395
338
(1) The carrying value of debt for both periods reflected $5 million of issuer's discount and costs related to 4% Notes due in 2029.
The carrying values of cash and cash equivalents, restricted cash, and other current receivables and payables approximate
their fair value.
2023 Form 10-K Page 65
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
20. Retirement Plans and Other Benefits
Pension and Other Postretirement Plans
We have defined benefit pension plans covering certain of our North American employees. In May 2019, the U.S. qualified
pension plan was amended such that all employees who were not participants in the plan as of December 31, 2019, will not
become participants after such date. All benefit accruals were frozen as of December 31, 2019 for all plan participants with
less than eleven years of service as of that date. For participants with more than eleven years of service as of
December 31, 2019, benefit accruals were frozen as of December 31, 2022. Participants continue to accrue interest at a
fixed rate of 6% per year.
We also sponsor postretirement medical and life insurance plans, which are available to most of our retired U.S. employees.
These plans are contributory and are not funded. These plans are not significant.
The following tables set forth the plans' changes in benefit obligations and plan assets, funded status, and amounts
recognized in the Consolidated Balance Sheets related to our pension plans:
($ in millions)
Change in benefit obligation:
Benefit obligation at beginning of year
Service cost
Interest cost
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
Settlement
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
2023
2022
$
$
$
$
$
$
$
566 $
6
27
(6 )
—
(35 )
(127 )
431 $
546 $
4
3
—
(35 )
(124 )
394 $
(37 ) $
4 $
(3 )
(38 )
(37 ) $
674
14
21
(93 )
(2 )
(48 )
—
566
676
(83 )
3
(2 )
(48 )
—
546
(20 )
4
(3 )
(21 )
(20 )
The Canadian qualified pension plan's assets exceeded its accumulated benefit obligation for both 2023 and 2022. 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. qualified and non-qualified plans.
($ in millions)
Projected benefit obligation
Accumulated benefit obligation
Fair value of plan assets
2023 Form 10-K Page 66
$
2023
2022
400 $
400
359
533
533
509
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
20. Retirement Plans and Other Benefits (continued)
The following table provides the amounts recognized in AOCL on a pre-tax basis related to the pension plans:
($ in millions)
Net actuarial loss at beginning of year
Amortization of net loss
Loss arising during the year
Settlement charge
Net actuarial loss at end of year
$
$
329
(11 )
19
(75 )
262
The actuarial losses recognized during 2023 were primarily driven by lower actual return as compared with the expected
return on plan assets and updated assumptions based on recent experience, 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.
During the fourth quarter of 2023, as part of our efforts to reduce pension plan obligations, we transferred approximately
$109 million of our U.S. Qualified pension plan registered assets and liabilities to an insurance company through the
purchase of a group annuity contract, under which an insurance company is required to directly pay and administer pension
payments to certain of our pension plan participants, or their designated beneficiaries. In connection with this transaction,
we recorded a non-cash pretax settlement charge of $75 million. The settlement charge was calculated based on the total
of the lump sum payments and the amount paid to the insurance company. This settlement charge accelerated the
recognition of previously unrecognized losses in AOCL.
The following weighted-average assumptions were used to determine the benefit obligations under the plans:
Discount rate
Rate of compensation increase (1)
2023
2022
5.2 %
3.0 %
5.0 %
3.6 %
(1) The rate of compensation increase for 2023 relates only to Canadian pension plan, as the other plans are frozen.
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 $513 million and $618 million for 2023 and 2022, respectively.
Assumptions used in the calculation of net benefit cost include the discount rate selected and disclosed at the end of the
previous year, as well as other assumptions detailed in the table below:
Discount rate
Rate of compensation increase (1)
Expected long-term rate of return on assets
2023
2022
2021
5.0 %
3.0 %
5.6 %
3.2 %
3.6 %
4.8 %
2.5 %
3.6 %
5.3 %
(1) The rate of compensation increase for 2023 relates only to Canadian pension plan, as the other plans are frozen.
