10-Q

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

______________________________________

FORM 10-Q

(Mark One)

☑ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended: October 28, 2017

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 Number: 1-10299

______________________________________

(Exact name of registrant as specified in its charter)

______________________________________

New York	13-3513936
(State or other jurisdiction of incorporation or organization)	(I.R.S. Employer Identification No.)

330 West 34th Street, New York, New York 10001

(Address of principal executive offices, Zip Code)

(212-720-3700)

(Registrant’s telephone number, including area code)

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 and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted 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 and post such files). Yes☑No☐
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a 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☑	Accelerated filer☐	Non-accelerated filer☐	Smaller reporting company☐
Emerging growth 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 provided pursuant to Section 13(a) of the Exchange Act.☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).   Yes☐No☑

Number of shares of Common Stock outstanding as of November 24,  2017: 121,205,589

FOOT LOCKER, INC.

TABLE OF CONTENTS

			Page
PART I	FINANCIAL INFORMATION
	Item 1.	Financial Statements
		Condensed Consolidated Balance Sheets	1
		Condensed Consolidated Statements of Operations	2
		Condensed Consolidated Statements of Comprehensive Income	3
		Condensed Consolidated Statements of Cash Flows	4
		Notes to Condensed Consolidated Financial Statements	5
	Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	17
	Item 4.	Controls and Procedures	26
PART II	OTHER INFORMATION
	Item 1.	Legal Proceedings	26
	Item 1A.	Risk Factors	26
	Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	26
	Item 6.	Exhibits	26
SIGNATURE			27
INDEX OF EXHIBITS			28

PART I - FINANCIAL INFORMATION

Item 1. Financial Statements

FOOT LOCKER, INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

($ in millions, except shares)

	October 28,		October 29,		January 28,
	2017		2016		2017
	(Unaudited)		(Unaudited)		*
ASSETS
Current assets:
Cash and cash equivalents	$	890	$	865	$	1,046
Merchandise inventories		1,313		1,361		1,307
Other current assets		295		291		280
		2,498		2,517		2,633
Property and equipment, net		835		732		765
Deferred taxes		164		171		161
Goodwill		158		156		155
Other intangible assets, net		45		43		42
Other assets		113		75		84
	$	3,813	$	3,694	$	3,840
LIABILITIES AND SHAREHOLDERS’ EQUITY
Current liabilities:
Accounts payable	$	241	$	215	$	249
Accrued and other liabilities		326		327		363
Current portion of capital lease obligations		—		1		—
		567		543		612
Long-term debt and obligations under capital leases		126		127		127
Other liabilities		463		391		391
Total liabilities		1,156		1,061		1,130
Shareholders’ equity:
Common stock and paid-in capital: 133,336,171;  174,687,964; and 132,616,087 shares outstanding, respectively		921		1,168		900
Retained earnings		2,467		3,546		2,254
Accumulated other comprehensive loss		(286)		(353)		(363)
Less: Treasury stock at cost: 10,730,582;  42,326,538; and 1,120,466 shares, respectively		(445)		(1,728)		(81)
Total shareholders' equity		2,657		2,633		2,710
	$	3,813	$	3,694	$	3,840

See Accompanying Notes to Condensed Consolidated Financial Statements.

* The balance sheet at January 28, 2017 has been derived from the previously reported audited financial statements at that date, but does not include all of the information and footnotes required by U.S. generally accepted accounting principles for complete financial statements. For further information, refer to the consolidated financial statements and footnotes thereto included in Foot Locker, Inc.’s Annual Report on Form 10-K for the year ended January 28, 2017.

1

FOOT LOCKER, INC.

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(Unaudited)

(in millions, except per share amounts)

	Thirteen weeks ended				Thirty-nine weeks ended
	October 28,		October 29,		October 28,		October 29,
	2017		2016		2017		2016
Sales	$	1,870	$	1,886	$	5,572	$	5,653
Cost of sales		1,290		1,246		3,809		3,730
Selling, general and administrative expenses		368		366		1,078		1,077
Depreciation and amortization		44		40		127		118
Litigation and other charges		13		6		63		6
Income from operations		155		228		495		722
Interest (income) / expense, net		—		1		(1)		2
Other income		(1)		—		(2)		(3)
Income before income taxes		156		227		498		723
Income tax expense		54		70		165		248
Net income	$	102	$	157	$	333	$	475
Basic earnings per share	$	0.81	$	1.18	$	2.57	$	3.53
Weighted-average shares outstanding		126.0		132.9		129.6		134.6
Diluted earnings per share	$	0.81	$	1.17	$	2.55	$	3.50
Weighted-average shares outstanding, assuming dilution		126.4		134.0		130.3		135.7

See Accompanying Notes to Condensed Consolidated Financial Statements.

2

FOOT LOCKER, INC.

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

(Unaudited)

($ in millions)

	Thirteen weeks ended				Thirty-nine weeks ended
	October 28,		October 29,		October 28,		October 29,
	2017		2016		2017		2016
Net income	$	102	$	157	$	333	$	475
Other comprehensive income, net of income tax:
Foreign currency translation adjustment:
Translation adjustment arising during the period, net of income tax		(4)		(14)		70		3
Cash flow hedges:
Change in fair value of derivatives, net of income tax		—		1		1		4
Available for sale securities:
Unrealized gain on available for sale securities		—		—		1		1
Pension and postretirement adjustments:
Amortization of net actuarial gain/loss and prior service cost included in net periodic benefit costs, net of income tax expense of $1,  $1,  $3 and $3 million, respectively, and foreign currency fluctuations		2		3		5		5
Comprehensive income	$	100	$	147	$	410	$	488

See Accompanying Notes to Condensed Consolidated Financial Statements.

3

FOOT LOCKER, INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited)

($ in millions)

	Thirty-nine weeks ended
	October 28,		October 29,
	2017		2016 *
From operating activities:
Net income	$	333	$	475
Adjustments to reconcile net income to net cash provided by operating activities:
Non-cash impairment charges		—		6
Depreciation and amortization		127		118
Share-based compensation expense		11		17
Qualified pension plan contributions		(25)		(33)
Change in assets and liabilities:
Merchandise inventories		18		(77)
Accounts payable		(13)		(66)
Accrued and other liabilities		(29)		(3)
Pension litigation accrual		50		—
Other, net		24		40
Net cash provided by operating activities		496		477
From investing activities:
Capital expenditures		(204)		(193)
Net cash used in investing activities		(204)		(193)
From financing activities:
Purchase of treasury shares		(362)		(352)
Dividends paid on common stock		(120)		(111)
Proceeds from exercise of stock options		12		24
Treasury stock reissued under employee stock plan		5		4
Shares of common stock repurchased to satisfy tax withholding obligations		(10)		(6)
Payment of revolving credit agreement costs		—		(2)
Net cash used in financing activities		(475)		(443)
Effect of exchange rate fluctuations on cash, cash equivalents, and restricted cash		30		4
Net change in cash, cash equivalents, and restricted cash		(153)		(155)
Cash, cash equivalents, and restricted cash at beginning of period		1,073		1,048
Cash, cash equivalents, and restricted cash at end of period	$	920	$	893
Cash paid during the period:
Interest	$	6	$	6
Income taxes	$	187	$	271

See Accompanying Notes to Condensed Consolidated Financial Statements.

* Amounts for the thirty-nine weeks ended October 29, 2016 have been revised from previously reported amounts to reflect the adoption of new accounting standards in the first quarter of 2017. For additional information, see the Recently Adopted Accounting Pronouncements note.

4

FOOT LOCKER, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

1. Summary of Significant Accounting Policies

Basis of Presentation

The accompanying condensed consolidated financial statements contained in this report are unaudited. In the opinion of management, the condensed consolidated financial statements include all normal, recurring adjustments necessary for a fair presentation of the results for the interim periods of the fiscal year ending February 3, 2018 and of the fiscal year ended January 28, 2017. Certain items included in these statements are based on management’s estimates. Actual results may differ from those estimates. The results of operations for any interim period are not necessarily indicative of the results expected for the year. The accompanying unaudited condensed consolidated financial statements should be read in conjunction with the Notes to Consolidated Financial Statements contained in Foot Locker, Inc.’s (the “Company”) Form 10-K for the year ended January 28, 2017, as filed with the U.S. Securities and Exchange Commission (the “SEC”) on March 23, 2017.

Recent Accounting Pronouncements

In May 2014, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2014-09, Revenue from Contracts with Customers. The core principle of this amendment is that an entity should recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. ASU 2014-09, as amended by ASU 2015-14, ASU 2016-08, ASU 2016-10, ASU 2016-12 and ASU 2016-20, is effective for annual reporting periods beginning after December 15, 2017, and interim periods therein. These ASUs can be adopted either retrospectively to each prior reporting period presented or as a cumulative-effect adjustment as of the date of adoption. The Company expects a change in the timing of recognizing gift card breakage, sales relating to shipping and handling for undelivered orders, and a change in timing for the recognition of expenses related to direct-response advertising costs. In addition, we expect a balance sheet reclassification from inventory to other current assets relating to our right to recover products for our sales returns, as well as a change to the accounting for our unredeemed rewards for our loyalty program as a reduction to sales instead of recording the charge to cost of goods sold. Although we are in the process of finalizing the quantification of the effects on the areas discussed above, we currently do not expect the adoption will significantly affect our consolidated statements of operations, financial position or cash flows. The Company expects to adopt the provisions of this standard using the modified retrospective method, which requires a cumulative effect adjustment to the opening balance of retained earnings on the date of adoption.

In February 2016, the FASB issued ASU 2016-02, Leases. This ASU requires lessees to recognize a lease liability and a right-of-use asset for all leases, as well as additional disclosure regarding leasing arrangements. This standard will be effective for fiscal years beginning after December 15, 2018, including interim periods therein, and requires a modified retrospective adoption, with earlier adoption permitted. The Company does not expect to adopt this ASU until required and is evaluating the effect of this guidance. The Company has historically presented a non-GAAP measure to adjust its balance sheet to present operating leases as if they were capital leases. Based upon that analysis and preliminary evaluation of the standard, we estimate the adoption will result in the addition of $3 billion to $4 billion of assets and liabilities to our consolidated balance sheet, with no significant change to our consolidated statements of operations or cash flows.

In October 2016, the FASB issued ASU 2016-16, Income Taxes (Topic 740):Intra-Entity Transfers of Assets Other Than Inventory. ASU 2016-16 requires recognition of income tax consequences of an intra-entity transfer of an asset other than inventory when the transfer occurs. This ASU is effective and will be adopted by the Company for annual reporting periods beginning after December 15, 2017, including interim periods therein. The amendments in this update should be applied on a modified retrospective basis through a cumulative-effect adjustment directly to retained earnings as of the beginning of the period of adoption. Upon adoption, a company would write off any income tax effects that had been deferred from past intercompany transactions involving non-inventory assets to opening retained earnings. In addition, an entity would record deferred tax assets with an offset to opening retained earnings for amounts that entity had previously not recognized under existing guidance but would recognize under the new guidance. Based on deferred tax amounts related to applicable past intercompany transactions and the foreign exchange rates as of October 28, 2017, we expect the adoption will result in an increase in deferred income tax assets of approximately $40 million to $45 million.

Other recently issued accounting pronouncements did not, or are not believed by management to, have a material effect on the Company’s present or future consolidated financial statements.

5

FOOT LOCKER, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

Recently Adopted Accounting Pronouncements

In March 2016, the FASB issued ASU 2016-09, Improvements to Employee Share-Based Payment Accounting. ASU 2016-09 simplifies the accounting for share-based payment transactions, including tax consequences, forfeitures, and classifications of the tax related items in the statement of cash flows. The Company adopted ASU 2016-09 during the first quarter of 2017. Amendments relating to accounting for excess tax benefits and deficiencies have been adopted prospectively. For the thirteen and thirty-nine weeks ended October 28,2017, the Company recorded excess tax benefits related to share-based compensation awards of $2 million and $9 million, respectively, to the income statement, within the income tax provision, whereas such benefits were previously recognized in equity. Also, in the diluted net earnings per share calculation, when applying the treasury stock method for shares that could be repurchased, the assumed proceeds no longer include the amount of excess tax benefits. This ASU also requires that we present excess tax benefits or deficiencies as operating activities in our condensed consolidated statement of cash flow. As a result of adopting this change retrospectively, we reclassified excess tax benefits of $16 million which were previously classified as cash flows from financing activities to operating activities for the thirty-nine weeks ended October 29, 2016. Additionally, the presentation of employee taxes paid to taxing authorities for share-based transactions of $6 million, previously classified as cash flows from operating activities, were reclassified to financing activities for the thirty-nine weeks ended October 29, 2016. The Company has made a policy election of recording forfeitures as they occur instead of estimating forfeitures using a modified retrospective approach. The cumulative effect of this change was not significant.

In November 2016, the FASB issued ASU 2016-18, Statement of Cash Flows (Topic 230): Restricted Cash. ASU 2016-18 requires that a statement of cash flows explain the change during the period in the total cash, cash equivalents, and amounts generally described as restricted cash and restricted cash equivalents when reconciling the beginning-of-period and end-of-period total amounts. This ASU is effective for annual reporting periods beginning after December 15, 2017 including interim periods therein. The Company has adopted this ASU as of the first quarter of 2017. Accordingly, we restated our cash and cash equivalents balances in the condensed consolidated statements of cash flows to include restricted cash of $28 million as of October29,2016 and $27 million as of both January 30, 2016, and January 28, 2017. Please see Note 5, Restricted Cash, for a reconciliation of cash and cash equivalents as presented on our condensed consolidated balance sheets to cash, cash equivalents, and restricted cash as reported on our condensed consolidated statements of cash flows.

2. Segment Information

The Company has determined that its reportable segments are those that are based on its method of internal reporting. The Company has two reportable segments, Athletic Stores and Direct-to-Customers. The Company evaluates performance based on several factors, of which the primary financial measure is division results. Division profit reflects income before income taxes, pension litigation charge, reorganization charge, corporate expense, non-operating income, and net interest (income) / expense.

	Thirteen weeks ended				Thirty-nine weeks ended
	October 28,		October 29,		October 28,		October 29,
	2017		2016		2017		2016
Sales	($ in millions)
Athletic Stores	$	1,612	$	1,644	$	4,819	$	4,955
Direct-to-Customers		258		242		753		698
Total sales	$	1,870	$	1,886	$	5,572	$	5,653
Operating Results
Athletic Stores (1)	$	154	$	213	$	504	$	683
Direct-to-Customers		26		32		88		92
Division profit		180		245		592		775
Less: Pension litigation and reorganization charges (2), (3)		13		—		63		—
Less: Corporate expense		12		17		34		53
Operating profit		155		228		495		722
Interest (income) / expense, net		—		1		(1)		2
Other income (4)		1		—		2		3
Income before income taxes	$	156	$	227	$	498	$	723

6

FOOT LOCKER, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(1)	Included in the thirteen and thirty-nine weeks ended October 29, 2016 is a $6 million pre-tax non-cash impairment charge to write down long-lived store assets of Runners Point and Sidestep. See Note 3, Litigation and Other Charges for additional information.
(2)	Included in the thirty-nine weeks ended October 28, 2017 is a pre-tax charge of $50 million relating to a pension litigation matter described further in Note 14, Legal Proceedings.
(3)	Included in the thirteen and thirty-nine weeks ended October 28, 2017 is $13 million in pre-tax reorganization costs related to the reduction and reorganization of division and corporate staff that occurred in the third quarter of 2017, described more fully in Note 3, Litigation and Other Charges.
(4)	Other income includes non-operating items, such as lease termination gains, royalty income, insurance recoveries, and the changes in fair value, premiums paid, and realized gains and losses associated with foreign currency option contracts.

3. Litigation and Other Charges

	Thirteen weeks ended					Thirty-nine weeks ended
		October 28,		October 29,		October 28,		October 29,
		2017		2016		2017		2016
		($ in millions)
Pension litigation charge		$	—	$	—	$	50	$	—
Reorganization costs			13		—		13		—
Impairment of long-lived assets			—		6		—		6
Total litigation and other charges		$	13	$	6	$	63	$	6

During the third quarter of 2017, the Company reorganized its organizational structure by adjusting certain divisional responsibilities between our various businesses. As a result of this, as well as certain corporate staff reductions taken to improve corporate efficiency, the Company recorded a charge of $13 million. The charge consisted primarily of severance payments and benefit continuation costs for approximately 190 associates. The following is a reconciliation of the accrual for the quarter ended October 28,2017:

		Severance and		Other Related
		Benefit Costs		Charges		Total
	($ in millions)
Balance at January 28, 2017	$	—	$	—	$	—
Amounts charged to expense		11		2		13
Cash payments		(2)		—		(2)
Balance at October 28, 2017	$	9	$	2	$	11

As more fully discussed in Note 14, Legal Proceedings, during the second quarter of 2017 the Company recorded a $50 million pension litigation charge.

Included in the thirteen and thirty-nine weeks ended October 29, 2016 is a non-cash charge of $6 million to write down store fixtures and leasehold improvements related to the Runners Point and Sidestep businesses.

4. Hurricane-Related Costs

Hurricanes Harvey, Irma, and Maria adversely affected the Company’s third quarter of 2017 operations and resulted in the closure of approximately 450 of the Company’s retail stores for varying periods of time. As of October28, 2017, 22 of these stores remain closed in Puerto Rico. The Company expects to re-open 8 of the remaining stores during the fourth quarter of 2017 and an additional 7 stores during the early part of 2018, dependent on timing of repairs and mall openings. Currently, we do not expect to re-open the balance of the stores.

The Company recorded a $7 million charge associated with its retail stores that were damaged by the hurricanes. This charge was recorded as a component of selling, general and administrative expenses in the Consolidated Statements of Operations for the thirteen and thirty-nine weeks ended October 28, 2017. The charge reflects estimated property damages and other costs of $2 million and inventory write-offs of $5 million. The Company is working with its insurance providers to determine if any of the losses can be recovered.

7

FOOT LOCKER, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

5. Restricted Cash

The following table provides a reconciliation of cash and cash equivalents, as reported on our condensed consolidated balance sheets, to cash, cash equivalents, and restricted cash, as reported on our condensed consolidated statements of cash flows.

	October 28,		October 29,		January 28,
	2017		2016		2017
	($ in millions)
Cash and cash equivalents	$	890	$	865	$	1,046
Restricted cash included in other current assets		1		—		—
Restricted cash included in other non-current assets		29		28		27
Cash, cash equivalents, and restricted cash	$	920	$	893	$	1,073

Amounts included in restricted cash primarily relate to amounts held in escrow in connection with various leasing arrangements in Europe. In addition, restricted cash reflects deposits held in insurance trusts in order to satisfy the requirement to collateralize part of the self-insured workers’ compensation and liability claims.

6. Goodwill

Annually during the first quarter, or more frequently if impairment indicators arise, the Company reviews goodwill and intangible assets with indefinite lives for impairment. The annual review of goodwill and intangible assets with indefinite lives performed during the first quarter of 2017 did not result in the recognition of impairment. The following table provides a summary of goodwill by reportable segment. The change in the balance represents foreign currency exchange fluctuations.