The expected long-term rate of return on invested plan assets is based on the plans' weighted-average target asset
allocation, as well as historical and future expected performance of those assets. The target asset allocation is selected to
obtain an investment return that is sufficient to cover the expected benefit payments and to reduce the variability of our
future contributions.
2023 Form 10-K Page 67
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
20. Retirement Plans and Other Benefits (continued)
The following are the components of net periodic pension benefit cost. Service cost is recognized as a component of SG&A
and the remaining pension and postretirement expense components are recognized as part of Other (expense) income,
net.
($ in millions)
Service cost
Interest cost
Expected return on plan assets
Amortization of net loss
Settlement charge
Net benefit expense
2023
2022
2021
$
$
6 $
27
(29 )
11
75
90 $
14 $
21
(31 )
10
—
14 $
16
18
(35 )
10
—
9
The mortality assumption used to value the 2023 and 2022 U.S. pension obligations was the Pri-2012 mortality table with
generational projection using MP-2021 for both males and females. For years ended February 3, 2024 and
January 28, 2023, 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
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 2023 and 2022.
2023 Form 10-K Page 68
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
20. Retirement Plans and Other Benefits (continued)
The fair values of the U.S. pension plan assets at February 3, 2024 and January 28, 2023 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
$
1 $
—
—
—
—
11
7
19 $
$
— $
3
91
241
5
—
—
340 $
2023 Total 2022 Total
2
1 $
1
3
— $
—
—
—
—
—
—
— $
91
241
5
11
7
359 $
130
341
8
17
10
509
The fair values of the Canadian pension plan assets at February 3, 2024 and January 28, 2023 were as follows:
($ in millions)
Cash equivalents
Equity securities:
Canadian and international
Fixed-income securities:
Cash matched bonds
Total assets at fair value
Contributions and Expected Payments
Level 1
$
— $
Level 2
Level 3
7 $
2023 Total 2022 Total
6
7 $
— $
3
—
—
$
—
3 $
25
32 $
—
— $
3
25
35 $
3
28
37
We were not required to make any contributions to the U.S. qualified pension plan in 2023 and 2022. We do not anticipate
making any contributions to the U.S. qualified pension plan in 2024 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 $3 million during 2023 and 2022 related to our unfunded non-qualified pension plans.
Estimated future benefit payments for each of the next five years and the five years thereafter are as follows:
($ in millions)
2024
2025
2026
2027
2028
2029 - 2033
Savings Plans
$
46
34
33
32
32
145
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.
2023 Form 10-K Page 69
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
21. Share-Based Compensation
Stock Awards
Under our amended and restated 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. Effective May 17, 2023, the 2007 Stock Plan was amended and restated to
increase the number of shares of common stock reserved for all awards to 14 million shares. As of February 3, 2024, there
were 12,598,147 shares available for issuance under this plan.
During 2022, the Company granted options and other awards to its President and Chief Executive Officer, Mary N. Dillon.
These awards were granted outside of the 2007 Stock Incentive Plan as employment inducement awards and did not require
shareholder approval under the rules of the New York Stock Exchange or otherwise. Shares available for future grant under
this plan of 408,636 are reserved for the sole purpose to issue shares pursuant to her employment inducement awards.
Employees Stock Purchase Plan
On May 17, 2023, the Company adopted the 2023 Foot Locker Employee Stock Purchase Plan ("2023 ESPP"), whose
terms are substantially the same as the 2013 Foot Locker Employee Stock Purchase Plan ("2013 ESPP"). Under our 2023
ESPP, participating employees are able to contribute up to 10% of their annual compensation, not to exceed $25,000 in
any plan year, through payroll deductions to acquire shares of our common stock at 85% of the lower market price on
specified dates in each plan year. Under the 2023 ESPP, participating employees are now permitted to purchase shares in
June and December of each year. Of the 3,000,000 shares of common stock authorized under the 2023 ESPP, there
were 2,785,161 shares available for purchase as of February 3, 2024. No further shares may be issued under the 2013
ESPP.
Share-Based Compensation Expense
($ in millions)
Options and employee stock purchase plan
Restricted stock units and performance stock units
Total share-based compensation expense
Tax benefit recognized
2023
2022
2021
$
$
$
4 $
9
13 $
2 $
5 $
26
31 $
3 $
6
23
29
3
Option and Employee Stock Purchase Plan Valuation Model and Assumptions
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. Effective with the
adoption of the 2023 ESPP, we provide two offering periods.
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.
2023 Form 10-K Page 70
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
21. Share-Based Compensation (continued)
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 compensation expense for our options and stock purchase
plan:
Stock Option Plans
2022
2021
2023
Stock Purchase Plan
2022
2021
2023
Weighted-average risk free rate
of interest
Expected volatility
Weighted-average expected
award life (in years)
Dividend yield
Weighted-average fair value
3.6 %
50 %
2.5 %
50 %
0.9 %
47 %
3.8 %
40 %
1.0 %
40 %
5.5
3.7 %
13.53 $
5.5
3.8 %
10.80 $
5.5
1.5 %
20.22 $
0.5
3.7 %
5.32 $
1.0
2.6 %
18.46 $
$
0.1 %
45 %
1.0
4.0 %
9.61
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 February 3, 2024
Options exercisable at February 3, 2024
Weighted-
Average
Remaining
Contractual
Life
(in years)
Weighted-
Average
Exercise Price
(per share)
$
3.3 $
2.3 $
47.85
37.72
23.93
48.08
48.23
50.25
Number of
Shares
(in thousands)
3,256
341
(194 )
(665 )
2,738
2,321
The total fair value of options vested was $5 million, $4 million, and $4 million, during 2023, 2022, and 2021, respectively.
During the years ended February 3, 2024, January 28, 2023, and January 29, 2022, we received $5 million, $6 million,
and $10 million, respectively, in cash from option exercises and recognized a related tax benefit of an insignificant amount
in 2023 and 2022, and $2 million in 2021.
The total intrinsic value of options exercised (the difference between the market price of the Company's common stock on
the exercise date and the price paid by the optionee to exercise the option) is presented below:
($ in millions)
Exercised
2023
2022
2021
$
3 $
1 $
8
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
2023
$
$
4
3
2023 Form 10-K Page 71
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
21. Share-Based Compensation (continued)
As of February 3, 2024, there was $2 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 February 3, 2024:
Range of Exercise
Prices
$21.60 - $30.98
$36.49 - $46.64
$53.61 - $58.94
$62.02 - $72.83
Number
Outstanding
Options Exercisable
Options Outstanding
Weighted-
Average
Weighted-
Remaining Average
Contractual Exercise Number
Weighted-
Average
Exercise
Price
Price
(in thousands, except prices per share and contractual life)
Exercisable
Life
688
682
400
968
2,738
4.1 $
5.2
2.6
1.6
3.3 $
24.77
41.71
56.58
66.02
48.23
593 $
369
391
968
2,321 $
24.07
44.19
56.65
66.02
50.25
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 2023 and 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.
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 during 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:
Nonvested at beginning of year
Granted
Vested
Performance adjustment (1)
Forfeited
Nonvested at February 3, 2024
Aggregate value ($ in millions)
Weighted-
Average
Remaining
Contractual
Life
(in years)
Weighted-
Average Grant
Date Fair
Value
(per share)
$
1.2 $
37.58
35.75
34.08
39.02
38.81
Number of
Shares
(in thousands)
1,992
1,204
(689 )
(866 )
(263 )
1,378
$
53
(1) This represents adjustments made to PSU awards reflecting changes in estimates based upon our current performance against predefined financial
targets.
2023 Form 10-K Page 72
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
21. Share-Based Compensation (continued)
The total fair value of awards vested was $23 million, $6 million, and $23 million, for 2023, 2022, and 2021, respectively. At
February 3, 2024, there was $19 million of total unrecognized compensation cost related to nonvested awards.
22. Legal Proceedings
Legal proceedings pending against the Company or its consolidated subsidiaries consist of ordinary, routine litigation, or
pre-litigation demands, 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, environmental, and employment-related claims. Additionally, the Company is a defendant in a
consolidated class action 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.
2023 Form 10-K Page 73
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 February 3, 2024.