	October 28,		October 29,		January 28,
	2017		2016		2017
	($ in millions)
Athletic Stores	$	18	$	17	$	16
Direct-to-Customers		140		139		139
Total goodwill	$	158	$	156	$	155

7. Other Intangible Assets, net

The components of finite-lived intangible assets and intangible assets not subject to amortization are as follows:

		October 28, 2017						October 29, 2016						January 28, 2017
		Gross		Accum.		Net		Gross		Accum.		Net		Gross		Accum.		Net
($ in millions)		value		amort.		value		value		amort.		value		value		amort.		value
Amortized intangible assets: (1)
	Lease acquisition costs	$	129	$	(117)	$	12	$	118	$	(107)	$	11	$	116	$	(105)	$	11
	Trademarks / trade names		20		(13)		7		20		(13)		7		20		(13)		7
	Favorable leases		7		(6)		1		7		(5)		2		7		(5)		2
		$	156	$	(136)	$	20	$	145	$	(125)	$	20	$	143	$	(123)	$	20
Indefinite life intangible assets: (1)
	Runners Point Group trademarks / trade names					$	25					$	23					$	22
Other intangible assets, net						$	45					$	43					$	42

(1) The change in the ending balances also reflects the effect of foreign currency fluctuations due primarily to the movements of the euro in relation to the U.S. dollar.

8

FOOT LOCKER, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

During the thirty-nine week period ended October, 28 2017, the Company recorded $2 million of lease acquisition additions, primarily related to our European businesses. These additions are being amortized over a weighted-average life of 10 years.  Amortization expense recorded is as follows:

	Thirteen weeks ended				Thirty-nine weeks ended
($ in millions)		October 28, 2017		October 29, 2016	October 28, 2017		October 29, 2016
Amortization expense	$	1	$	1	$	3	$	3

Estimated future amortization expense for finite-life intangible assets is as follows:

		($ in millions)
Remainder of 2017	$	1
2018		4
2019		4
2020		3
2021		2
2022		2

8. Accumulated Other Comprehensive Loss

Accumulated other comprehensive loss (“AOCL”), net of tax, is comprised of the following:

	October 28,		October 29,		January 28,
	2017		2016		2017
	($ in millions)
Foreign currency translation adjustments	$	(57)	$	(116)	$	(127)
Cash flow hedges		2		6		1
Unrecognized pension cost and postretirement benefit		(231)		(243)		(236)
Unrealized loss on available-for-sale security		—		—		(1)
	$	(286)	$	(353)	$	(363)

The changes in AOCL for the thirty-nine weeks ended October 28, 2017 were as follows:

					Items Related
	Foreign Currency				to Pension and		Unrealized Loss on
	Translation		Cash Flow		Postretirement		Available-For-
($ in millions)	Adjustments		Hedges		Benefits		Sale Security		Total
Balance as of January 28, 2017	$	(127)	$	1	$	(236)	$	(1)	$	(363)
OCI before reclassification		70		1		(1)		1		71
Reclassified from AOCL		—		—		6		—		6
Other comprehensive income		70		1		5		1		77
Balance as of October 28, 2017	$	(57)	$	2	$	(231)	$	—	$	(286)

Reclassifications from AOCL for the thirty-nine weeks ended October 28, 2017 were as follows:

		($ in millions)
Amortization of actuarial (gain) loss:
Pension benefits- amortization of actuarial loss	$	10
Postretirement benefits- amortization of actuarial gain		(1)
Net periodic benefit cost (see Note 12)		9
Income tax benefit		(3)
Net of tax	$	6

9

FOOT LOCKER, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

9. Financial Instruments

The Company operates internationally and utilizes certain derivative financial instruments to mitigate its foreign currency exposures, primarily related to third-party and intercompany forecasted transactions. As a result of the use of derivative instruments, the Company is exposed to the risk that counterparties will fail to meet their contractual obligations. To mitigate this counterparty credit risk, the Company has a practice of entering into contracts only with major financial institutions selected based upon their credit ratings and other financial factors. The Company monitors the creditworthiness of counterparties throughout the duration of the derivative instrument. Additional information is contained within Note 10, Fair Value Measurements.

Derivative Holdings Designated as Hedges

For a derivative to qualify as a hedge at inception and throughout the hedged period, the Company formally documents the nature of the hedged items and the relationships between the hedging instruments and the hedged items, as well as its risk-management objectives, strategies for undertaking the various hedge transactions, and the methods of assessing hedge effectiveness and ineffectiveness. In addition, for hedges of forecasted transactions, the significant characteristics and expected terms of a forecasted transaction must be specifically identified, and it must be probable that each forecasted transaction would occur. If it were deemed probable that the forecasted transaction would not occur, the gain or loss on the derivative instrument would be recognized in earnings immediately. The amount of such gains or losses that were recognized in earnings during the thirty-nine weeks ended October 28, 2017 was not significant and there were no such gains or losses in the corresponding prior-year period. Derivative financial instruments qualifying for hedge accounting must maintain a specified level of effectiveness between the hedging instrument and the item being hedged, both at inception and throughout the hedged period, which management evaluates periodically.

The primary currencies to which the Company is exposed are the euro, British pound, Canadian dollar, and Australian dollar. For the most part, merchandise inventories are purchased by each geographic area in their respective local currency. The most significant exception to this is the United Kingdom, whose merchandise inventory purchases are denominated in euros. For option and foreign exchange forward contracts designated as cash flow hedges of the purchase of inventory, the effective portion of gains and losses is deferred as a component of AOCL and is recognized as a component of cost of sales when the related inventory is sold. The amount reclassified to cost of sales related to such contracts was not significant for any of the periods presented. The effective portion of gains or losses associated with other forward contracts is deferred as a component of AOCL until the underlying transaction is reported in earnings. The ineffective portion of gains and losses related to cash flow hedges recorded to earnings was also not significant for any of the periods presented. When using a forward contract as a hedging instrument, the Company excludes the time value of the contract from the assessment of effectiveness. At quarter-end, substantially all of the Company’s hedged forecasted transactions were less than twelve months into the future, and the Company expects the derivative-related amounts reported in AOCL to be reclassified to earnings within twelve months.

The net change in the fair value of the foreign exchange derivative financial instruments designated as cash flow hedges was not significant for the thirteen weeks ended October 28, 2017 and was a $1 million gain for the thirty-nine weeks ended October 28, 2017. At October 28, 2017, a $2 million gain remained in AOCL.For the thirteen and thirty-nine weeks ended October 29, 2016, the net change in fair value was a $1 million and $4 million gain, respectively. The notional value of the foreign exchange contracts designated as hedges outstanding at October 28, 2017 was $138 million, and these contracts mature at various dates through January 2019.  

Derivative Holdings Not Designated as Hedges

The Company enters 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 selling, general and administrative expenses or other income, depending on the type of transaction. The net change in fair value was not significant for the thirteen and thirty-nine weeks ended October 28, 2017.

10

FOOT LOCKER, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

The net change in fair value resulted in income of $1 million for the thirteen weeks ended October 29, 2016, and was not significant for the thirty-nine weeks ended October 29, 2016. The notional value of the foreign exchange contracts not designated as hedges outstanding at October 28, 2017 was $2 million, and these contracts mature in November 2017.

From time to time, the Company mitigates the effect of fluctuating foreign exchange rates on the reporting of foreign-currency denominated earnings by entering into currency option contracts. Changes in the fair value of these foreign currency option contracts, which are not designated as hedges, are recorded in earnings immediately within other income. The realized gains, premiums paid, and changes in the fair market value recorded were not significant for any of the periods presented. No such contracts were outstanding at October 28, 2017. 

Fair Value of Derivative Contracts 

The following represents the fair value of the Company’s derivative contracts. Many of the Company’s agreements allow for a netting arrangement. The following is presented on a gross basis, by type of contract:

	Balance Sheet	October 28,		October 29,		January 28,
($ in millions)	Caption	2017		2016		2017
Hedging Instruments:
Foreign exchange forward contracts	Current assets	$	2	$	7	$	3
Foreign exchange forward contracts	Current liabilities	$	1	$	—	$	3
Non-hedging Instruments:
Foreign exchange forward contracts	Current assets	$	—	$	1	$	—

10. Fair Value Measurements

The Company’s financial assets recorded at fair value are categorized as follows:

Level 1 – Quoted prices for identical instruments in active markets.

Level 2 –	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.

The following tables provide a summary of the Company’s recognized assets and liabilities that are measured at fair value on a recurring basis:

	As of October 28, 2017						As of October 29, 2016						As of January 28, 2017
	($ in millions)
	Level 1		Level 2		Level 3		Level 1		Level 2		Level 3		Level 1		Level 2		Level 3
Assets
Available-for-sale securities	$	—	$	7	$	—	$	—	$	7	$	—	$	—	$	6	$	—
Foreign exchange forward contracts		—		2		—		—		8		—		—		3		—
Total Assets	$	—	$	9	$	—	$	—	$	15	$	—	$	—	$	9	$	—
Liabilities
Foreign exchange forward contracts		—		1		—		—		—		—		—		3		—
Total Liabilities	$	—	$	1	$	—	$	—	$	—	$	—	$	—	$	3	$	—

11

FOOT LOCKER, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

Securities classified as available-for-sale are recorded at fair value with unrealized gains and losses reported, net of tax, in other comprehensive income, unless unrealized gains or losses are determined to be other than temporary. 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 Company’s 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.

There were no transfers into or out of Level 1, Level 2, or Level 3 assets and liabilities for any of the periods presented.

The carrying value and estimated fair value of long-term debt and obligations under capital leases were as follows:

	October 28,		October 29,		January 28,
	2017		2016		2017
	($ in millions)
Carrying value	$	126	$	128	$	127
Fair value	$	145	$	150	$	148

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. The carrying values of cash and cash equivalents, and other current receivables and payables approximate their fair value.

11. Earnings Per Share

The Company accounts for and discloses earnings per share using the treasury stock method. Basic earnings per share is computed by dividing net income for the period by the weighted-average number of common shares outstanding at the end of the period. Restricted stock awards, which contain non-forfeitable rights to dividends, are considered participating securities and are included in the calculation of basic earnings per share. Diluted earnings per share reflects the weighted-average number of common shares outstanding during the period used in the basic earnings per share computation plus dilutive common stock equivalents.

The computation of basic and diluted earnings per share is as follows:

	Thirteen weeks ended					Thirty-nine weeks ended
		October 28,		October 29,		October 28,		October 29,
		2017		2016		2017		2016
		(in millions, except per share data)
Net Income		$	102	$	157	$	333	$	475
Weighted-average common shares outstanding			126.0		132.9		129.6		134.6
Dilutive effect of potential common shares			0.4		1.1		0.7		1.1
Weighted-average common shares outstanding assuming dilution			126.4		134.0		130.3		135.7
Earnings per share - basic		$	0.81	$	1.18	$	2.57	$	3.53
Earnings per share - diluted		$	0.81	$	1.17	$	2.55	$	3.50
Anti-dilutive share-based awards excluded from diluted calculation			2.0		0.5		1.6		0.4

12

FOOT LOCKER, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

The Company adopted ASU 2016-09 during the first quarter of 2017. As a result, excess tax benefits and tax deficiencies are no longer included as assumed proceeds in the calculation of diluted shares outstanding. This change was adopted prospectively.

Contingently issuable shares of 0.4 million and 0.3 million have not been included as the vesting conditions have not been satisfied as of October 28, 2017 and October 29, 2016, respectively. These shares relate to restricted stock units issued in connection with the Company’s long-term incentive program.

12. Pension and Postretirement Plans

The Company has defined benefit pension plans covering certain of its North American employees, which are funded in accordance with the provisions of the laws where the plans are in effect. The Company also has a defined benefit pension plan covering certain employees of the Runners Point Group.

In addition to providing pension benefits, the Company sponsors postretirement medical and life insurance plans, which are available to most of its retired U.S. employees. These medical and life insurance plans are contributory and are not funded.

The following are the components of net periodic pension benefit cost and net periodic postretirement benefit income, which are recognized as part of SG&A expense:

	Pension Benefits								Postretirement Benefits
	Thirteen weeks ended				Thirty-nine weeks ended				Thirteen weeks ended				Thirty-nine weeks ended
	Oct. 28,		Oct. 29,		Oct. 28,		Oct. 29,		Oct. 28,		Oct. 29,		Oct. 28,		Oct. 29,
($ in millions)	2017		2016		2017		2016		2017		2016		2017		2016
Service cost	$	4	$	4	$	12	$	12	$	—	$	—	$	—	$	—
Interest cost		6		6		19		19		—		1		—		1
Expected return on plan assets		(9)		(9)		(28)		(27)		—		—		—		—
Amortization of net loss (gain)		3		4		10		11		—		(1)		(1)		(2)
Net benefit expense (income)	$	4	$	5	$	13	$	15	$	—	$	—	$	(1)	$	(1)

During the first quarter of 2017, the Company made a contribution of $25 million to the U.S. qualified plan. The Company continually evaluates the amount and timing of any future contributions. The Company currently does not expect to make any further pension plan contributions during this year.Actual contributions are dependent on several factors, including the outcome of the ongoing U.S. pension litigation. See Note 14, Legal Proceedings, for further information.

13. Share-Based Compensation

Total compensation expense included in SG&A, and the associated tax benefits recognized related to the Company’s share-based compensation plans, were as follows:

	Thirteen weeks ended				Thirty-nine weeks ended
	October 28,		October 29,		October 28,		October 29,
	2017		2016		2017		2016
	($ in millions)
Options and shares purchased under the employee stock purchase plan	$	2	$	3	$	7	$	8
Restricted stock and restricted stock units		1		3		4		9
Total share-based compensation expense	$	3	$	6	$	11	$	17
Tax benefit recognized	$	1	$	2	$	3	$	5

13

FOOT LOCKER, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

Valuation Model and Assumptions

The Company uses the Black-Scholes option-pricing model to estimate the fair value of share-based awards. The Black-Scholes option-pricing model incorporates various and highly subjective assumptions, including expected term and expected volatility.

During the first quarter of 2017, in connection with the adoption of ASU 2016-09, we have made the accounting policy election to discontinue estimating forfeitures and will account for forfeitures as they occur.

The following table shows the Company’s assumptions used to compute share-based compensation expense for awards granted during the thirty-nine weeks ended October 28, 2017 and October 29, 2016:

		Stock Option Plans						Stock Purchase Plan
		October 28,			October 29,			October 28,			October 29,
		2017			2016			2017			2016
Weighted-average risk free rate of interest		2.1	%		1.4	%		0.9	%		0.4	%
Expected volatility		25	%		30	%		29	%		27	%
Weighted-average expected award life (in years)		5.4			5.7			1.0			1.0
Dividend yield		1.9	%		1.7	%		2.0	%		1.7	%
Weighted-average fair value	$	14.74		$	15.71		$	10.84		$	14.04

The information in the following table covers option activity under the Company’s stock option plans for the thirty-nine weeks ended October 28, 2017:

		Weighted-		Weighted-
	Number	Average		Average
	of	Remaining		Exercise
	Shares	Contractual Life		Price
	(in thousands)	(in years)		(per share)
Options outstanding at the beginning of the year	2,806			$	42.61
Granted	547				69.58
Exercised	(536)				21.38
Expired or cancelled	(19)				61.01
Options outstanding at October 28, 2017	2,798		6.7	$	51.82
Options exercisable at October 28, 2017	1,729		5.4	$	42.91
Options available for future grant at October 28, 2017	10,759

The total fair value of options vested as of October 28, 2017 and October 29, 2016 was $8 million and $9 million, respectively. The cash received from option exercises for the thirteen and thirty-nine weeks ended October 28, 2017 was $2 million and $12 million, respectively. The cash received from option exercises for the thirteen and thirty-nine weeks ended October 29, 2016 was $10 million and $24 million, respectively.

The total intrinsic value of options exercised (the difference between the market price of the Company’s common stock on the exercise date and the price paid by the optionee to exercise the option) is presented below:

	Thirteen weeks ended				Thirty-nine weeks ended
	October 28,		October 29,		October 28,		October 29,
	2017		2016		2017		2016
	($ in millions)
Exercised	$	5	$	19	$	20	$	45

The total tax benefit realized from option exercises was $2 million and $8 million for the thirteen and thirty-nine weeks ended October 28, 2017. The total tax benefit realized from option exercises was $7 million and $17 million for the corresponding prior-year periods.

14

FOOT LOCKER, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

The aggregate intrinsic value for stock options outstanding, outstanding and exercisable, and vested and expected to vest (the difference between the Company’s 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:

	Thirty-nine weeks ended
	October 28,		October 29,
	2017		2016
	($ in millions)
Outstanding	$	5	$	78
Outstanding and exercisable	$	5	$	71
Vested and expected to vest	$	5	$	78

As of October 28, 2017 there was $7 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 October 28, 2017:

	Options Outstanding				Options Exercisable
		Weighted-
		Average		Weighted-			Weighted-
		Remaining		Average			Average
Range of Exercise	Number	Contractual		Exercise	Number		Exercise
Prices	Outstanding	Life		Price	Exercisable		Price
	(in thousands, except prices per share and contractual life)
$9.85 to $24.75	344	2.7	$	16.77	344	$	16.77
$30.92 to $45.75	787	5.5		38.33	747		38.50
$48.55 to $62.11	704	6.9		61.05	472		61.35
$63.79 to $73.21	963	8.8		68.60	166		64.35
	2,798	6.7	$	51.82	1,729	$	42.91

Restricted Stock and Restricted Stock Units

Restricted shares of the Company’s common stock and restricted stock units (“RSU”) may be awarded to certain officers and key employees of the Company. Additionally, RSU awards are made to employees in connection with the Company’s long-term incentive program, and to nonemployee directors. Each RSU represents the right to receive one share of the Company’s common stock provided that the performance and vesting conditions are satisfied. There were 361,137 and 678,466 RSU awards outstanding as of October 28, 2017 and October 29, 2016, respectively.

Generally, awards fully vest after the passage of time, typically three years. However, RSU awards made in connection with the Company’s performance-based long-term incentive program are earned after the attainment of certain performance metrics and vest after the passage of time. Restricted stock is considered outstanding at the time of grant and the holders have voting rights. Dividends are paid to holders of restricted stock that vest with the passage of time. With regard to performance-based restricted stock, dividends will be accumulated and paid after the performance criteria are met. No dividends are paid or accumulated on RSU awards. Compensation expense is recognized using the market value at the date of grant and is amortized over the vesting period, provided the recipient continues to be employed by the Company.

15

FOOT LOCKER, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

Restricted stock and RSU activity for the thirty-nine weeks ended October 28, 2017 is summarized as follows:

			Weighted-
			Average	Weighted-
		Number	Remaining	Average
		of	Contractual	Grant Date
		Shares	Life	Fair Value
		(in thousands)	(in years)		(per share)
Nonvested at beginning of year		798		$	56.91
Granted		328			63.72
Vested		(286)			49.55
Expired or cancelled		(447)			64.74
Nonvested at October 28, 2017		393	1.5	$	59.07
Aggregate value ($ in millions)	$	23

The total value of awards for which restrictions lapsed during the thirty-nine weeks ended October 28, 2017 and October 29, 2016 was $14 million and $8 million, respectively. As of October 28, 2017, there was $10 million of total unrecognized compensation cost related to nonvested restricted awards.