Based on that evaluation, the Company's CEO and CFO have concluded that the Company's disclosure controls and
procedures were effective as of February 3, 2024.
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.
(b) Remediation of Previously Disclosed Material Weakness in Internal Controls over Financial Reporting
We previously identified and disclosed in our 2022 Annual Report on Form 10-K, a material weakness in our internal
control over financial reporting related to certain 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 were dependent on the completeness and accuracy of information derived from the affected information
systems were also ineffective. In accordance with our internal control compliance program, a material weakness is
not considered remediated until the remediation processes have been operational for a sufficient period of time and
successfully tested. Throughout the year ended February 3, 2024, we undertook remediation measures. Our
remediation efforts included (i) designing and implementing controls related to deprovisioning, privileged access, and
user access reviews, (ii) developing an enhanced risk assessment process to evaluate logical access, and (iii)
improving the existing training program associated with control design and implementation. In light of this material
weakness, management performed additional procedures over our affected IT environment and personnel to
determine if any unauthorized action had been taken and found no such instances. As of February 3, 2024,
management completed the implementation of our remediation efforts of the material weakness.
(c) 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 effective as of
February 3, 2024.
2023 Form 10-K Page 74
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.
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 attestation report on the Company's
effectiveness of internal control over financial reporting, which is included in Item 9A(d).
(d) Changes in Internal Control over Financial Reporting
Other than execution of the material weakness remediation activities described above, 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 February 3, 2024, that have materially affected, or are reasonably likely to materially affect, our
internal control over financial reporting.
(e) Report of Independent Registered Public Accounting Firm on Internal Control Over Financial Reporting
The report appears on the following page.
2023 Form 10-K Page 75
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
February 3, 2024, based on criteria established in Internal Control – Integrated Framework (2013) issued by the Committee
of Sponsoring Organizations of the Treadway Commission. In our opinion, the Company maintained, in all material respects,
effective internal control over financial reporting as of February 3, 2024, 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 February 3, 2024 and January 28, 2023, the related
consolidated statements of operations, comprehensive (loss) income, changes in shareholders' equity, and cash flows for
each of the years in the three-year period ended February 3, 2024, and the related notes (collectively, the consolidated
financial statements), and our report dated March 28, 2024 expressed an unqualified opinion 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 28, 2024
2023 Form 10-K Page 76
Item 9B. Other Information
During the quarter ended February 3, 2024, no director or officer (as defined in Rule 16a-1(f) promulgated under the
Exchange Act) of the Company adopted or terminated a "Rule 10b5-1 trading arrangement" or a "non-Rule 10b5-1 trading
arrangement" (as each term is defined in Item 408 of Regulation S-K).
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 Governance 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
3" 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 3" section of the Proxy Statement and is incorporated by reference.
2023 Form 10-K Page 77
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 79 through 82.
Item 16. Form 10-K Summary
None.
2023 Form 10-K Page 78
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 (a) July 20, 1989, (b) July 24, 1990, (c) July 9, 1997
(incorporated herein by reference to 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
Bylaws of the Registrant (incorporated herein by reference to Exhibit 3.1 to the Current Report on Form
8-K dated September 22, 2023 filed on September 22, 2023).
4.1*
4.2
4.3
10.1
10.2
10.3
10.4
10.5
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).
Amendment No. 3 to Credit Agreement, dated as of April 21, 2023, among the Registrant, the guarantors
party thereto, the lenders party thereto, and Wells Fargo, National Association, as administrative and
collateral 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 April 25, 2023 filed on April 25, 2023).
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), as amended by 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).
2023 Form 10-K Page 79
Exhibit No.
10.6†
Description
Foot Locker 2007 Stock Incentive Plan, amended and restated as of March 22, 2023 (incorporated herein
by reference to Exhibit 10.1 on Form S-8 (Registration No.333-272007), filed on May 17, 2023 (the "2023
Form S-8")).
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†
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).
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).
2023 Foot Locker Employee Stock Purchase Plan (incorporated herein by reference to Exhibit 10.2 on the
2023 Form S-8).
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).
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")), as amended by 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).
2023 Form 10-K Page 80
Exhibit No.