14. Legal Proceedings

Legal proceedings pending against the Company or its consolidated subsidiaries consist of ordinary, routine litigation, including administrative proceedings, incidental to the business of the Company or businesses that have been sold or disposed of by the Company in past years. These legal proceedings include commercial, intellectual property, customer, environmental, and employment-related claims.

The Company and the Company’s U.S. retirement plan are defendants in a class action (Osberg v. Foot Locker Inc. et ano., filed in the U.S. District Court for the Southern District of New York) in which the plaintiff alleges that, in connection with the 1996 conversion of the retirement plan to a defined benefit plan with a cash balance formula, the Company and the retirement plan failed to properly advise plan participants of the “wear-away” effect of the conversion. Plaintiff’s claims were for breach of fiduciary duty under the Employee Retirement Income Security Act of 1974, as amended, and violation of the statutory provisions governing the content of the Summary Plan Description. During the third quarter of 2015, the trial court ruled that the retirement plan be reformed. As a  result of this development, the Company recorded a charge of $100 million pre-tax ($61 million after-tax) during the third quarter of 2015.  

The Company appealed the trial court’s decision, and the judgment was stayed pending the outcome of the appeal process. During the second quarter of 2017, the Second Circuit Court of Appeals affirmed the trial court’s decision. In light of this development, the Company reassessed its estimate of the liability. The Company’s updated reasonable estimate of this liability is a range between $150 million and $260 million. The high end of the range reflects the estimated cost to reform the retirement plan in accordance with the court ruling; however, it excludes any legal fees that may be awarded to plaintiff’s counsel. No amount within that range is more probable than any other amount and therefore, in accordance with U.S. GAAP, the Company recorded a charge of $50 million pre-tax ($30 million after-tax) during the second quarter of 2017, bringing the cumulative amount accrued for this matter to $150 million. The accrual has been classified as a long-term liability. The Company will continue to vigorously defend itself in this case and on November 8, 2017 filed a Petition for Writ of Certiorari with the U.S. Supreme Court. In light of the uncertainties involved in this matter, there is no assurance that the ultimate resolution will not differ from the amount currently accrued by the Company.

Management does 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 the Company’s 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, and judgments could be rendered or settlements entered into that could adversely affect the Company’s operating results or cash flows in a particular period.

16

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations

Disclosure Regarding Forward-Looking Statements

This report contains forward-looking statements within the meaning of the federal securities laws. Other than statements of historical facts, all statements which 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, and 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 2016 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.

Business Overview

Foot Locker, Inc., through its subsidiaries, operates in two reportable segments – Athletic Stores and Direct-to-Customers. The Athletic Stores segment is one of the largest athletic footwear and apparel retailers in the world, with formats that include Foot Locker, Kids Foot Locker, Lady Foot Locker, Champs Sports, Footaction, Runners Point, Sidestep, and SIX:02. The Direct-to-Customers segment includes Footlocker.com, Inc. and other affiliates, including Eastbay, Inc., and our international ecommerce businesses, which sell to customers through their Internet and mobile sites and catalogs.

The Foot Locker brand is one of the most widely recognized names in the markets in which we operate, epitomizing premium quality for the active lifestyle customer. This brand equity has aided our ability to successfully develop and increase our portfolio of complementary retail store formats, such as Lady Foot Locker and Kids Foot Locker, as well as Footlocker.com, part of our direct-to-customer business. Through various marketing channels and experiences, including social, digital, broadcast, and print media, as well as various sports sponsorships and events, we reinforce our image with a consistent message — namely, that we are the destination for premium athletically-inspired shoes and apparel with a wide selection of merchandise in a full-service environment.

Store Count

At October 28, 2017,  weoperated 3,349 stores as compared with 3,363 and 3,394 stores at January 28, 2017 and October 29, 2016, respectively.

During the first quarter of 2017, the Company entered into a franchise agreement with Fox-Wizel Ltd, for franchised stores operating in Israel. There are 13 franchised stores operating in Israel as of October 28, 2017. Also, during the second quarter of 2017, the Company terminated its franchise agreement with the third party that operated stores in the Republic of Korea.

A total of 97 franchised stores were operating at October 28, 2017, as compared with 74 and 71 stores atJanuary 28, 2017 and October 29, 2016, respectively. Revenue from the franchised stores was not significant for any of the periods presented. These stores are not included in the operating store count above.

Reconciliation of Non-GAAP Measures

TheCompanypresentscertain non-GAAP measures, such as sales changes excluding foreign currency fluctuations, adjusted net income before income taxes, adjusted net income, and adjusted diluted earnings per share. 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.

17

We present these non-GAAP measures because webelievethey assist investors in comparing our performance across reporting periods on a consistent basis by excluding items that are not indicative of our core business. 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. In addition, these non-GAAP measures are useful in assessing the Company’s progress in achieving its long-term financial objectives.

The non-GAAP financial information is provided in addition to, and not as an alternative to, the Company’s reported results prepared in accordance with GAAP.The Company estimates the tax effect of the non-GAAP adjustments by applying its marginal rate to each of the respective items.

Presented belowis a reconciliation ofGAAP and non-GAAP results for the thirteen and thirty-nine weeks ended October 28, 2017 and October 29, 2016, respectively. 

	Thirteen weeks ended				Thirty-nine weeks ended
	October 28,		October 29,		October 28,		October 29,
	2017		2016		2017		2016
	($ in millions)
Pre-tax income:
Income before income taxes	$	156	$	227	$	498	$	723
Pre-tax amounts excluded from GAAP:
Reorganization costs		13		—		13		—
Pension litigation charge		—		—		50		—
Impairment charge		—		6		—		6
Adjusted income before income taxes (non-GAAP)	$	169	$	233	$	561	$	729
After-tax income:
Net income	$	102	$	157	$	333	$	475
After-tax adjustments excluded from GAAP:
Reorganization costs, net of income tax benefit of $5 million		8		—		8		—
Pension litigation charge, net of income tax benefit of $20 million		—		—		30		—
Impairment charge, net of income tax benefit of $1 million		—		5		—		5
Tax benefit related to intellectual property reassessment		—		(10)		—		(10)
Adjusted net income (non-GAAP)	$	110	$	152	$	371	$	470
Earnings per share:
Diluted EPS	$	0.81	$	1.17	$	2.55	$	3.50
Diluted EPS amounts excluded from GAAP:
Reorganization costs		0.06		—		0.06		—
Pension litigation charge		—		—		0.23		—
Impairment charge		—		0.03		—		0.03
Tax benefit related to intellectual property reassessment		—		(0.07)		—		(0.07)
Adjusted diluted EPS (non-GAAP)	$	0.87	$	1.13	$	2.84	$	3.46

During the third quarter ended October 28, 2017, the Company reduced and reorganized its division and corporate staff which resulted in a charge of $13 million, $8 million after-tax or $0.06 per share. The substantial majority of the charge is for severance and related costs.

During the second quarter ended July 29, 2017, the Company recorded a charge of $50 million, $30 million after-tax or $0.23 per share, related to pension litigation.Please see Item 1. “Financial Statements,” Note 14,Legal Proceedings for further information on this charge.

18

In the third quarter of 2016, the Company recorded a $6 million, $5 million after-tax or $0.03 per share, impairment charge associated with underperforming store assets of Runners Point and Sidestep. Also during the third quarter of 2016, the Company’s scheduled triennial reassessment of the value of intellectual property provided to our European business by Foot Locker in the U.S. resulted in a $10 million tax reduction.

Results of Operations

Sales

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-store sales also includes the sales of the Direct-to-Customers segment. Stores opened or closed during the period are not included in the comparable-store base; however, stores closed temporarily for relocation or remodeling are included. Computations exclude the effect of foreign currency fluctuations.

Sales decreased by $16 million, or 0.8 percent, to $1,870 million for the thirteen weeks ended October 28, 2017, from $1,886 million for the thirteen weeks ended October 29, 2016. For the thirty-nine weeks ended October 28, 2017, sales decreased by 1.4 percent to$5,572 million from sales of $5,653 million in the corresponding prior-year period. Excluding the effect of foreign currency fluctuations, sales decreased by 2.3 and 1.5 percent for the thirteen and thirty-nine weeks ended October 28, 2017, respectively. Comparable-store sales decreased by 3.7 and 2.9 percent for the thirteen and thirty-nine weeks ended October 28, 2017, respectively.  For both periods, this reflected a decline in our Athletic Stores segment, partially offset by an increase in our Direct-to-Customers segment.

Gross Margin

	Thirteen weeks ended				Thirty-nine weeks ended
	October 28,		October 29,		October 28,		October 29,
	2017		2016		2017		2016
Gross margin rate	31.0	%	33.9	%	31.6	%	34.0	%
Basis point change in the gross margin rate	(290)				(240)
Components of the change-
Decline in the merchandise margin rate	(200)				(140)
Higher occupancy and buyers' compensation expense rate	(90)				(100)

Gross margin is calculated as sales minus cost of sales. Cost of sales includes: the cost of merchandise, freight, distribution costs including related depreciation expense, shipping and handling, occupancy and buyers’ compensation. Occupancy costs include rent, common area maintenance charges, real estate taxes, general maintenance, and utilities. The gross margin rate decreased by 290 and 240 basis points for the thirteen and thirty-nine weeks ended October 28, 2017, respectively.

The merchandise margin rate decline for both the quarter and year-to-date periods primarily reflected a higher markdown rate in both our Athletic Stores and Direct-to-Customers segments as the Company was more promotional. Additionally, our Direct-to-Customers segment was also somewhat affected by higher shipping and handling expense. The increased promotional activity was necessary to stimulate sales and ensure that inventory levels remained current and in line with the pace of sales.

The higher occupancy and buyers’ compensation expense rate for both the quarter and year-to-date periods reflected higher rent-related costs coupled with a decrease in sales. Higher occupancy costs are primarily attributed to several high-profile location leases entered into recently, partially offset by rent reductions in certain other stores.

Selling, General and Administrative Expenses (SG&A)

	Thirteen weeks ended						Thirty-nine weeks ended
	October 28,			October 29,			October 28,			October 29,
	2017			2016			2017			2016
	($ in millions)
SG&A	$	368		$	366		$	1,078		$	1,077
$ Change	$	2					$	1		$
% Change		0.5	%					0.1	%
SG&A as a percentage of sales		19.7	%		19.4	%		19.3	%		19.1	%

19

For the thirteen weeks ended October 28, 2017, excluding the effect of foreign currency fluctuations, SG&A expense decreased by $4 million as compared with the corresponding prior-year period. The effect of foreign currency fluctuations for the thirty-nine weeks ended October 28, 2017 was not significant. Comparing the SG&A expense rate with the prior-year periods, the rate increased by 30 and 20 basis points for the thirteen and thirty-nine weeks ended October 28, 2017, respectively.  

The higher SG&A expense rate for both the quarter and year-to-date periods, as compared with the corresponding prior-year periods, was driven by the Athletic Stores segment and was primarily related to higher store-related compensation costs and hurricane-related expenses. Wages were higher primarily due to minimum wage increases, as well as related payroll taxes and benefits. As a percentage of sales, store wages and associated costs increased due to the decline in sales as we were not able to reduce staffing levels commensurate with the rate of decline in sales. In addition, included in SG&A was $7 million of hurricane-related expenses, including lost inventory, damage to fixed assets, and repair and maintenance expenses. These hurricane-related expenses negatively affected the SG&A expense rate for the quarter by 40 basis points. Our Direct-to-Customers segment’s SG&A expense rate declined for both the quarter and year-to-date periods reflecting decreased publicity and incentive compensation expenses. Additionally, corporate expense significantly declined during the third quarter and year-to-date periods reflecting primarily reduced incentive compensation expense.

Depreciation and Amortization

	Thirteen weeks ended					Thirty-nine weeks ended
	October 28,			October 29,		October 28,			October 29,
	2017			2016		2017			2016
	($ in millions)
Depreciation and amortization	$	44		$	40	$	127		$	118
$ Change	$	4				$	9
% Change		10.0	%				7.6	%

Depreciation and amortization increased by $4 million and $9 million for the thirteen and thirty-nine weeks ended October 28, 2017, respectively, as compared with the corresponding prior-year periods. The increase in depreciation and amortization reflected ongoing capital spending on store projects, enhancing our digital capabilities, and various other technologies and infrastructure.

Interest Expense, Net

	Thirteen weeks ended				Thirty-nine weeks ended
	October 28,		October 29,		October 28,		October 29,
	2017		2016		2017		2016
	($ in millions)
Interest expense	$	3	$	3	$	9	$	9
Interest income		(3)		(2)		(10)		(7)
Interest (income) / expense, net	$	—	$	1	$	(1)	$	2

Interest income increased by $1 million and $3 million for the thirteen and thirty-nine weeks ended October 28, 2017, respectively, as compared with the corresponding prior-year periods, while interest expense was unchanged. The increase in interest income was due to higher average interest rates earned on our cash investments.

Income Taxes

The Company recorded income tax provisions of $54 million and $165 million for the thirteen and thirty-nine weeks ended October 28, 2017, respectively, which represented effective tax rates of 34.7 percent and 33.2 percent. For the thirteen and thirty-nine weeks ended October 29, 2016, the Company recorded income tax provisions of $70 million and $248 million, which represented effective tax rates of 30.9 percent and 34.4 percent, respectively. 

20

The Company’s interim provision for income taxes is measured using an annual effective tax rate adjusted for discrete items that occur within the periods presented. The Company regularly assesses the adequacy of its provisions for income tax contingencies in accordance with the applicable authoritative guidance on accounting for income taxes. As a result, the Company may adjust the reserves for unrecognized tax benefits considering 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 limitation. The changes in the tax reserves were not significant for any of the periods presented.

For the thirteen weeks ended October 28, 2017, the Company recorded excess tax benefits of $2 million from stock-based compensation reflecting the change required by ASC 718 as well as a tax benefit of $5 million related to a staff reduction and reorganization charge of $13 million. Additionally, for the thirty-nine weeks ended October 28, 2017, the Company recorded a pension-related litigation charge of $50 million with a related tax benefit of $20 million. The litigation charge and the reorganization costs reduced the overall effective rate because they reduced the proportion of the Company’s worldwide income taxed in jurisdictions where the tax rates are higher.

For the thirteen and thirty-nine weeks ended October 29, 2016, due to a scheduled reassessment the Company increased the value of the intellectual property provided to its European business by Foot Locker in the U.S. The higher valuation resulted in catch-up deductions that reduced 2016’s tax expense by $10 million.

Excluding the effects of the excess tax benefits, the litigation charge, the reorganization costs, and the change in the value of the intellectual property, there was no significant change in the effective tax rate for the thirteen and thirty-nine weeks ended October 28, 2017 as compared with the corresponding prior-year periods.

The Company currently expects its full-year tax rate to approximate 34 percent excluding the effect of any nonrecurring items that may occur and the effects of potential tax reform. The actual tax rate will vary depending on the level of stock option exercise activity and the stock price at exercise. Additionally, the actual tax rate will also vary depending on the level and mix of income earned in the United States, as compared with our international operations.

Net Income

For the thirteen weeks ended October 28, 2017, net income decreased by $55 million, or 35 percent, and diluted earnings per share decreased by 31 percent to $0.81 per share, as compared with the corresponding prior-year period. For the thirty-nine weeks ended October 28, 2017, net income decreased by $142 million, or 30 percent, and diluted earnings per share decreased by 27 percent to $2.55 per share, as compared with the corresponding prior-year period.

Segment Information

We have two reportable segments, Athletic Stores and Direct-to-Customers, which are based on our method of internal reporting. We evaluate performance based on several factors, the primary financial measure of which is division results. Division profit reflects income before income taxes, pension litigation charge, reorganization charge, corporate expense, non-operating income, and net interest (income) / expense. The following table summarizes results by segment:

	Thirteen weeks ended				Thirty-nine weeks ended
	October 28,		October 29,		October 28,		October 29,
	2017		2016		2017		2016
Sales	($ in millions)
Athletic Stores	$	1,612	$	1,644	$	4,819	$	4,955
Direct-to-Customers		258		242		753		698
Total sales	$	1,870	$	1,886	$	5,572	$	5,653

21

	Thirteen weeks ended				Thirty-nine weeks ended
	October 28,		October 29,		October 28,		October 29,
	2017		2016		2017		2016
Operating Results	($ in millions)
Athletic Stores (1)	$	154	$	213	$	504	$	683
Direct-to-Customers		26		32		88		92
Division profit		180		245		592		775
Less: Pension litigation and reorganization charges (2) (3)		13		—		63		—
Less: Corporate expense		12		17		34		53
Operating profit		155		228		495		722
Other income (4)		1		—		2		3
Earnings before interest expense and income taxes		156		228		497		725
Interest (income) / expense, net		—		1		(1)		2
Income before income taxes	$	156	$	227	$	498	$	723

(1)	Included in the thirteen and thirty-nine weeks ended October 29, 2016 is a $6 million pre-tax non-cash impairment charge to write-down long-lived store assets of Runners Point and Sidestep.
(2)	Included in the thirteen and thirty-nine weeks ended October 28, 2017 is a charge of $50 million relating to a pension litigation matter described further in Note 14, Legal Proceedings.
(3)	Included in the thirteen and thirty-nine weeks ended October 28, 2017 is a $13 million pre-tax charge related to the reduction and reorganization of division and corporate staff that occurred in the third quarter of 2017. The substantial majority of the charge is for severance and related costs.
(4)	Other income includes non-operating items, such as lease termination gains, royalty income, insurance recoveries and the changes in fair value, premiums paid, and realized gains and losses associated with foreign currency option contracts.

Athletic Stores

	Thirteen weeks ended						Thirty-nine weeks ended
	October 28,			October 29,			October 28,			October 29,
	2017			2016			2017			2016
	($ in millions)
Sales	$	1,612		$	1,644		$	4,819		$	4,955
$ Change	$	(32)					$	(136)		$
% Change		(1.9)	%					(2.7)	%
Division profit	$	154		$	213		$	504		$	683
Division profit margin		9.6	%		13.0	%		10.5	%		13.8	%

Excluding the effect of foreign currency fluctuations, Athletic Stores segment sales decreased by 3.6 percent and 2.8 percent for the thirteen and thirty-nine weeks ended October 28, 2017, respectively, as compared with the corresponding prior-year periods. The sales decline for the current quarter and year-to-date periods, excluding the effect of foreign currency fluctuations, was across almost allstore banners, with the exception of Footaction andFoot Locker Canada, which increased sales.