10.22†
10.23†
10.24†
10.25†
10.26†
10.27†
10.28†
10.29†
10.30†
Description
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), as amended by 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), and 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).
Directors' Retirement Plan, as amended (incorporated herein by reference to Exhibit 10(k) to the 8-B
Registration Statement), as amended by 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).
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).
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).
10.31†
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).
10.32†*
Form of Senior Executive Offer Letter (including specific contractual obligations).
10.33†*
Form of Indemnification Agreement, as amended.
19*
Policy Prohibiting Insider Trading.
21*
Subsidiaries of the Registrant.
23*
Consent of Independent Registered Public Accounting Firm.
2023 Form 10-K Page 81
Exhibit No.
31.1*
Certification of Chief Executive Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
Description
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.
97*
Incentive Compensation Recoupment Policy.
101.INS*
Inline XBRL Instance Document.
101.SCH*
Inline XBRL Taxonomy Extension Schema.
101.CAL*
Inline XBRL Taxonomy Extension Calculation Linkbase.
101.DEF*
Inline XBRL Taxonomy Extension Definition Linkbase.
101.LAB*
Inline XBRL Taxonomy Extension Label Linkbase.
101.PRE*
Inline XBRL Taxonomy Extension Presentation Linkbase.
104*
Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101).
†
*
**
Management contract or compensatory plan or arrangement
Filed herewith
Furnished herewith
2023 Form 10-K Page 82
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 28, 2024
Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below on March 28, 2024,
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/ MICHAEL BAUGHN
Michael Baughn
Executive Vice President and
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
2023 Form 10-K Page 83
(THIS PAGE INTENTIONALLY LEFT BLANK)
FOOT LOCKER, INC. SUBSIDIARIES (1)
Exhibit 21
The following is a list of subsidiaries of Foot Locker, Inc. as of February 3, 2024, omitting some subsidiaries, which,
considered in the aggregate, would not constitute a significant subsidiary.
Name
Foot Locker Australia, Inc.
Foot Locker Australia Holdings, LLC
Foot Locker New Zealand, Inc.
Foot Locker New Zealand Holdings, LLC
Team Edition Apparel, Inc.
FL Canada Holdings, Inc.
Foot Locker Sourcing, Inc.
Foot Locker Services Pte. Ltd.
FLE Holdings Coöperatief U.A.
FLE Logistics B.V.
Foot Locker Greece Athletic Goods Ltd.
FL Finance (Europe) Limited
Foot Locker Retail Ireland Limited
Foot Locker Europe B.V.
FL Ventures B.V.
Foot Locker Poland Spólka z ograniczonq odpowiedzialnościq
Foot Locker Hungary Kft
Foot Locker Romania SRL
Foot Locker Canada Co.
Foot Locker Norway B.V.
Foot Locker Denmark B.V.
Runners Point B.V. & Co. KG
RPG.com GmbH
Sidestep GmbH
Runners Point Administration GmbH
Runners Point Switzerland LLC
Foot Locker Germany Holdings GmbH
Foot Locker Germany GmbH & Co. KG
Foot Locker Germany Administration GmbH
Foot Locker France S.A.S.
Foot Locker Austria GmbH
Foot Locker Belgium B.V.
Foot Locker Czech Republic s.r.o.
Foot Locker - Artigos Desportivos e de Tempos Livres Lda.
Foot Locker Europe.com B.V.
Foot Locker Scandinavia B.V.
Foot Locker Switzerland LLC
Foot Locker U.K. Limited
Freedom Sportsline Limited
Jurisdiction of Incorporation
Virginia
Virginia
Virginia
Virginia
Florida
Delaware
Delaware
Singapore
Netherlands
Netherlands
Greece
Ireland
Ireland
Netherlands
Netherlands
Poland
Hungary
Romania
Canada
Netherlands
Netherlands
Germany
Germany
Germany
Germany
Switzerland
Germany
Germany
Germany
France
Austria
Belgium
Czech Republic
Portugal
Netherlands
Netherlands
Switzerland
U.K.
U.K.
Name
Foot Locker Italy S.r.l.
Foot Locker Netherlands B.V.