Comparable-store sales decreased by 5.1 percent and 4.5 percent for the thirteen and thirty-nine weeks ended October 28, 2017, respectively. Foot Locker Canada generated positive comparable-store sales for the quarter and year-to-date periods, while Footaction was positive for the third quarter but not the year-to-date period.  All other store banners generated negative comparable-store sales for both periods.The overall decline in comparable-store sales was due to a decrease in footwear sales for both the quarter and year-to-date periods. The footwear sales decline in the quarter was across men’s, women’s, and children’s, whereas the year-to-date decline was related primarily to declines in children’ and men’s footwear. A comparable-sales increase in men’s lifestyle running footwear for both the quarter and year-to-date periods for the majority of our store banners was not enough to compensate for the comparable-store declines in basketball and court lifestyle footwear. The decline in most other footwear categories for both the quarter and year-to-date periods was the result of insufficient product availability of certain styles and the lack of product innovation in select categories to suit our customers’ quickly-changing style preferences.Women’s court styles mainly contributed to the comparable-store sales decline in women’s footwear both domestically and internationally for the quarter. The decline in women’s footwear was most significant in Foot Locker, Lady Foot Locker, and Foot Locker Europe.  Sales of children’s footwear declined for the year-to-date period due primarily by declines in the basketball category.

22

The decline in footwear sales was partially offset by gains in apparel sales, as the majority of our store banners experienced apparel sales gains for both the thirteen and thirty-nine weeks ended October 28, 2017. Most of our banners benefited from gains in men’s branded apparel and outerwear, which was partially offset by declines in private label and licensed apparel for both the quarter and year-to-date periods. Additionally, women’s apparel performed well for our SIX:02 banner for both the quarter and year-to-date periods, although this was largely driven by increased markdowns. For the quarter and year-to-date periods, children’s apparel experienced both total and comparable-store sales increases as compared to the corresponding prior-year periods.

Athletic Stores division profit decreased by 27.7 percent and 26.2 percent for the thirteen and thirty-nine weeks ended October 28, 2017, respectively, as compared with the corresponding prior-year periods. The decline in division profit margin for both the quarter and year-to-date periods was attributable primarily to a lower gross margin rate, coupled with a higher SG&A expense rate.

Direct-to-Customers

	Thirteen weeks ended						Thirty-nine weeks ended
	October 28,			October 29,			October 28,			October 29,
	2017			2016			2017			2016
	($ in millions)
Sales	$	258		$	242		$	753		$	698
$ Change	$	16					$	55
% Change		6.6	%					7.9	%
Division profit	$	26		$	32		$	88		$	92
Division profit margin		10.1	%		13.2	%		11.7	%		13.2	%

Comparable-sales for the Direct-to-Customers segment increased by 6.1 percent and 8.1 percent for the thirteen and thirty-nine weeks ended October 28, 2017, respectively, as compared with the corresponding prior-year periods. The increase in the quarter was driven primarily by Eastbay and the continued growth of ecommerce sales associated with our store-banner websites, both domestically and internationally. The increase for the year-to-date period was primarily related to the growth of our store-banner websites.

The footwear category continued to deliver the strongest gains during the current quarter and year-to-date periods. The footwear gains related to our domestic store-banner websites and Eastbay for both the quarter and year-to-date periods were driven by strong results in the children’s and men’s footwear categories.  For the quarter, the women’s business softened primarily in the running category. Our international store-banner websites for both the quarter and year-to-date periods were primarily driven by sales from men’s and women’s lifestyle running styles.

Direct-to-Customers division profit for the thirteen and thirty-nine weeks ended October 28, 2017 decreased by $6 million and $4 million, respectively, as compared with the corresponding prior-year periods. Division profit, as a percentage of sales, declined by 310 basis points and 150 basis points for the thirteen and thirty-nine weeks ended October 28, 2017, respectively, as compared with the corresponding prior-year periods. While sales increased, the gross margin rate declined due to increased markdowns in response to promotional activity in the market and, to a lesser degree, higher shipping and handling expense. Partially offsetting the gross margin decline was an expense rate improvement primarily related to lower publicity costs and incentive compensation expense in light of current performance as compared with our plan.

Corporate Expense

	Thirteen weeks ended				Thirty-nine weeks ended
	October 28,		October 29,		October 28,		October 29,
	2017		2016		2017		2016
	($ in millions)
Corporate expense	$	12	$	17	$	34	$	53
$ Change	$	(5)			$	(19)

23

Corporate expense consists of unallocated SG&A, as well as depreciation and amortization related to the Company’s corporate headquarters, centrally managed departments, unallocated insurance and benefit programs, certain foreign exchange transaction gains and losses, and other items. Depreciation and amortization included in corporate expense was $4 million and $11 million for both the thirteen and thirty-nine weeks ended October 28, 2017 and October 29, 2016, respectively.

The allocation of corporate expense to the operating divisions is adjusted annually based upon an internal study; accordingly, the allocation increased by $1 million and $4 million for the thirteen and thirty-nine weeks ended October 28, 2017, thus reducing corporate expense. Excluding the corporate allocation change, corporate expense decreased by $4 million and $15 million for the thirteen and thirty-nine weeks ended October 28, 2017, respectively.

Incentive compensation declined by $4 million and $11 million for the thirteen weeks and thirty-nine weeks ended October 28, 2017, respectively, reflecting the Company’s underperformance compared to its plan. Share-based compensation declined by $3 million and $6 million for the thirteen weeks and thirty-nine weeks ended October 28, 2017, respectively, which primarily represented the portion of share-based compensation that is tied to Company performance. Additionally, the decline for the thirty-nine weeks ended October 28, 2017 was due to the prior-year corporate headquarters relocation costs of $4 million. These decreases were partially offset by a $2 million litigation settlement charge recorded during the third quarter of 2017 and increased corporate support costs such as information technology and real estate management.

Liquidity and Capital Resources

Liquidity

Our primary source of liquidity has been cash flow from earnings, while the principal uses of cash have been: to fund inventory and other working capital requirements; to finance capital expenditures related to store openings, store remodelings, Internet and mobile sites, information systems, and other support facilities; to make retirement plan contributions, quarterly dividend payments, and interest payments; and to 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, and future cash flow from operations will be adequate to fund these requirements.

The Company may also from time to time repurchase its common stock or seek to retire or purchase outstanding debt through open market purchases, privately negotiated transactions, or otherwise. Share repurchases and retirement of debt, if any, will depend on prevailing market conditions, liquidity requirements, contractual restrictions, and other factors. The amounts involved may be material. As of October 28, 2017, approximately $863 million remained available under the Company’s current $1.2 billion share repurchase program.

As discussed further in the Legal Proceedings note under “Item 1. Financial Statements,” during the second quarter of 2017, in connection with our pension litigation, we recorded a pre-tax charge of $50 million ($30 million after-tax or $0.23 per diluted share). The Company previously recorded a pre-tax charge of $100 million during 2015. The second quarter 2017 charge reflects the Company’s revised estimate of its exposure for the matter, bringing the total pre-tax amount accrued to $150 million. In light of the uncertainties involved in this matter, there is no assurance that the ultimate resolution will not differ from the amount currently accrued by us. The total accrual of $150 million has been classified as a long-term liability due to the uncertainty involved with the resolution of this litigation, as the appeal process may be lengthy. The pension plan is currently sufficiently funded to initially absorb a $150 million liability and, accordingly, we currently do not anticipate the need to make any pension contributions in the near term in connection with this matter. The timing and the amount of contributions to the pension plan are dependent on the funded status of the plan and various other factors, such as interest rates and the performance of the plan’s assets.

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 vendors 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 needs from business operations.

24

Operating Activities

	Thirty-nine weeks ended
	October 28,		October 29,
	2017		2016
	($ in millions)
Net cash provided by operating activities	$	496	$	477
$ Change	$	19

The amount provided by operating activities reflects net income adjusted for non-cash items and working capital changes. Adjustments to net income for non-cash items include depreciation and amortization, and share-based compensation expense. The increase from the prior year primarily reflects working capital changes, partially offset by the decline in net income as compared with the prior year.

Investing Activities

	Thirty-nine weeks ended
	October 28,		October 29,
	2017		2016
	($ in millions)
Net cash used in investing activities	$	204	$	193
$ Change	$	11

Capital expenditures were $11 million higher than the prior year. The increase was due to increased spending on technology projects and cash payments related to the 2016 capital program. The Company’s full-year capital spending is expected to be approximately $269 million, which includes $198 million related to the remodeling or relocation of approximately 180 existing stores and the opening of approximately 90 new stores, as well as $71 million for the development of information systems, websites, and infrastructure, including supply chain initiatives. 

Financing Activities

	Thirty-nine weeks ended
	October 28,		October 29,
	2017		2016
	($ in millions)
Net cash used in financing activities	$	475	$	443
$ Change	$	32

During the thirty-nine weeks ended October 28, 2017, we repurchased 9,589,660 shares of our common stock for $362 million, as compared with 5,874,643 shares repurchased for $352 million in the corresponding prior-year period.

The Company also declared and paid dividends during the first three quarters of 2017 and 2016 of $120 million and $111 million, respectively. This represented quarterly rates of $0.31 and $0.275 per share for 2017 and 2016, respectively.  

Additionally, we received proceeds from the issuance of common stock in connection with employee stock programs of $17 million and $28 million for the thirty-nine weeks ended October 28, 2017 and October29,2016, respectively. Also, during the thirty-nine weeks ended October 28, 2017 and October29,2016, the Company paid $10 million and $6 million, respectively, to satisfy tax withholding obligations relating to the vesting of share-based equity awards.

Included in the prior year’s financing activities were fees of $2 million paid in connection with the 2016 Credit Agreement.

Critical Accounting Policies and Estimates

There have been no significant changes to our critical accounting policies and estimates from the information provided in Item 7, “Management’s Discussion and Analysis of Financial Condition and Results of Operations,” included in the Annual Report on Form 10-K for the fiscal year ended January 28, 2017.

25

Recent Accounting Pronouncements

Descriptions of the recently issued and adopted accounting principles are included Item 1. “Financial Statements” in Note 1, Summary of Significant Accounting Policies, to the Condensed Consolidated Financial Statements.

Item 4. Controls and Procedures

During the quarter, 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”)). Based on that evaluation, the Company’s CEO and CFO concluded that the Company’s disclosure controls and procedures were effective to ensure that information relating to the Company that is required to be disclosed in the reports that we file or submit under the Exchange Act is recorded, processed, summarized and reported, within the time periods specified in the SEC rules and forms, and is accumulated and communicated to management, including the CEO and CFO, as appropriate to allow timely decisions regarding required disclosure.

During the quarter ended October 28, 2017, there were no changes in the Company’s internal control over financial reporting (as defined in Rules 13a-15(f) of the Exchange Act) that materially affected or are reasonably likely to affect the Company’s internal control over financial reporting.

PART II - OTHER INFORMATION

Item 1. Legal Proceedings

Information regarding the Company’s legal proceedings is contained in the Legal Proceedings note under Item 1. “Financial Statements.”

Item 1A. Risk Factors

There were no material changes to the risk factors disclosed in the 2016 Annual Report on Form 10-K.

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds

The following table provides information with respect to shares of the Company’s common stock that the Company repurchased during the thirteen weeks ended October 28, 2017:  

					Approximate
				Total Number of	Dollar Value of
	Total	Average		Shares Purchased as	Shares that may
	Number	Price		Part of Publicly	yet be Purchased
	of Shares	Paid Per		Announced	Under the
Date Purchased	Purchased (1)	Share (1)		Program (2)	Program (2)
July 30 - Aug. 26, 2017	3,002,574	$	35.17	3,000,000	$	1,061,038,524
Aug. 27 - Sept. 30, 2017	4,788,800		35.34	4,788,760		891,816,280
Oct. 1 - Oct. 28, 2017	904,800		31.85	904,800		862,996,130
	8,696,174	$	34.92	8,693,560

(1)

These columns also reflect shares acquired in satisfaction of the tax withholding obligations of holders of restricted stock units and restricted stock awards which vested during the quarter, and shares repurchased pursuant to Rule 10b5-1 under the Securities Exchange Act of 1934. The calculation of the average price paid per share includes all fees, commissions, and other costs associated with the repurchase of such shares.

(2)

On February 14, 2017, the Board of Directors approved a 3-year, $1.2 billion share repurchase program extending through January 2020.

Item 6. Exhibits
(a)	Exhibits
	The exhibits that are in this report immediately follow the index.

26

SIGNATURE

Pursuant to the requirements 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.

Date: December 6, 2017	FOOT LOCKER, INC.
	/s/ Lauren B. Peters
	LAUREN B. PETERS
	Executive Vice President and Chief Financial Officer

27

FOOT LOCKER, INC.

INDEX OF  EXHIBITS

Exhibit No.	Description
12*	Computation of Ratio of Earnings to Fixed Charges.
15*	Accountants’ Acknowledgement.
31.1*	Certification of Chief Executive Officer Pursuant to Rule 13a-14(a) or 15d-14(a), as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
31.2*	Certification of Chief Financial Officer Pursuant to Rule 13a-14(a) or 15d-14(a), as adopted 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.
99*	Report of Independent Registered Public Accounting Firm.
101.INS*	XBRL Instance Document.
101.SCH*	XBRL Taxonomy Extension Schema.
101.CAL*	XBRL Taxonomy Extension Calculation Linkbase.
101.DEF*	XBRL Taxonomy Extension Definition Linkbase.
101.LAB*	XBRL Taxonomy Extension Label Linkbase.
101.PRE*	XBRL Taxonomy Extension Presentation Linkbase.
*	Filed herewith.
**	Furnished herewith.

28

EX-12.1

Exhibit 12

FOOT LOCKER, INC.

COMPUTATION OF RATIO OF EARNINGS TO FIXED CHARGES

(Unaudited)

($ in millions)

	Thirty-nine weeks ended					Fiscal Year Ended
		Oct. 28,		Oct. 29,		Jan. 28,		Jan. 30,		Jan. 31,		Feb. 1,		Feb. 2,
		2017		2016		2017		2016		2015		2014		2013
NET EARNINGS
Net income	$	333	$	475	$	664	$	541	$	520	$	429	$	397
Income tax expense		165		248		340		296		289		234		210
Interest expense, excluding capitalized interest		9		9		11		11		11		11		11
Portion of rents deemed representative of the interest factor (1/3)		202		189		269		252		249		236		222
	$	709	$	921	$	1,284	$	1,100	$	1,069	$	910	$	840
FIXED CHARGES
Gross interest expense	$	9	$	9	$	11	$	11	$	11	$	11	$	11
Portion of rents deemed representative of the interest factor (1/3)		202		189		269		252		249		236		222
	$	211	$	198	$	280	$	263	$	260	$	247	$	233
RATIO OF EARNINGS TO FIXED CHARGES		3.4		4.7		4.6		4.2		4.1		3.7		3.6

EX-15

Exhibit 15

ACCOUNTANTS’ ACKNOWLEDGEMENT

The Board of Directors

Foot Locker, Inc.:

We hereby acknowledge our awareness of the use of our report dated December 6, 2017 related to our review of interim financial information in the following Registration Statements:

- Form S-8 No. 33-10783

- Form S-8 No. 33-91888

- Form S-8 No. 33-91886

- Form S-8 No. 33-97832

- Form S-8 No. 333-07215

- Form S-8 No. 333-21131

- Form S-8 No. 333-62425

- Form S-8 No. 333-33120

- Form S-8 No. 333-41056

- Form S-8 No. 333-41058

- Form S-8 No. 333-74688

- Form S-8 No. 333-99829

- Form S-8 No. 333-111222

- Form S-8 No. 333-121515

- Form S-8 No. 333-144044

- Form S-8 No. 333-149803

- Form S-3 No. 33-43334

- Form S-3 No. 33-86300

- Form S-3 No. 333-64930

- Form S-8 No. 333-167066

- Form S-8 No. 333-171523

- Form S-8 No. 333-190680

- Form S-8 No. 333-196899

Pursuant to Rule 436(c) under the Securities Act of 1933 (the Act), such report is not considered a part of the registration statement prepared or certified by an independent registered public accounting firm or a report prepared or certified by an independent registered public accounting firm within the meaning of Sections 7 and 11 of the Act.

/s/ KPMG LLP

New York, New York

December 6, 2017

EX-31.1

Exhibit 31.1

CERTIFICATION

I, Richard A. Johnson, certify that:

1. I have reviewed this quarterly report on Form 10-Q 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 and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the Registrant and have:

a) designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the Registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

b) designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

c) evaluated the effectiveness of the Registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

d) disclosed in this report any change in the Registrant’s internal control over financial reporting that occurred during the Registrant’s most recent fiscal quarter (the Registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the Registrant’s internal control over financial reporting; and

5. The Registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the Registrant’s auditors and the Audit Committee of the Registrant’s Board of Directors (or persons performing the equivalent functions):

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.

December  6, 2017
	/s/ Richard A. Johnson
	Chief Executive Officer

EX-31.2

Exhibit 31.2

CERTIFICATION

I, Lauren B. Peters, certify that:

1. I have reviewed this quarterly report on Form 10-Q 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 and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the Registrant and have:

a) designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the Registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

b) designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

c) evaluated the effectiveness of the Registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

d) disclosed in this report any change in the Registrant’s internal control over financial reporting that occurred during the Registrant’s most recent fiscal quarter (the Registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the Registrant’s internal control over financial reporting; and

5. The Registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the Registrant’s auditors and the Audit Committee of the Registrant’s Board of Directors (or persons performing the equivalent functions):

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.

December  6, 2017
	/s/ Lauren B. Peters
	Chief Financial Officer

EX-32

Exhibit 32

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

In connection with the Quarterly Report on Form 10-Q of Foot Locker, Inc. (the “Registrant”) for the quarterly period ended October 28, 2017, as filed with the Securities and Exchange Commission on the date hereof (the “Report”), Richard A. Johnson, as Chief Executive Officer of the Registrant and Lauren B. Peters, as Chief Financial Officer of the Registrant, each hereby certifies, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, 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: December  6, 2017
	/s/ Richard A. Johnson
	Richard A. Johnson
	Chief Executive Officer
	/s/ Lauren B. Peters
	Lauren B. Peters
	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.

EX-99

Exhibit 99

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

The Board of Directors and Shareholders

Foot Locker, Inc.:

We have reviewed the accompanying condensed consolidated balance sheets of Foot Locker, Inc. and subsidiaries as of October 28, 2017 and October 29, 2016,  and the related condensed consolidated statements of operations and comprehensive income for the thirteen and thirty-nine week periods ended October 28, 2017 and October 29, 2016, and the related condensed consolidated statements of cash flows for the thirty-nine week periods ended October 28, 2017 and October 29, 2016. These condensed consolidated financial statements are the responsibility of the Company’s management.

We conducted our review in accordance with the standards of the Public Company Accounting Oversight Board (United States). A review of interim financial information consists principally of applying analytical procedures and making inquiries of persons responsible for financial and accounting matters. It is substantially less in scope than an audit conducted in accordance with the standards of the Public Company Accounting Oversight Board (United States), the objective of which is the expression of an opinion regarding the financial statements taken as a whole. Accordingly, we do not express such an opinion.

Based on our review, we are not aware of any material modifications that should be made to the condensed consolidated financial statements referred to above for them to be in conformity with U.S. generally accepted accounting principles.

We have previously audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States), the consolidated balance sheet of Foot Locker, Inc. and subsidiaries as of January 28, 2017, and the related consolidated statements of operations, comprehensive income, shareholders’ equity, and cash flows for the year then ended (not presented herein); and in our report dated March 23, 2017 we expressed an unqualified opinion on those consolidated financial statements. In our opinion, the information set forth in the accompanying condensed consolidated balance sheet as of January 28, 2017, is fairly stated, in all material respects, in relation to the consolidated balance sheet from which it has been derived.

/s/ KPMG LLP

New York, New York
December 6, 2017

XML

Document And Entity Information - shares	9 Months Ended
	Oct. 28, 2017	Nov. 24, 2017
Document And Entity Information [Abstract]
Document Type	10-Q
Amendment Flag	false
Document Period End Date	Oct. 28, 2017
Document Fiscal Year Focus	2017
Document Fiscal Period Focus	Q3
Trading Symbol	FL
Entity Common Stock, Shares Outstanding		121,205,589
Entity Registrant Name	FOOT LOCKER, INC.
Entity Central Index Key	0000850209
Current Fiscal Year End Date	--02-03
Entity Filer Category	Large Accelerated Filer

XML

CONDENSED CONSOLIDATED BALANCE SHEETS - USD ($) $ in Millions	Oct. 28, 2017	Jan. 28, 2017	[1]	Oct. 29, 2016
Current assets
Cash and cash equivalents	$ 890	$ 1,046		$ 865
Merchandise inventories	1,313	1,307		1,361
Other current assets	295	280		291
Assets, current, total	2,498	2,633		2,517
Property and equipment, net	835	765		732
Deferred taxes	164	161		171
Goodwill	158	155		156
Other intangible assets, net	45	42		43
Other assets	113	84		75
Total assets	3,813	3,840		3,694
Current liabilities
Accounts payable	241	249		215
Accrued and other liabilities	326	363		327
Current portion of capital lease obligations				1
Liabilities, current, total	567	612		543
Long-term debt and obligations under capital leases	126	127		127
Other liabilities	463	391		391
Total liabilities	1,156	1,130		1,061
Shareholders' equity
Common stock and paid-in capital: 133,336,171; 132,616,087 and 174,687,964 shares outstanding, respectively	921	900		1,168
Retained earnings	2,467	2,254		3,546
Accumulated other comprehensive loss	(286)	(363)		(353)
Less: Treasury stock at cost: 10,730,582; 1,120,466 and 42,326,538 shares, respectively	(445)	(81)		(1,728)
Total shareholders’ equity	2,657	2,710		2,633
Liabilities and equity, total	$ 3,813	$ 3,840		$ 3,694

[1] The balance sheet at January 28, 2017 has been derived from the previously reported audited financial statements at that date, but does not include all of the information and footnotes required by U.S. generally accepted accounting principles for complete financial statements. For further information, refer to the consolidated financial statements and footnotes thereto included in Foot Locker, Inc.'s Annual Report on Form 10-K for the year ended January 28, 2017

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CONDENSED CONSOLIDATED BALANCE SHEETS (Parenthetical) - shares	Oct. 28, 2017	Jan. 28, 2017	Oct. 29, 2016
CONSOLIDATED BALANCE SHEETS [Abstract]
Common Stock, Shares Outstanding, Issued, Total	133,336,171	132,616,087	174,687,964
Treasury Stock, Shares	10,730,582	1,120,466	42,326,538

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CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS - USD ($) shares in Millions, $ in Millions		3 Months Ended		9 Months Ended
		Oct. 28, 2017	Oct. 29, 2016	Oct. 28, 2017	Oct. 29, 2016
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS [Abstract]
Sales		$ 1,870	$ 1,886	$ 5,572	$ 5,653
Cost of sales		1,290	1,246	3,809	3,730
Selling, general and administrative expenses		368	366	1,078	1,077
Depreciation and amortization		44	40	127	118	[1]
Litigation and other charges		13	6	63	6
Income from operations		155	228	495	722
Interest (income) / expense, net			1	(1)	2
Other income	[2]	(1)		(2)	(3)
Income before income taxes		156	227	498	723
Income tax expense		54	70	165	248
Net income		$ 102	$ 157	$ 333	$ 475	[1]
Basic earnings per share		$ 0.81	$ 1.18	$ 2.57	$ 3.53
Weighted-average shares outstanding		126.0	132.9	129.6	134.6
Diluted earnings per share		$ 0.81	$ 1.17	$ 2.55	$ 3.50
Weighted-average shares outstanding, assuming dilution		126.4	134.0	130.3	135.7

[1] Amounts for the thirty-nine weeks ended October 29, 2016 have been revised from previously reported amounts to reflect the adoption of new accounting standards in the first quarter of 2017. For additional information, see the Recently Adopted Accounting Pronouncements note.

[2] Other income includes non-operating items, such as lease termination gains, royalty income, insurance recoveries, and the changes in fair value, premiums paid, and realized gains and losses associated with foreign currency option contracts.

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CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME - USD ($) $ in Millions	3 Months Ended		9 Months Ended
	Oct. 28, 2017	Oct. 29, 2016	Oct. 28, 2017	Oct. 29, 2016
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME [Abstract]
Net income	$ 102	$ 157	$ 333	$ 475	[1]
Foreign currency translation adjustment:
Translation adjustment arising during the period, net of income tax	(4)	(14)	70	3
Cash flow hedges:
Change in fair value of derivatives, net of income tax		1	1	4
Available for sale securities:
Unrealized gain on available-for-sale securities			1	1
Pension and postretirement adjustments:
Amortization of net actuarial gain/loss and prior service cost included in net periodic benefit costs, net of income tax expense of $1, $1, $3 and $3 million, respectively, and foreign currency fluctuations	2	3	5	5
Comprehensive income	$ 100	$ 147	$ 410	$ 488

[1] Amounts for the thirty-nine weeks ended October 29, 2016 have been revised from previously reported amounts to reflect the adoption of new accounting standards in the first quarter of 2017. For additional information, see the Recently Adopted Accounting Pronouncements note.

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CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (Parenthetical) - USD ($) $ in Millions	3 Months Ended		9 Months Ended
	Oct. 28, 2017	Oct. 29, 2016	Oct. 28, 2017	Oct. 29, 2016
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME [Abstract]
Income tax expense on amortization of net acturial gain/loss and prior service cost	$ 1	$ 1	$ 3	$ 3

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CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS - USD ($) $ in Millions		9 Months Ended
		Oct. 28, 2017	Oct. 29, 2016
From operating activities
Net income		$ 333	$ 475	[1]
Adjustments to reconcile net income to net cash provided by operating activities:
Non-cash impairment charges	[1]		6
Depreciation and amortization		127	118	[1]
Share-based compensation expense		11	17	[1]
Qualified pension plan contributions		(25)	(33)	[1]
Change in assets and liabilities:
Merchandise inventories		18	(77)	[1]
Accounts payable		(13)	(66)	[1]
Accrued and other liabilities		(29)	(3)	[1]
Pension litigation accrual		50
Other, net		24	40	[1]
Net cash provided by operating activities		496	477	[1]
From investing activities
Capital expenditures		(204)	(193)	[1]
Net cash used in investing activities		(204)	(193)	[1]
From financing activities
Purchase of treasury shares		(362)	(352)	[1]
Dividends paid on common stock		(120)	(111)	[1]
Proceeds from exercise of stock options		12	24	[1]
Treasury stock reissued under employee stock plan		5	4	[1]
Shares of common stock repurchased to satisfy tax withholding obligations		(10)	(6)	[1]
Payment of revolving credit agreement costs	[1]		(2)
Net cash used in financing activities		(475)	(443)	[1]
Effect of exchange rate fluctuations on cash, cash equivalents, and restricted cash		30	4	[1]
Net change in cash, cash equivalents, and restricted cash		(153)	(155)	[1]
Cash, cash equivalents, and restricted cash at beginning of period		1,073	1,048	[1]
Cash, cash equivalents, and restricted cash at end of period		920	893	[1]
Cash paid during the period:
Interest		6	6	[1]
Income taxes		$ 187	$ 271	[1]

[1] Amounts for the thirty-nine weeks ended October 29, 2016 have been revised from previously reported amounts to reflect the adoption of new accounting standards in the first quarter of 2017. For additional information, see the Recently Adopted Accounting Pronouncements note.

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Summary of Significant Accounting Policies

9 Months Ended

Oct. 28, 2017

Summary of Significant Accounting Policies [Abstract]

Summary of Significant Accounting Policies

1. Summary of Significant Accounting Policies

Basis of Presentation

The accompanying condensed consolidated financial statements contained in this report are unaudited. In the opinion of management, the condensed consolidated financial statements include all normal, recurring adjustments necessary for a fair presentation of the results for the interim periods of the fiscal year ending February 3, 2018 and of the fiscal year ended January 28, 2017. Certain items included in these statements are based on management’s estimates. Actual results may differ from those estimates. The results of operations for any interim period are not necessarily indicative of the results expected for the year. The accompanying unaudited condensed consolidated financial statements should be read in conjunction with the Notes to Consolidated Financial Statements contained in Foot Locker, Inc.’s (the “Company”) Form 10-K for the year ended January 28, 2017, as filed with the U.S. Securities and Exchange Commission (the “SEC”) on March 23, 2017.

Recent Accounting Pronouncements

In May 2014, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2014-09, Revenue from Contracts with Customers. The core principle of this amendment is that an entity should recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. ASU 2014-09, as amended by ASU 2015-14, ASU 2016-08, ASU 2016-10, ASU 2016-12 and ASU 2016-20, is effective for annual reporting periods beginning after December 15, 2017, and interim periods therein. These ASUs can be adopted either retrospectively to each prior reporting period presented or as a cumulative-effect adjustment as of the date of adoption. The Company expects a change in the timing of recognizing gift card breakage, sales relating to shipping and handling for undelivered orders, and a change in timing for the recognition of expenses related to direct-response advertising costs. In addition, we expect a balance sheet reclassification from inventory to other current assets relating to our right to recover products for our sales returns, as well as a change to the accounting for our unredeemed rewards for our loyalty program as a reduction to sales instead of recording the charge to cost of goods sold. Although we are in the process of finalizing the quantification of the effects on the areas discussed above, we currently do not expect the adoption will significantly affect our consolidated statements of operations, financial position or cash flows. The Company expects to adopt the provisions of this standard using the modified retrospective method, which requires a cumulative effect adjustment to the opening balance of retained earnings on the date of adoption.

In February 2016, the FASB issued ASU 2016-02, Leases. This ASU requires lessees to recognize a lease liability and a right-of-use asset for all leases, as well as additional disclosure regarding leasing arrangements. This standard will be effective for fiscal years beginning after December 15, 2018, including interim periods therein, and requires a modified retrospective adoption, with earlier adoption permitted. The Company does not expect to adopt this ASU until required and is evaluating the effect of this guidance. The Company has historically presented a non-GAAP measure to adjust its balance sheet to present operating leases as if they were capital leases. Based upon that analysis and preliminary evaluation of the standard, we estimate the adoption will result in the addition of $3 billion to $4 billion of assets and liabilities to our consolidated balance sheet, with no significant change to our consolidated statements of operations or cash flows.

In October 2016, the FASB issued ASU 2016-16, Income Taxes (Topic 740):Intra-Entity Transfers of Assets Other Than Inventory. ASU 2016-16 requires recognition of income tax consequences of an intra-entity transfer of an asset other than inventory when the transfer occurs. This ASU is effective and will be adopted by the Company for annual reporting periods beginning after December 15, 2017, including interim periods therein. The amendments in this update should be applied on a modified retrospective basis through a cumulative-effect adjustment directly to retained earnings as of the beginning of the period of adoption. Upon adoption, a company would write off any income tax effects that had been deferred from past intercompany transactions involving non-inventory assets to opening retained earnings. In addition, an entity would record deferred tax assets with an offset to opening retained earnings for amounts that entity had previously not recognized under existing guidance but would recognize under the new guidance. Based on deferred tax amounts related to applicable past intercompany transactions and the foreign exchange rates as of October 28, 2017, we expect the adoption will result in an increase in deferred income tax assets of approximately $40 million to $45 million.

Other recently issued accounting pronouncements did not, or are not believed by management to, have a material effect on the Company’s present or future consolidated financial statements.

Recently Adopted Accounting Pronouncements

In March 2016, the FASB issued ASU 2016-09, Improvements to Employee Share-Based Payment Accounting. ASU 2016-09 simplifies the accounting for share-based payment transactions, including tax consequences, forfeitures, and classifications of the tax related items in the statement of cash flows. The Company adopted ASU 2016-09 during the first quarter of 2017. Amendments relating to accounting for excess tax benefits and deficiencies have been adopted prospectively. For the thirteen and thirty-nine weeks ended October 28,2017, the Company recorded excess tax benefits related to share-based compensation awards of $2 million and $9 million, respectively, to the income statement, within the income tax provision, whereas such benefits were previously recognized in equity. Also, in the diluted net earnings per share calculation, when applying the treasury stock method for shares that could be repurchased, the assumed proceeds no longer include the amount of excess tax benefits. This ASU also requires that we present excess tax benefits or deficiencies as operating activities in our condensed consolidated statement of cash flow. As a result of adopting this change retrospectively, we reclassified excess tax benefits of $16 million which were previously classified as cash flows from financing activities to operating activities for the thirty-nine weeks ended October 29, 2016. Additionally, the presentation of employee taxes paid to taxing authorities for share-based transactions of $6 million, previously classified as cash flows from operating activities, were reclassified to financing activities for the thirty-nine weeks ended October 29, 2016. The Company has made a policy election of recording forfeitures as they occur instead of estimating forfeitures using a modified retrospective approach. The cumulative effect of this change was not significant.

In November 2016, the FASB issued ASU 2016-18, Statement of Cash Flows (Topic 230): Restricted Cash. ASU 2016-18 requires that a statement of cash flows explain the change during the period in the total cash, cash equivalents, and amounts generally described as restricted cash and restricted cash equivalents when reconciling the beginning-of-period and end-of-period total amounts. This ASU is effective for annual reporting periods beginning after December 15, 2017 including interim periods therein. The Company has adopted this ASU as of the first quarter of 2017. Accordingly, we restated our cash and cash equivalents balances in the condensed consolidated statements of cash flows to include restricted cash of $28 million as of October29,2016 and $27 million as of both January 30, 2016, and January 28, 2017. Please see Note 5, Restricted Cash, for a reconciliation of cash and cash equivalents as presented on our condensed consolidated balance sheets to cash, cash equivalents, and restricted cash as reported on our condensed consolidated statements of cash flows.

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Segment Information

9 Months Ended

Oct. 28, 2017

Segment Information [Abstract]

Segment Information

2. Segment Information

The Company has determined that its reportable segments are those that are based on its method of internal reporting. The Company has two reportable segments, Athletic Stores and Direct-to-Customers. The Company evaluates performance based on several factors, of which the primary financial measure is division results. Division profit reflects income before income taxes, pension litigation charge, reorganization charge, corporate expense, non-operating income, and net interest (income) / expense.

	Thirteen weeks ended				Thirty-nine weeks ended
	October 28,		October 29,		October 28,		October 29,
	2017		2016		2017		2016
Sales	($ in millions)
Athletic Stores	$	1,612	$	1,644	$	4,819	$	4,955
Direct-to-Customers		258		242		753		698
Total sales	$	1,870	$	1,886	$	5,572	$	5,653
Operating Results
Athletic Stores (1)	$	154	$	213	$	504	$	683
Direct-to-Customers		26		32		88		92
Division profit		180		245		592		775
Less: Pension litigation and reorganization charges (2), (3)		13		—		63		—
Less: Corporate expense		12		17		34		53
Operating profit		155		228		495		722
Interest (income) / expense, net		—		1		(1)		2
Other income (4)		1		—		2		3
Income before income taxes	$	156	$	227	$	498	$	723

(1)	Included in the thirteen and thirty-nine weeks ended October 29, 2016 is a $6 million pre-tax non-cash impairment charge to write down long-lived store assets of Runners Point and Sidestep. See Note 3, Litigation and Other Charges for additional information.
(2)	Included in the thirty-nine weeks ended October 28, 2017 is a pre-tax charge of $50 million relating to a pension litigation matter described further in Note 14, Legal Proceedings.
(3)	Included in the thirteen and thirty-nine weeks ended October 28, 2017 is $13 million in pre-tax reorganization costs related to the reduction and reorganization of division and corporate staff that occurred in the third quarter of 2017, described more fully in Note 3, Litigation and Other Charges.
(4)	Other income includes non-operating items, such as lease termination gains, royalty income, insurance recoveries, and the changes in fair value, premiums paid, and realized gains and losses associated with foreign currency option contracts.

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Litigation and Other Charges

9 Months Ended

Oct. 28, 2017

Litigation and Other Charges [Abstract]

Litigation and Other Charges

3. Litigation and Other Charges

	Thirteen weeks ended					Thirty-nine weeks ended
		October 28,		October 29,		October 28,		October 29,
		2017		2016		2017		2016
		($ in millions)
Pension litigation charge		$	—	$	—	$	50	$	—
Reorganization costs			13		—		13		—
Impairment of long-lived assets			—		6		—		6
Total litigation and other charges		$	13	$	6	$	63	$	6

During the third quarter of 2017, the Company reorganized its organizational structure by adjusting certain divisional responsibilities between our various businesses. As a result of this, as well as certain corporate staff reductions taken to improve corporate efficiency, the Company recorded a charge of $13 million. The charge consisted primarily of severance payments and benefit continuation costs for approximately 190 associates. The following is a reconciliation of the accrual for the quarter ended October 28,2017:

		Severance and		Other Related
		Benefit Costs		Charges		Total
	($ in millions)
Balance at January 28, 2017	$	—	$	—	$	—
Amounts charged to expense		11		2		13
Cash payments		(2)		—		(2)
Balance at October 28, 2017	$	9	$	2	$	11

As more fully discussed in Note 14, Legal Proceedings, during the second quarter of 2017 the Company recorded a $50 million pension litigation charge.

Included in the thirteen and thirty-nine weeks ended October 29, 2016 is a non-cash charge of $6 million to write down store fixtures and leasehold improvements related to the Runners Point and Sidestep businesses.

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Hurricane Related Costs

9 Months Ended

Oct. 28, 2017

Hurricane Related Costs [Abstract]

Hurricane Related Costs

4. Hurricane-Related Costs

Hurricanes Harvey, Irma, and Maria adversely affected the Company’s third quarter of 2017 operations and resulted in the closure of approximately 450 of the Company’s retail stores for varying periods of time. As of October28, 2017, 22 of these stores remain closed in Puerto Rico. The Company expects to re-open 8 of the remaining stores during the fourth quarter of 2017 and an additional 7 stores during the early part of 2018, dependent on timing of repairs and mall openings. Currently, we do not expect to re-open the balance of the stores.

The Company recorded a $7 million charge associated with its retail stores that were damaged by the hurricanes. This charge was recorded as a component of selling, general and administrative expenses in the Consolidated Statements of Operations for the thirteen and thirty-nine weeks ended October 28, 2017. The charge reflects estimated property damages and other costs of $2 million and inventory write-offs of $5 million. The Company is working with its insurance providers to determine if any of the losses can be recovered.