Foot Locker Spain S.L.U.
Foot Locker Asia Pte. Ltd.
Foot Locker Japan GK
Foot Locker Korea LLC
Foot Locker Macau, Limited
Foot Locker Taiwan Ltd.
Hommyo Limited
atmos Korea Inc.
Foot Locker Hong Kong Limited
Foot Locker Specialty, Inc.
Foot Locker Retail, Inc.
FL atmos US, LLC
FL atmos US Holdco, LLC
Foot Locker atmos Japan G.K.
Eurostar, Inc.
Foot Locker Card Services LLC
Foot Locker Stores, Inc.
Foot Locker Corporate Services, Inc.
Jurisdiction of Incorporation
Italy
Netherlands
Spain
Singapore
Japan
South Korea
Macau
Taiwan
Hong Kong
Korea
Hong Kong
New York
New York
New York
New York
Japan
Delaware
Virginia
Delaware
Delaware
(1) Each subsidiary company is 100% owned, directly or indirectly, by Foot Locker, Inc. All subsidiaries are consolidated
with Foot Locker, Inc. for accounting and financial reporting purposes.
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 28, 2024, 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
Form S-8 No. 333-272007
/s/ KPMG LLP
New York, New York
March 28, 2024
Exhibit 31.1
I, Mary N. Dillon, certify that:
CERTIFICATION
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 28, 2024
/s/ MARY N. DILLON
Chief Executive Officer
Exhibit 31.2
I, Michael Baughn, certify that:
CERTIFICATION
1.
2.
3.
4.
I have reviewed this Annual Report on Form 10-K of Foot Locker, Inc. (the "Registrant");
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;
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;
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)
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;
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 28, 2024
/s/ MICHAEL BAUGHN
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
February 3, 2024, 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 Michael Baughn, as 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 28, 2024
/s/ MARY N. DILLON
Mary N. Dillon
Chief Executive Officer
/s/ MICHAEL BAUGHN
Michael Baughn
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.
PATTERN - BLACKPATTERN - BLACK PATTERN - BLACKPATTERN - BLACK BOARD OF DIRECTORS
EXECUTIVE LEADERSHIP TEAM
CORPORATE INFORMATION
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
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
its affiliates.
Investor Information
Investor inquiries should be directed to
the Investor Relations Department at
(212) 720-4600.
Mary N. Dillon
President and
Chief Executive Officer
Michael A. Baughn
Executive Vice President and
Chief Financial Officer
Franklin R. Bracken
Executive Vice President and
Chief Commercial Officer
Cindy Carlisle
Executive Vice President and
Chief Human Resources Officer
Jennifer L. Kraft
Executive Vice President and
General Counsel
Elliott D. Rodgers
Executive Vice President and
Chief Operations Officer
Kristin Bauer
Senior Vice President and
Chief Supply Chain Officer
Adrian Butler
Senior Vice President and
Chief Technology Officer
Robert Higginbotham
Senior Vice President,
Investor Relations,
Corporate Finance and Treasurer
Bryon Milburn
Senior Vice President and
Chief Merchandising Officer
Peter Scaturro
Senior Vice President,
Strategic Planning and Growth
Kim Waldmann
Senior Vice President and
Chief Customer Officer
Mary N. Dillon 1
President and
Chief Executive Officer
Dona D. Young 1, 2, 4
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 and Chief Executive Officer
Porosome Therapeutics, Inc.;
President
Marmol & Associates
Darlene Nicosia 2, 3
Chief Executive Officer
Hearthside Food Solutions LLC
Steven Oakland 1, 4, 5
Chairman, Chief Executive Officer
and President
TreeHouse Foods, Inc.
Ulice Payne, Jr. 1, 2, 4
President
Cyber-Athletix, LLC;
President and Managing Member
Addison-Clifton, LLC
Kimberly K. Underhill 1, 3, 4
Senior Advisor
Boston Consulting Group
Tristan Walker 4, 5
Managing Member
Heirloom Management Company, LLC
1 Member of Executive Committee
2 Member of Audit Committee
3 Member of HCC Committee
4 Member of NCR Committee
5 Member of Technology Committee
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