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Restricted Cash

9 Months Ended

Oct. 28, 2017

Restricted Cash [Abstract]

Restricted Cash

5. Restricted Cash

The following table provides a reconciliation of cash and cash equivalents, as reported on our condensed consolidated balance sheets, to cash, cash equivalents, and restricted cash, as reported on our condensed consolidated statements of cash flows.

	October 28,		October 29,		January 28,
	2017		2016		2017
	($ in millions)
Cash and cash equivalents	$	890	$	865	$	1,046
Restricted cash included in other current assets		1		—		—
Restricted cash included in other non-current assets		29		28		27
Cash, cash equivalents, and restricted cash	$	920	$	893	$	1,073

Amounts included in restricted cash primarily relate to amounts held in escrow in connection with various leasing arrangements in Europe. In addition, restricted cash reflects deposits held in insurance trusts in order to satisfy the requirement to collateralize part of the self-insured workers’ compensation and liability claims.

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Goodwill

9 Months Ended

Oct. 28, 2017

Goodwill and Other Intangible Assets, Net [Abstract]

Goodwill

6. Goodwill

Annually during the first quarter, or more frequently if impairment indicators arise, the Company reviews goodwill and intangible assets with indefinite lives for impairment. The annual review of goodwill and intangible assets with indefinite lives performed during the first quarter of 2017 did not result in the recognition of impairment. The following table provides a summary of goodwill by reportable segment. The change in the balance represents foreign currency exchange fluctuations.

	October 28,		October 29,		January 28,
	2017		2016		2017
	($ in millions)
Athletic Stores	$	18	$	17	$	16
Direct-to-Customers		140		139		139
Total goodwill	$	158	$	156	$	155

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Other Intangible Assets, Net

9 Months Ended

Oct. 28, 2017

Goodwill and Other Intangible Assets, Net [Abstract]

Other Intangible Assets, Net

7. Other Intangible Assets, net

The components of finite-lived intangible assets and intangible assets not subject to amortization are as follows:

		October 28, 2017						October 29, 2016						January 28, 2017
		Gross		Accum.		Net		Gross		Accum.		Net		Gross		Accum.		Net
($ in millions)		value		amort.		value		value		amort.		value		value		amort.		value
Amortized intangible assets: (1)
	Lease acquisition costs	$	129	$	(117)	$	12	$	118	$	(107)	$	11	$	116	$	(105)	$	11
	Trademarks / trade names		20		(13)		7		20		(13)		7		20		(13)		7
	Favorable leases		7		(6)		1		7		(5)		2		7		(5)		2
		$	156	$	(136)	$	20	$	145	$	(125)	$	20	$	143	$	(123)	$	20
Indefinite life intangible assets: (1)
	Runners Point Group trademarks / trade names					$	25					$	23					$	22
Other intangible assets, net						$	45					$	43					$	42

(1) The change in the ending balances also reflects the effect of foreign currency fluctuations due primarily to the movements of the euro in relation to the U.S. dollar.

During the thirty-nine week period ended October, 28 2017, the Company recorded $2 million of lease acquisition additions, primarily related to our European businesses. These additions are being amortized over a weighted-average life of 10 years.  Amortization expense recorded is as follows:

	Thirteen weeks ended				Thirty-nine weeks ended
($ in millions)		October 28, 2017		October 29, 2016	October 28, 2017		October 29, 2016
Amortization expense	$	1	$	1	$	3	$	3

Estimated future amortization expense for finite-life intangible assets is as follows:

		($ in millions)
Remainder of 2017	$	1
2018		4
2019		4
2020		3
2021		2
2022		2

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Accumulated Other Comprehensive Loss

9 Months Ended

Oct. 28, 2017

Accumulated Other Comprehensive Loss [Abstract]

Accumulated Other Comprehensive Loss

8. Accumulated Other Comprehensive Loss

Accumulated other comprehensive loss (“AOCL”), net of tax, is comprised of the following:

	October 28,		October 29,		January 28,
	2017		2016		2017
	($ in millions)
Foreign currency translation adjustments	$	(57)	$	(116)	$	(127)
Cash flow hedges		2		6		1
Unrecognized pension cost and postretirement benefit		(231)		(243)		(236)
Unrealized loss on available-for-sale security		—		—		(1)
	$	(286)	$	(353)	$	(363)

The changes in AOCL for the thirty-nine weeks ended October 28, 2017 were as follows:

					Items Related
	Foreign Currency				to Pension and		Unrealized Loss on
	Translation		Cash Flow		Postretirement		Available-For-
($ in millions)	Adjustments		Hedges		Benefits		Sale Security		Total
Balance as of January 28, 2017	$	(127)	$	1	$	(236)	$	(1)	$	(363)
OCI before reclassification		70		1		(1)		1		71
Reclassified from AOCL		—		—		6		—		6
Other comprehensive income		70		1		5		1		77
Balance as of October 28, 2017	$	(57)	$	2	$	(231)	$	—	$	(286)

Reclassifications from AOCL for the thirty-nine weeks ended October 28, 2017 were as follows:

		($ in millions)
Amortization of actuarial (gain) loss:
Pension benefits- amortization of actuarial loss	$	10
Postretirement benefits- amortization of actuarial gain		(1)
Net periodic benefit cost (see Note 12)		9
Income tax benefit		(3)
Net of tax	$	6

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Financial Instruments

9 Months Ended

Oct. 28, 2017

Financial Instruments [Abstract]

Financial Instruments

9. Financial Instruments

The Company operates internationally and utilizes certain derivative financial instruments to mitigate its foreign currency exposures, primarily related to third-party and intercompany forecasted transactions. As a result of the use of derivative instruments, the Company is exposed to the risk that counterparties will fail to meet their contractual obligations. To mitigate this counterparty credit risk, the Company has a practice of entering into contracts only with major financial institutions selected based upon their credit ratings and other financial factors. The Company monitors the creditworthiness of counterparties throughout the duration of the derivative instrument. Additional information is contained within Note 10, Fair Value Measurements.

Derivative Holdings Designated as Hedges

For a derivative to qualify as a hedge at inception and throughout the hedged period, the Company formally documents the nature of the hedged items and the relationships between the hedging instruments and the hedged items, as well as its risk-management objectives, strategies for undertaking the various hedge transactions, and the methods of assessing hedge effectiveness and ineffectiveness. In addition, for hedges of forecasted transactions, the significant characteristics and expected terms of a forecasted transaction must be specifically identified, and it must be probable that each forecasted transaction would occur. If it were deemed probable that the forecasted transaction would not occur, the gain or loss on the derivative instrument would be recognized in earnings immediately. The amount of such gains or losses that were recognized in earnings during the thirty-nine weeks ended October 28, 2017 was not significant and there were no such gains or losses in the corresponding prior-year period. Derivative financial instruments qualifying for hedge accounting must maintain a specified level of effectiveness between the hedging instrument and the item being hedged, both at inception and throughout the hedged period, which management evaluates periodically.

The primary currencies to which the Company is exposed are the euro, British pound, Canadian dollar, and Australian dollar. For the most part, merchandise inventories are purchased by each geographic area in their respective local currency. The most significant exception to this is the United Kingdom, whose merchandise inventory purchases are denominated in euros. For option and foreign exchange forward contracts designated as cash flow hedges of the purchase of inventory, the effective portion of gains and losses is deferred as a component of AOCL and is recognized as a component of cost of sales when the related inventory is sold. The amount reclassified to cost of sales related to such contracts was not significant for any of the periods presented. The effective portion of gains or losses associated with other forward contracts is deferred as a component of AOCL until the underlying transaction is reported in earnings. The ineffective portion of gains and losses related to cash flow hedges recorded to earnings was also not significant for any of the periods presented. When using a forward contract as a hedging instrument, the Company excludes the time value of the contract from the assessment of effectiveness. At quarter-end, substantially all of the Company’s hedged forecasted transactions were less than twelve months into the future, and the Company expects the derivative-related amounts reported in AOCL to be reclassified to earnings within twelve months.

The net change in the fair value of the foreign exchange derivative financial instruments designated as cash flow hedges was not significant for the thirteen weeks ended October 28, 2017 and was a $1 million gain for the thirty-nine weeks ended October 28, 2017. At October 28, 2017, a $2 million gain remained in AOCL.For the thirteen and thirty-nine weeks ended October 29, 2016, the net change in fair value was a $1 million and $4 million gain, respectively. The notional value of the foreign exchange contracts designated as hedges outstanding at October 28, 2017 was $138 million, and these contracts mature at various dates through January 2019.  

Derivative Holdings Not Designated as Hedges

The Company enters 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 selling, general and administrative expenses or other income, depending on the type of transaction. The net change in fair value was not significant for the thirteen and thirty-nine weeks ended October 28, 2017.  

The net change in fair value resulted in income of $1 million for the thirteen weeks ended October 29, 2016, and was not significant for the thirty-nine weeks ended October 29, 2016. The notional value of the foreign exchange contracts not designated as hedges outstanding at October 28, 2017 was $2 million, and these contracts mature in November 2017.

From time to time, the Company mitigates the effect of fluctuating foreign exchange rates on the reporting of foreign-currency denominated earnings by entering into currency option contracts. Changes in the fair value of these foreign currency option contracts, which are not designated as hedges, are recorded in earnings immediately within other income. The realized gains, premiums paid, and changes in the fair market value recorded were not significant for any of the periods presented. No such contracts were outstanding at October 28, 2017. 

Fair Value of Derivative Contracts 

The following represents the fair value of the Company’s derivative contracts. Many of the Company’s agreements allow for a netting arrangement. The following is presented on a gross basis, by type of contract:

	Balance Sheet	October 28,		October 29,		January 28,
($ in millions)	Caption	2017		2016		2017
Hedging Instruments:
Foreign exchange forward contracts	Current assets	$	2	$	7	$	3
Foreign exchange forward contracts	Current liabilities	$	1	$	—	$	3
Non-hedging Instruments:
Foreign exchange forward contracts	Current assets	$	—	$	1	$	—

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Fair Value Measurements

9 Months Ended

Oct. 28, 2017

Fair Value Measurements [Abstract]

Fair Value Measurements

10. Fair Value Measurements

The Company’s financial assets recorded at fair value are categorized as follows:

Level 1 – Quoted prices for identical instruments in active markets.

Level 2 –	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.

The following tables provide a summary of the Company’s recognized assets and liabilities that are measured at fair value on a recurring basis:

	As of October 28, 2017						As of October 29, 2016						As of January 28, 2017
	($ in millions)
	Level 1		Level 2		Level 3		Level 1		Level 2		Level 3		Level 1		Level 2		Level 3
Assets
Available-for-sale securities	$	—	$	7	$	—	$	—	$	7	$	—	$	—	$	6	$	—
Foreign exchange forward contracts		—		2		—		—		8		—		—		3		—
Total Assets	$	—	$	9	$	—	$	—	$	15	$	—	$	—	$	9	$	—
Liabilities
Foreign exchange forward contracts		—		1		—		—		—		—		—		3		—
Total Liabilities	$	—	$	1	$	—	$	—	$	—	$	—	$	—	$	3	$	—

Securities classified as available-for-sale are recorded at fair value with unrealized gains and losses reported, net of tax, in other comprehensive income, unless unrealized gains or losses are determined to be other than temporary. 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 Company’s 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.

There were no transfers into or out of Level 1, Level 2, or Level 3 assets and liabilities for any of the periods presented.

The carrying value and estimated fair value of long-term debt and obligations under capital leases were as follows:

	October 28,		October 29,		January 28,
	2017		2016		2017
	($ in millions)
Carrying value	$	126	$	128	$	127
Fair value	$	145	$	150	$	148

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. The carrying values of cash and cash equivalents, and other current receivables and payables approximate their fair value.

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Earnings Per Share

9 Months Ended

Oct. 28, 2017

Earnings Per Share [Abstract]

Earnings Per Share

11. Earnings Per Share

The Company accounts for and discloses earnings per share using the treasury stock method. Basic earnings per share is computed by dividing net income for the period by the weighted-average number of common shares outstanding at the end of the period. Restricted stock awards, which contain non-forfeitable rights to dividends, are considered participating securities and are included in the calculation of basic earnings per share. Diluted earnings per share reflects the weighted-average number of common shares outstanding during the period used in the basic earnings per share computation plus dilutive common stock equivalents.

The computation of basic and diluted earnings per share is as follows:

	Thirteen weeks ended					Thirty-nine weeks ended
		October 28,		October 29,		October 28,		October 29,
		2017		2016		2017		2016
		(in millions, except per share data)
Net Income		$	102	$	157	$	333	$	475
Weighted-average common shares outstanding			126.0		132.9		129.6		134.6
Dilutive effect of potential common shares			0.4		1.1		0.7		1.1
Weighted-average common shares outstanding assuming dilution			126.4		134.0		130.3		135.7
Earnings per share - basic		$	0.81	$	1.18	$	2.57	$	3.53
Earnings per share - diluted		$	0.81	$	1.17	$	2.55	$	3.50
Anti-dilutive share-based awards excluded from diluted calculation			2.0		0.5		1.6		0.4

The Company adopted ASU 2016-09 during the first quarter of 2017. As a result, excess tax benefits and tax deficiencies are no longer included as assumed proceeds in the calculation of diluted shares outstanding. This change was adopted prospectively.

Contingently issuable shares of 0.4 million and 0.3 million have not been included as the vesting conditions have not been satisfied as of October 28, 2017 and October 29, 2016, respectively. These shares relate to restricted stock units issued in connection with the Company’s long-term incentive program.

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Pension and Postretirement Plans

9 Months Ended

Oct. 28, 2017

Pension and Postretirement Plans [Abstract]

Pension and Postretirement Plans

12. Pension and Postretirement Plans

The Company has defined benefit pension plans covering certain of its North American employees, which are funded in accordance with the provisions of the laws where the plans are in effect. The Company also has a defined benefit pension plan covering certain employees of the Runners Point Group.

In addition to providing pension benefits, the Company sponsors postretirement medical and life insurance plans, which are available to most of its retired U.S. employees. These medical and life insurance plans are contributory and are not funded.

The following are the components of net periodic pension benefit cost and net periodic postretirement benefit income, which are recognized as part of SG&A expense:

	Pension Benefits								Postretirement Benefits
	Thirteen weeks ended				Thirty-nine weeks ended				Thirteen weeks ended				Thirty-nine weeks ended
	Oct. 28,		Oct. 29,		Oct. 28,		Oct. 29,		Oct. 28,		Oct. 29,		Oct. 28,		Oct. 29,
($ in millions)	2017		2016		2017		2016		2017		2016		2017		2016
Service cost	$	4	$	4	$	12	$	12	$	—	$	—	$	—	$	—
Interest cost		6		6		19		19		—		1		—		1
Expected return on plan assets		(9)		(9)		(28)		(27)		—		—		—		—
Amortization of net loss (gain)		3		4		10		11		—		(1)		(1)		(2)
Net benefit expense (income)	$	4	$	5	$	13	$	15	$	—	$	—	$	(1)	$	(1)

During the first quarter of 2017, the Company made a contribution of $25 million to the U.S. qualified plan. The Company continually evaluates the amount and timing of any future contributions. The Company currently does not expect to make any further pension plan contributions during this year.Actual contributions are dependent on several factors, including the outcome of the ongoing U.S. pension litigation. See Note 14, Legal Proceedings, for further information.

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Share-Based Compensation

9 Months Ended

Oct. 28, 2017

Share-Based Compensation [Abstract]

Share-Based Compensation

13. Share-Based Compensation

Total compensation expense included in SG&A, and the associated tax benefits recognized related to the Company’s share-based compensation plans, were as follows:

	Thirteen weeks ended				Thirty-nine weeks ended
	October 28,		October 29,		October 28,		October 29,
	2017		2016		2017		2016
	($ in millions)
Options and shares purchased under the employee stock purchase plan	$	2	$	3	$	7	$	8
Restricted stock and restricted stock units		1		3		4		9
Total share-based compensation expense	$	3	$	6	$	11	$	17
Tax benefit recognized	$	1	$	2	$	3	$	5

Valuation Model and Assumptions

The Company uses the Black-Scholes option-pricing model to estimate the fair value of share-based awards. The Black-Scholes option-pricing model incorporates various and highly subjective assumptions, including expected term and expected volatility.

During the first quarter of 2017, in connection with the adoption of ASU 2016-09, we have made the accounting policy election to discontinue estimating forfeitures and will account for forfeitures as they occur.

The following table shows the Company’s assumptions used to compute share-based compensation expense for awards granted during the thirty-nine weeks ended October 28, 2017 and October 29, 2016:  

		Stock Option Plans						Stock Purchase Plan
		October 28,			October 29,			October 28,			October 29,
		2017			2016			2017			2016
Weighted-average risk free rate of interest		2.1	%		1.4	%		0.9	%		0.4	%
Expected volatility		25	%		30	%		29	%		27	%
Weighted-average expected award life (in years)		5.4			5.7			1.0			1.0
Dividend yield		1.9	%		1.7	%		2.0	%		1.7	%
Weighted-average fair value	$	14.74		$	15.71		$	10.84		$	14.04

The information in the following table covers option activity under the Company’s stock option plans for the thirty-nine weeks ended October 28, 2017:

		Weighted-		Weighted-
	Number	Average		Average
	of	Remaining		Exercise
	Shares	Contractual Life		Price
	(in thousands)	(in years)		(per share)
Options outstanding at the beginning of the year	2,806			$	42.61
Granted	547				69.58
Exercised	(536)				21.38
Expired or cancelled	(19)				61.01
Options outstanding at October 28, 2017	2,798		6.7	$	51.82
Options exercisable at October 28, 2017	1,729		5.4	$	42.91
Options available for future grant at October 28, 2017	10,759

The total fair value of options vested as of October 28, 2017 and October 29, 2016 was $8 million and $9 million, respectively. The cash received from option exercises for the thirteen and thirty-nine weeks ended October 28, 2017 was $2 million and $12 million, respectively. The cash received from option exercises for the thirteen and thirty-nine weeks ended October 29, 2016 was $10 million and $24 million, respectively.

The total intrinsic value of options exercised (the difference between the market price of the Company’s common stock on the exercise date and the price paid by the optionee to exercise the option) is presented below:

	Thirteen weeks ended				Thirty-nine weeks ended
	October 28,		October 29,		October 28,		October 29,
	2017		2016		2017		2016
	($ in millions)
Exercised	$	5	$	19	$	20	$	45

The total tax benefit realized from option exercises was $2 million and $8 million for the thirteen and thirty-nine weeks ended October 28, 2017. The total tax benefit realized from option exercises was $7 million and $17 million for the corresponding prior-year periods.

The aggregate intrinsic value for stock options outstanding, outstanding and exercisable, and vested and expected to vest (the difference between the Company’s 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:

	Thirty-nine weeks ended
	October 28,		October 29,
	2017		2016
	($ in millions)
Outstanding	$	5	$	78
Outstanding and exercisable	$	5	$	71
Vested and expected to vest	$	5	$	78

As of October 28, 2017 there was $7 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 October 28, 2017:

	Options Outstanding				Options Exercisable
		Weighted-
		Average		Weighted-			Weighted-
		Remaining		Average			Average
Range of Exercise	Number	Contractual		Exercise	Number		Exercise
Prices	Outstanding	Life		Price	Exercisable		Price
	(in thousands, except prices per share and contractual life)
$9.85 to $24.75	344	2.7	$	16.77	344	$	16.77
$30.92 to $45.75	787	5.5		38.33	747		38.50
$48.55 to $62.11	704	6.9		61.05	472		61.35
$63.79 to $73.21	963	8.8		68.60	166		64.35
	2,798	6.7	$	51.82	1,729	$	42.91

Restricted Stock and Restricted Stock Units

Restricted shares of the Company’s common stock and restricted stock units (“RSU”) may be awarded to certain officers and key employees of the Company. Additionally, RSU awards are made to employees in connection with the Company’s long-term incentive program, and to nonemployee directors. Each RSU represents the right to receive one share of the Company’s common stock provided that the performance and vesting conditions are satisfied. There were 361,137 and 678,466 RSU awards outstanding as of October 28, 2017 and October 29, 2016, respectively.

Generally, awards fully vest after the passage of time, typically three years. However, RSU awards made in connection with the Company’s performance-based long-term incentive program are earned after the attainment of certain performance metrics and vest after the passage of time. Restricted stock is considered outstanding at the time of grant and the holders have voting rights. Dividends are paid to holders of restricted stock that vest with the passage of time. With regard to performance-based restricted stock, dividends will be accumulated and paid after the performance criteria are met. No dividends are paid or accumulated on RSU awards. Compensation expense is recognized using the market value at the date of grant and is amortized over the vesting period, provided the recipient continues to be employed by the Company.

Restricted stock and RSU activity for the thirty-nine weeks ended October 28, 2017 is summarized as follows:

			Weighted-
			Average	Weighted-
		Number	Remaining	Average
		of	Contractual	Grant Date
		Shares	Life	Fair Value
		(in thousands)	(in years)		(per share)
Nonvested at beginning of year		798		$	56.91
Granted		328			63.72
Vested		(286)			49.55
Expired or cancelled		(447)			64.74
Nonvested at October 28, 2017		393	1.5	$	59.07
Aggregate value ($ in millions)	$	23

The total value of awards for which restrictions lapsed during the thirty-nine weeks ended October 28, 2017 and October 29, 2016 was $14 million and $8 million, respectively. As of October 28, 2017, there was $10 million of total unrecognized compensation cost related to nonvested restricted awards.

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Legal Proceedings

9 Months Ended

Oct. 28, 2017

Legal Proceedings [Abstract]

Legal Proceedings

14. Legal Proceedings

Legal proceedings pending against the Company or its consolidated subsidiaries consist of ordinary, routine litigation, including administrative proceedings, incidental to the business of the Company or businesses that have been sold or disposed of by the Company in past years. These legal proceedings include commercial, intellectual property, customer, environmental, and employment-related claims.

The Company and the Company’s U.S. retirement plan are defendants in a class action (Osberg v. Foot Locker Inc. et ano., filed in the U.S. District Court for the Southern District of New York) in which the plaintiff alleges that, in connection with the 1996 conversion of the retirement plan to a defined benefit plan with a cash balance formula, the Company and the retirement plan failed to properly advise plan participants of the “wear-away” effect of the conversion. Plaintiff’s claims were for breach of fiduciary duty under the Employee Retirement Income Security Act of 1974, as amended, and violation of the statutory provisions governing the content of the Summary Plan Description. During the third quarter of 2015, the trial court ruled that the retirement plan be reformed. As a  result of this development, the Company recorded a charge of $100 million pre-tax ($61 million after-tax) during the third quarter of 2015.  

The Company appealed the trial court’s decision, and the judgment was stayed pending the outcome of the appeal process. During the second quarter of 2017, the Second Circuit Court of Appeals affirmed the trial court’s decision. In light of this development, the Company reassessed its estimate of the liability. The Company’s updated reasonable estimate of this liability is a range between $150 million and $260 million. The high end of the range reflects the estimated cost to reform the retirement plan in accordance with the court ruling; however, it excludes any legal fees that may be awarded to plaintiff’s counsel. No amount within that range is more probable than any other amount and therefore, in accordance with U.S. GAAP, the Company recorded a charge of $50 million pre-tax ($30 million after-tax) during the second quarter of 2017, bringing the cumulative amount accrued for this matter to $150 million. The accrual has been classified as a long-term liability. The Company will continue to vigorously defend itself in this case and on November 8, 2017 filed a Petition for Writ of Certiorari with the U.S. Supreme Court. In light of the uncertainties involved in this matter, there is no assurance that the ultimate resolution will not differ from the amount currently accrued by the Company.

Management does 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 the Company’s 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, and judgments could be rendered or settlements entered into that could adversely affect the Company’s operating results or cash flows in a particular period.

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Summary of Significant Accounting Policies (Policy)

9 Months Ended

Oct. 28, 2017

Summary of Significant Accounting Policies [Abstract]

Basis of Presentation

Basis of Presentation

The accompanying condensed consolidated financial statements contained in this report are unaudited. In the opinion of management, the condensed consolidated financial statements include all normal, recurring adjustments necessary for a fair presentation of the results for the interim periods of the fiscal year ending February 3, 2018 and of the fiscal year ended January 28, 2017. Certain items included in these statements are based on management’s estimates. Actual results may differ from those estimates. The results of operations for any interim period are not necessarily indicative of the results expected for the year. The accompanying unaudited condensed consolidated financial statements should be read in conjunction with the Notes to Consolidated Financial Statements contained in Foot Locker, Inc.’s (the “Company”) Form 10-K for the year ended January 28, 2017, as filed with the U.S. Securities and Exchange Commission (the “SEC”) on March 23, 2017.

Recent Accounting Pronouncements

Recent Accounting Pronouncements

In May 2014, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2014-09, Revenue from Contracts with Customers. The core principle of this amendment is that an entity should recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. ASU 2014-09, as amended by ASU 2015-14, ASU 2016-08, ASU 2016-10, ASU 2016-12 and ASU 2016-20, is effective for annual reporting periods beginning after December 15, 2017, and interim periods therein. These ASUs can be adopted either retrospectively to each prior reporting period presented or as a cumulative-effect adjustment as of the date of adoption. The Company expects a change in the timing of recognizing gift card breakage, sales relating to shipping and handling for undelivered orders, and a change in timing for the recognition of expenses related to direct-response advertising costs. In addition, we expect a balance sheet reclassification from inventory to other current assets relating to our right to recover products for our sales returns, as well as a change to the accounting for our unredeemed rewards for our loyalty program as a reduction to sales instead of recording the charge to cost of goods sold. Although we are in the process of finalizing the quantification of the effects on the areas discussed above, we currently do not expect the adoption will significantly affect our consolidated statements of operations, financial position or cash flows. The Company expects to adopt the provisions of this standard using the modified retrospective method, which requires a cumulative effect adjustment to the opening balance of retained earnings on the date of adoption.

In February 2016, the FASB issued ASU 2016-02, Leases. This ASU requires lessees to recognize a lease liability and a right-of-use asset for all leases, as well as additional disclosure regarding leasing arrangements. This standard will be effective for fiscal years beginning after December 15, 2018, including interim periods therein, and requires a modified retrospective adoption, with earlier adoption permitted. The Company does not expect to adopt this ASU until required and is evaluating the effect of this guidance. The Company has historically presented a non-GAAP measure to adjust its balance sheet to present operating leases as if they were capital leases. Based upon that analysis and preliminary evaluation of the standard, we estimate the adoption will result in the addition of $3 billion to $4 billion of assets and liabilities to our consolidated balance sheet, with no significant change to our consolidated statements of operations or cash flows.

In October 2016, the FASB issued ASU 2016-16, Income Taxes (Topic 740):Intra-Entity Transfers of Assets Other Than Inventory. ASU 2016-16 requires recognition of income tax consequences of an intra-entity transfer of an asset other than inventory when the transfer occurs. This ASU is effective and will be adopted by the Company for annual reporting periods beginning after December 15, 2017, including interim periods therein. The amendments in this update should be applied on a modified retrospective basis through a cumulative-effect adjustment directly to retained earnings as of the beginning of the period of adoption. Upon adoption, a company would write off any income tax effects that had been deferred from past intercompany transactions involving non-inventory assets to opening retained earnings. In addition, an entity would record deferred tax assets with an offset to opening retained earnings for amounts that entity had previously not recognized under existing guidance but would recognize under the new guidance. Based on deferred tax amounts related to applicable past intercompany transactions and the foreign exchange rates as of October 28, 2017, we expect the adoption will result in an increase in deferred income tax assets of approximately $40 million to $45 million.

Other recently issued accounting pronouncements did not, or are not believed by management to, have a material effect on the Company’s present or future consolidated financial statements.

Recently Adopted Accounting Pronouncements

In March 2016, the FASB issued ASU 2016-09, Improvements to Employee Share-Based Payment Accounting. ASU 2016-09 simplifies the accounting for share-based payment transactions, including tax consequences, forfeitures, and classifications of the tax related items in the statement of cash flows. The Company adopted ASU 2016-09 during the first quarter of 2017. Amendments relating to accounting for excess tax benefits and deficiencies have been adopted prospectively. For the thirteen and thirty-nine weeks ended October 28,2017, the Company recorded excess tax benefits related to share-based compensation awards of $2 million and $9 million, respectively, to the income statement, within the income tax provision, whereas such benefits were previously recognized in equity. Also, in the diluted net earnings per share calculation, when applying the treasury stock method for shares that could be repurchased, the assumed proceeds no longer include the amount of excess tax benefits. This ASU also requires that we present excess tax benefits or deficiencies as operating activities in our condensed consolidated statement of cash flow. As a result of adopting this change retrospectively, we reclassified excess tax benefits of $16 million which were previously classified as cash flows from financing activities to operating activities for the thirty-nine weeks ended October 29, 2016. Additionally, the presentation of employee taxes paid to taxing authorities for share-based transactions of $6 million, previously classified as cash flows from operating activities, were reclassified to financing activities for the thirty-nine weeks ended October 29, 2016. The Company has made a policy election of recording forfeitures as they occur instead of estimating forfeitures using a modified retrospective approach. The cumulative effect of this change was not significant.

In November 2016, the FASB issued ASU 2016-18, Statement of Cash Flows (Topic 230): Restricted Cash. ASU 2016-18 requires that a statement of cash flows explain the change during the period in the total cash, cash equivalents, and amounts generally described as restricted cash and restricted cash equivalents when reconciling the beginning-of-period and end-of-period total amounts. This ASU is effective for annual reporting periods beginning after December 15, 2017 including interim periods therein. The Company has adopted this ASU as of the first quarter of 2017. Accordingly, we restated our cash and cash equivalents balances in the condensed consolidated statements of cash flows to include restricted cash of $28 million as of October29,2016 and $27 million as of both January 30, 2016, and January 28, 2017. Please see Note 5, Restricted Cash, for a reconciliation of cash and cash equivalents as presented on our condensed consolidated balance sheets to cash, cash equivalents, and restricted cash as reported on our condensed consolidated statements of cash flows

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Segment Information (Tables)

9 Months Ended

Oct. 28, 2017

Segment Information [Abstract]

Sales and Division Operating Results for Reportable Segments

The Company evaluates performance based on several factors, of which the primary financial measure is division results. Division profit reflects income before income taxes, pension litigation charge, reorganization charge, corporate expense, non-operating income, and net interest (income) / expense.

	Thirteen weeks ended				Thirty-nine weeks ended
	October 28,		October 29,		October 28,		October 29,
	2017		2016		2017		2016
Sales	($ in millions)
Athletic Stores	$	1,612	$	1,644	$	4,819	$	4,955
Direct-to-Customers		258		242		753		698
Total sales	$	1,870	$	1,886	$	5,572	$	5,653
Operating Results
Athletic Stores (1)	$	154	$	213	$	504	$	683
Direct-to-Customers		26		32		88		92
Division profit		180		245		592		775
Less: Pension litigation and reorganization charges (2), (3)		13		—		63		—
Less: Corporate expense		12		17		34		53
Operating profit		155		228		495		722
Interest (income) / expense, net		—		1		(1)		2
Other income (4)		1		—		2		3
Income before income taxes	$	156	$	227	$	498	$	723

(1)	Included in the thirteen and thirty-nine weeks ended October 29, 2016 is a $6 million pre-tax non-cash impairment charge to write down long-lived store assets of Runners Point and Sidestep. See Note 3, Litigation and Other Charges for additional information.
(2)	Included in the thirty-nine weeks ended October 28, 2017 is a pre-tax charge of $50 million relating to a pension litigation matter described further in Note 14, Legal Proceedings.
(3)	Included in the thirteen and thirty-nine weeks ended October 28, 2017 is $13 million in pre-tax reorganization costs related to the reduction and reorganization of division and corporate staff that occurred in the third quarter of 2017, described more fully in Note 3, Litigation and Other Charges.
(4)	Other income includes non-operating items, such as lease termination gains, royalty income, insurance recoveries, and the changes in fair value, premiums paid, and realized gains and losses associated with foreign currency option contracts.

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Litigation and Other Charges (Tables)

9 Months Ended

Oct. 28, 2017

Litigation and Other Charges [Abstract]

Schedule of Litigation and Other Charges

	Thirteen weeks ended					Thirty-nine weeks ended
		October 28,		October 29,		October 28,		October 29,
		2017		2016		2017		2016
		($ in millions)
Pension litigation charge		$	—	$	—	$	50	$	—
Reorganization costs			13		—		13		—
Impairment of long-lived assets			—		6		—		6
Total litigation and other charges		$	13	$	6	$	63	$	6

Schedule of Reorganization Accrual

The following is a reconciliation of the accrual for the quarter ended October 28,2017:

		Severance and		Other Related
		Benefit Costs		Charges		Total
	($ in millions)
Balance at January 28, 2017	$	—	$	—	$	—
Amounts charged to expense		11		2		13
Cash payments		(2)		—		(2)
Balance at October 28, 2017	$	9	$	2	$	11

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Restricted Cash (Tables)

9 Months Ended

Oct. 28, 2017

Restricted Cash [Abstract]

Reconciliation of Cash and Cash Equivalents

The following table provides a reconciliation of cash and cash equivalents, as reported on our condensed consolidated balance sheets, to cash, cash equivalents, and restricted cash, as reported on our condensed consolidated statements of cash flows.

	October 28,		October 29,		January 28,
	2017		2016		2017
	($ in millions)
Cash and cash equivalents	$	890	$	865	$	1,046
Restricted cash included in other current assets		1		—		—
Restricted cash included in other non-current assets		29		28		27
Cash, cash equivalents, and restricted cash	$	920	$	893	$	1,073

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Goodwill (Tables)

9 Months Ended

Oct. 28, 2017

Goodwill and Other Intangible Assets, Net [Abstract]

Schedule of Goodwill

The following table provides a summary of goodwill by reportable segment. The change in the balance represents foreign currency exchange fluctuations.

	October 28,		October 29,		January 28,
	2017		2016		2017
	($ in millions)
Athletic Stores	$	18	$	17	$	16
Direct-to-Customers		140		139		139
Total goodwill	$	158	$	156	$	155

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Other Intangible Assets, Net (Tables)

9 Months Ended

Oct. 28, 2017

Goodwill and Other Intangible Assets, Net [Abstract]

Components of Finite-Lived Intangible Assets and Intangible Assets Not Subject to Amortization

The components of finite-lived intangible assets and intangible assets not subject to amortization are as follows:

		October 28, 2017						October 29, 2016						January 28, 2017
		Gross		Accum.		Net		Gross		Accum.		Net		Gross		Accum.		Net
($ in millions)		value		amort.		value		value		amort.		value		value		amort.		value
Amortized intangible assets: (1)
	Lease acquisition costs	$	129	$	(117)	$	12	$	118	$	(107)	$	11	$	116	$	(105)	$	11
	Trademarks / trade names		20		(13)		7		20		(13)		7		20		(13)		7
	Favorable leases		7		(6)		1		7		(5)		2		7		(5)		2
		$	156	$	(136)	$	20	$	145	$	(125)	$	20	$	143	$	(123)	$	20
Indefinite life intangible assets: (1)
	Runners Point Group trademarks / trade names					$	25					$	23					$	22
Other intangible assets, net						$	45					$	43					$	42

(1) The change in the ending balances also reflects the effect of foreign currency fluctuations due primarily to the movements of the euro in relation to the U.S. dollar.

Amortization Expense

	Thirteen weeks ended				Thirty-nine weeks ended
($ in millions)		October 28, 2017		October 29, 2016	October 28, 2017		October 29, 2016
Amortization expense	$	1	$	1	$	3	$	3

Estimated Future Expected Amortization Expense for Finite Life Intangible Assets

Estimated future amortization expense for finite-life intangible assets is as follows:

		($ in millions)
Remainder of 2017	$	1
2018		4
2019		4
2020		3
2021		2
2022		2

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Accumulated Other Comprehensive Loss (Tables)

9 Months Ended

Oct. 28, 2017

Accumulated Other Comprehensive Loss [Abstract]

Accumulated Other Comprehensive Loss

Accumulated other comprehensive loss (“AOCL”), net of tax, is comprised of the following:

	October 28,		October 29,		January 28,
	2017		2016		2017
	($ in millions)
Foreign currency translation adjustments	$	(57)	$	(116)	$	(127)
Cash flow hedges		2		6		1
Unrecognized pension cost and postretirement benefit		(231)		(243)		(236)
Unrealized loss on available-for-sale security		—		—		(1)
	$	(286)	$	(353)	$	(363)

Changes in Accumulated Other Comprehensive Loss

The changes in AOCL for the thirty-nine weeks ended October 28, 2017 were as follows:

					Items Related
	Foreign Currency				to Pension and		Unrealized Loss on
	Translation		Cash Flow		Postretirement		Available-For-
($ in millions)	Adjustments		Hedges		Benefits		Sale Security		Total
Balance as of January 28, 2017	$	(127)	$	1	$	(236)	$	(1)	$	(363)
OCI before reclassification		70		1		(1)		1		71
Reclassified from AOCL		—		—		6		—		6
Other comprehensive income		70		1		5		1		77
Balance as of October 28, 2017	$	(57)	$	2	$	(231)	$	—	$	(286)

Reclassification from Accumulated Other Comprehensive Loss

Reclassifications from AOCL for the thirty-nine weeks ended October 28, 2017 were as follows:

		($ in millions)
Amortization of actuarial (gain) loss:
Pension benefits- amortization of actuarial loss	$	10
Postretirement benefits- amortization of actuarial gain		(1)
Net periodic benefit cost (see Note 12)		9
Income tax benefit		(3)
Net of tax	$	6

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Financial Instruments (Tables)

9 Months Ended

Oct. 28, 2017

Financial Instruments [Abstract]

Fair Value of Derivative Contracts on Gross Basis, by Type of Contract

The following is presented on a gross basis, by type of contract:

	Balance Sheet	October 28,		October 29,		January 28,
($ in millions)	Caption	2017		2016		2017
Hedging Instruments:
Foreign exchange forward contracts	Current assets	$	2	$	7	$	3
Foreign exchange forward contracts	Current liabilities	$	1	$	—	$	3
Non-hedging Instruments:
Foreign exchange forward contracts	Current assets	$	—	$	1	$	—

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Fair Value Measurements (Tables)

9 Months Ended

Oct. 28, 2017

Fair Value Measurements [Abstract]

Assets and Liabilities Measured at Fair Value on Recurring Basis

The following tables provide a summary of the Company’s recognized assets and liabilities that are measured at fair value on a recurring basis:

	As of October 28, 2017						As of October 29, 2016						As of January 28, 2017
	($ in millions)
	Level 1		Level 2		Level 3		Level 1		Level 2		Level 3		Level 1		Level 2		Level 3
Assets
Available-for-sale securities	$	—	$	7	$	—	$	—	$	7	$	—	$	—	$	6	$	—
Foreign exchange forward contracts		—		2		—		—		8		—		—		3		—
Total Assets	$	—	$	9	$	—	$	—	$	15	$	—	$	—	$	9	$	—
Liabilities
Foreign exchange forward contracts		—		1		—		—		—		—		—		3		—
Total Liabilities	$	—	$	1	$	—	$	—	$	—	$	—	$	—	$	3	$	—

Carrying Value and Estimated Fair Value of Long-Term Debt

The carrying value and estimated fair value of long-term debt and obligations under capital leases were as follows:

	October 28,		October 29,		January 28,
	2017		2016		2017
	($ in millions)
Carrying value	$	126	$	128	$	127
Fair value	$	145	$	150	$	148

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Earnings Per Share (Tables)

9 Months Ended

Oct. 28, 2017

Earnings Per Share [Abstract]

Basic and Diluted Weighted-Average Number of Common Shares Outstanding

The computation of basic and diluted earnings per share is as follows:

	Thirteen weeks ended					Thirty-nine weeks ended
		October 28,		October 29,		October 28,		October 29,
		2017		2016		2017		2016
		(in millions, except per share data)
Net Income		$	102	$	157	$	333	$	475
Weighted-average common shares outstanding			126.0		132.9		129.6		134.6
Dilutive effect of potential common shares			0.4		1.1		0.7		1.1
Weighted-average common shares outstanding assuming dilution			126.4		134.0		130.3		135.7
Earnings per share - basic		$	0.81	$	1.18	$	2.57	$	3.53
Earnings per share - diluted		$	0.81	$	1.17	$	2.55	$	3.50
Anti-dilutive share-based awards excluded from diluted calculation			2.0		0.5		1.6		0.4

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Pension and Postretirement Plans (Tables)

9 Months Ended

Oct. 28, 2017

Pension and Postretirement Plans [Abstract]

Net Benefit Expense (Income)

The following are the components of net periodic pension benefit cost and net periodic postretirement benefit income, which are recognized as part of SG&A expense:

	Pension Benefits								Postretirement Benefits
	Thirteen weeks ended				Thirty-nine weeks ended				Thirteen weeks ended				Thirty-nine weeks ended
	Oct. 28,		Oct. 29,		Oct. 28,		Oct. 29,		Oct. 28,		Oct. 29,		Oct. 28,		Oct. 29,
($ in millions)	2017		2016		2017		2016		2017		2016		2017		2016
Service cost	$	4	$	4	$	12	$	12	$	—	$	—	$	—	$	—
Interest cost		6		6		19		19		—		1		—		1
Expected return on plan assets		(9)		(9)		(28)		(27)		—		—		—		—
Amortization of net loss (gain)		3		4		10		11		—		(1)		(1)		(2)
Net benefit expense (income)	$	4	$	5	$	13	$	15	$	—	$	—	$	(1)	$	(1)

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Share-Based Compensation (Tables)

9 Months Ended

Oct. 28, 2017

Share-Based Compensation [Abstract]

Total Compensation Expense and the Related Tax Benefits Recognized

	Thirteen weeks ended				Thirty-nine weeks ended
	October 28,		October 29,		October 28,		October 29,
	2017		2016		2017		2016
	($ in millions)
Options and shares purchased under the employee stock purchase plan	$	2	$	3	$	7	$	8
Restricted stock and restricted stock units		1		3		4		9
Total share-based compensation expense	$	3	$	6	$	11	$	17
Tax benefit recognized	$	1	$	2	$	3	$	5

Assumptions used to Compute Share-Based Compensation Expense

		Stock Option Plans						Stock Purchase Plan
		October 28,			October 29,			October 28,			October 29,
		2017			2016			2017			2016
Weighted-average risk free rate of interest		2.1	%		1.4	%		0.9	%		0.4	%
Expected volatility		25	%		30	%		29	%		27	%
Weighted-average expected award life (in years)		5.4			5.7			1.0			1.0
Dividend yield		1.9	%		1.7	%		2.0	%		1.7	%
Weighted-average fair value	$	14.74		$	15.71		$	10.84		$	14.04

Options Granted under Stock Option Plans

		Weighted-		Weighted-
	Number	Average		Average
	of	Remaining		Exercise
	Shares	Contractual Life		Price
	(in thousands)	(in years)		(per share)
Options outstanding at the beginning of the year	2,806			$	42.61
Granted	547				69.58
Exercised	(536)				21.38
Expired or cancelled	(19)				61.01
Options outstanding at October 28, 2017	2,798		6.7	$	51.82
Options exercisable at October 28, 2017	1,729		5.4	$	42.91
Options available for future grant at October 28, 2017	10,759

Total Intrinsic Value of Options Exercised

	Thirteen weeks ended				Thirty-nine weeks ended
	October 28,		October 29,		October 28,		October 29,
	2017		2016		2017		2016
	($ in millions)
Exercised	$	5	$	19	$	20	$	45

Aggregate Intrinsic Value for Stock Options Outstanding and Exercisable

	Thirty-nine weeks ended
	October 28,		October 29,
	2017		2016
	($ in millions)
Outstanding	$	5	$	78
Outstanding and exercisable	$	5	$	71
Vested and expected to vest	$	5	$	78

Information about Stock Options Outstanding and Exercisable

	Options Outstanding				Options Exercisable
		Weighted-
		Average		Weighted-			Weighted-
		Remaining		Average			Average
Range of Exercise	Number	Contractual		Exercise	Number		Exercise
Prices	Outstanding	Life		Price	Exercisable		Price
	(in thousands, except prices per share and contractual life)
$9.85 to $24.75	344	2.7	$	16.77	344	$	16.77
$30.92 to $45.75	787	5.5		38.33	747		38.50
$48.55 to $62.11	704	6.9		61.05	472		61.35
$63.79 to $73.21	963	8.8		68.60	166		64.35
	2,798	6.7	$	51.82	1,729	$	42.91

Restricted Share and Unit Activity

			Weighted-
			Average	Weighted-
		Number	Remaining	Average
		of	Contractual	Grant Date
		Shares	Life	Fair Value
		(in thousands)	(in years)		(per share)
Nonvested at beginning of year		798		$	56.91
Granted		328			63.72
Vested		(286)			49.55
Expired or cancelled		(447)			64.74
Nonvested at October 28, 2017		393	1.5	$	59.07
Aggregate value ($ in millions)	$	23

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Summary of Significant Accounting Policies (Narrative) (Details) - USD ($) $ in Millions	3 Months Ended	9 Months Ended
	Oct. 28, 2017	Oct. 28, 2017	Oct. 29, 2016		Jan. 28, 2017	Jan. 30, 2016
Significant Accounting Policies [Line Items]
Shares of common stock repurchased to satisfy tax withholding obligations		$ 10	$ 6	[1]
Accounting Standards Update 2016-09 [Member]
Significant Accounting Policies [Line Items]
Excess tax benefits on share-based compensation, operating activities	$ 2	9	16
Shares of common stock repurchased to satisfy tax withholding obligations			6
Restatement Adjustment [Member] | Accounting Standards Update 2016-18 [Member]
Significant Accounting Policies [Line Items]
Restricted cash			$ 28		$ 27	$ 27
Maximum [Member] | Scenario, Forecast [Member] | Accounting Standards Update 2016 02 [Member]
Significant Accounting Policies [Line Items]
Addition to assets and liabilities from accounting standards update		4,000
Maximum [Member] | Scenario, Forecast [Member] | Accounting Standards Update 2016 16 [Member]
Significant Accounting Policies [Line Items]
Increase in deferred tax assets		45
Minimum [Member] | Scenario, Forecast [Member] | Accounting Standards Update 2016 02 [Member]
Significant Accounting Policies [Line Items]
Addition to assets and liabilities from accounting standards update		3,000
Minimum [Member] | Scenario, Forecast [Member] | Accounting Standards Update 2016 16 [Member]
Significant Accounting Policies [Line Items]
Increase in deferred tax assets		$ 40

[1] Amounts for the thirty-nine weeks ended October 29, 2016 have been revised from previously reported amounts to reflect the adoption of new accounting standards in the first quarter of 2017. For additional information, see the Recently Adopted Accounting Pronouncements note.

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Segment Information (Narrative) (Details) $ in Millions	3 Months Ended		9 Months Ended
	Oct. 28, 2017 USD ($)	Oct. 29, 2016 USD ($)	Oct. 28, 2017 USD ($) segment	Oct. 29, 2016 USD ($)
Number of reportable segments | segment			2
Pension litigation charge			$ 50
Reorganization costs	$ 13		$ 13
Impairment of long-lived assets		$ 6		$ 6
Athletic Stores [Member]
Impairment of long-lived assets		$ 6		$ 6

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Segment Information (Sales and Division Operating Results for Reportable Segments) (Details) - USD ($) $ in Millions		3 Months Ended		9 Months Ended
		Oct. 28, 2017	Oct. 29, 2016	Oct. 28, 2017	Oct. 29, 2016
Segment Reporting Information [Line Items]
Sales		$ 1,870	$ 1,886	$ 5,572	$ 5,653
Division profit		180	245	592	775
Less: Pension litigation and reorganization charges	[1],[2]	13		63
Less: Corporate expense		12	17	34	53
Income from operations		155	228	495	722
Interest (income) / expense, net			1	(1)	2
Other income	[3]	1		2	3
Income before income taxes		156	227	498	723
Athletic Stores [Member]
Segment Reporting Information [Line Items]
Sales		1,612	1,644	4,819	4,955
Operating results before restructuring income	[4]	154	213	504	683
Direct-to-Customers [Member]
Segment Reporting Information [Line Items]
Sales		258	242	753	698
Operating results before restructuring income		26	32	88	92
Operating Segments [Member]
Segment Reporting Information [Line Items]
Income from operations		$ 155	$ 228	$ 495	$ 722

[1] Included in the thirteen and thirty-nine weeks ended October 28, 2017 is $13 million in pre-tax reorganization costs related to the reduction and reorganization of division and corporate staff that occurred in the third quarter of 2017, described more fully in Note 3, Litigation and Other Charges

[2] Included in the thirty-nine weeks ended October 28, 2017 is a pre-tax charge of $50 million relating to a pension litigation matter described further in Note 14, Legal Proceedings.

[3] Other income includes non-operating items, such as lease termination gains, royalty income, insurance recoveries, and the changes in fair value, premiums paid, and realized gains and losses associated with foreign currency option contracts.

[4] Included in the thirteen and thirty-nine weeks ended October 29, 2016 is a $6 million pre-tax non-cash impairment charge to write down long-lived store assets of Runners Point and Sidestep. See Note 3, Litigation and Other Charges for additional information

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Litigation and Other Charges (Narrative) (Details) $ in Millions	3 Months Ended		9 Months Ended
	Oct. 28, 2017 USD ($) employee	Oct. 29, 2016 USD ($)	Oct. 28, 2017 USD ($) employee	Oct. 29, 2016 USD ($)
Litigation and Other Charges [Abstract]
Reorganization costs	$ 13		$ 13
Number of associates with severance and benefit continuation costs | employee	190		190
Pension litigation charge			$ 50
Impairment of assets		$ 6		$ 6

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Litigation and Other Charges (Schedule of Litigation and Other Charges) (Details) - USD ($) $ in Millions	3 Months Ended		9 Months Ended
	Oct. 28, 2017	Oct. 29, 2016	Oct. 28, 2017	Oct. 29, 2016
Litigation and Other Charges [Abstract]
Pension litigation charge			$ 50
Reorganization costs	$ 13		13
Impairment of long-lived assets		$ 6		$ 6
Total litigation and other charges	$ 13	$ 6	$ 63	$ 6

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Litigation and Other Charges (Reorganization Accrual) (Details) - USD ($) $ in Millions	3 Months Ended	9 Months Ended
	Oct. 28, 2017	Oct. 28, 2017
Beginning balance
Amounts charged to expense	$ 13	13
Cash payments		(2)
Ending balance	11	11
Other Related Charges [Member]
Beginning balance
Amounts charged to expense		2
Ending balance	2	2
Severance and Benefit Costs [Member]
Beginning balance
Amounts charged to expense		11
Cash payments		(2)
Ending balance	$ 9	$ 9

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Hurricane Related Costs (Narrative) (Details) $ in Millions	3 Months Ended		6 Months Ended	9 Months Ended
	Feb. 03, 2018 store	Oct. 28, 2017 USD ($) store	Jul. 28, 2018 store	Oct. 28, 2017 USD ($) store
Unusual or Infrequent Item, or Both [Line Items]
Loss from hurricanes | $		$ 7		$ 7
Property damages and other costs | $		2		2
Inventory Write Off | $		$ 5		$ 5
Stores Closed Due to Hurricanes [Member]
Unusual or Infrequent Item, or Both [Line Items]
Number of stores | store		450		450
Stores Closed in Puerto Rico [Member]
Unusual or Infrequent Item, or Both [Line Items]
Number of stores | store		22		22
Scenario, Forecast [Member] | Stores Expected to Reopen [Member]
Unusual or Infrequent Item, or Both [Line Items]
Number of stores expected to reopen in the period | store	8		7

XML

Restricted Cash (Reconciliation of Cash and Cash Equivalents) (Details) - USD ($) $ in Millions	Oct. 28, 2017	Jan. 28, 2017		Oct. 29, 2016		Jan. 30, 2016	[2]
Restricted Cash [Abstract]
Cash and cash equivalents	$ 890	$ 1,046	[1]	$ 865
Restricted cash included in other current assets	1
Restricted cash included in other non-current assets	29	27		28
Cash, cash equivalents, and restricted cash	$ 920	$ 1,073		$ 893	[2]	$ 1,048

[1] The balance sheet at January 28, 2017 has been derived from the previously reported audited financial statements at that date, but does not include all of the information and footnotes required by U.S. generally accepted accounting principles for complete financial statements. For further information, refer to the consolidated financial statements and footnotes thereto included in Foot Locker, Inc.'s Annual Report on Form 10-K for the year ended January 28, 2017

[2] Amounts for the thirty-nine weeks ended October 29, 2016 have been revised from previously reported amounts to reflect the adoption of new accounting standards in the first quarter of 2017. For additional information, see the Recently Adopted Accounting Pronouncements note.

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Goodwill (Schedule of Goodwill) (Details) - USD ($) $ in Millions	Oct. 28, 2017	Jan. 28, 2017		Oct. 29, 2016
Goodwill [Line Items]
Goodwill	$ 158	$ 155	[1]	$ 156
Athletic Stores [Member]
Goodwill [Line Items]
Goodwill	18	16		17
Direct-to-Customers [Member]
Goodwill [Line Items]
Goodwill	$ 140	$ 139		$ 139

[1] The balance sheet at January 28, 2017 has been derived from the previously reported audited financial statements at that date, but does not include all of the information and footnotes required by U.S. generally accepted accounting principles for complete financial statements. For further information, refer to the consolidated financial statements and footnotes thereto included in Foot Locker, Inc.'s Annual Report on Form 10-K for the year ended January 28, 2017

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Other Intangible Assets, Net (Narrative) (Details) $ in Millions	9 Months Ended
	Oct. 28, 2017 USD ($)
Goodwill and Other Intangible Assets, Net [Abstract]
Additions of intangible assets of new leases	$ 2
Weighted-average amortization period	10 years

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Other Intangible Assets, Net (Schedule of Other Intangible Assets) (Details) - USD ($) $ in Millions		Oct. 28, 2017	Jan. 28, 2017		Oct. 29, 2016
Intangible Assets by Major Class [Line Items]
Amortized intangible assets, Gross value	[1]	$ 156	$ 143		$ 145
Amortized intangible assets, Accum. amort.	[1]	(136)	(123)		(125)
Amortized intangible assets, Net value	[1]	20	20		20
Other intangible assets, net		45	42	[2]	43
Lease Acquisition Costs [Member]
Intangible Assets by Major Class [Line Items]
Amortized intangible assets, Gross value	[1]	129	116		118
Amortized intangible assets, Accum. amort.	[1]	(117)	(105)		(107)
Amortized intangible assets, Net value	[1]	12	11		11
Trademarks and Trade Names [Member]
Intangible Assets by Major Class [Line Items]
Amortized intangible assets, Gross value	[1]	20	20		20
Amortized intangible assets, Accum. amort.	[1]	(13)	(13)		(13)
Amortized intangible assets, Net value	[1]	7	7		7
Favorable Leases [Member]
Intangible Assets by Major Class [Line Items]
Amortized intangible assets, Gross value	[1]	7	7		7
Amortized intangible assets, Accum. amort.	[1]	(6)	(5)		(5)
Amortized intangible assets, Net value	[1]	1	2		2
Runners Point Group [Member]
Intangible Assets by Major Class [Line Items]
Indefinite life intangible assets, Net Value	[1]	$ 25	$ 22		$ 23

[1] The change in the ending balances also reflects the effect of foreign currency fluctuations due primarily to the movements of the euro in relation to the U.S. dollar

[2] The balance sheet at January 28, 2017 has been derived from the previously reported audited financial statements at that date, but does not include all of the information and footnotes required by U.S. generally accepted accounting principles for complete financial statements. For further information, refer to the consolidated financial statements and footnotes thereto included in Foot Locker, Inc.'s Annual Report on Form 10-K for the year ended January 28, 2017

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Other Intangible Assets, Net (Amortization Expense) (Details) - USD ($) $ in Millions	3 Months Ended		9 Months Ended
	Oct. 28, 2017	Oct. 29, 2016	Oct. 28, 2017	Oct. 29, 2016
Goodwill and Other Intangible Assets, Net [Abstract]
Amortization expense	$ 1	$ 1	$ 3	$ 3

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Other Intangible Assets, Net (Estimated Future Amortization Expense for Finite Lived Intangibles) (Details) $ in Millions	Oct. 28, 2017 USD ($)
Goodwill and Other Intangible Assets, Net [Abstract]
Remainder of 2017	$ 1
2018	4
2019	4
2020	3
2021	2
2022	$ 2

XML

Accumulated Other Comprehensive Loss (Schedule of Accumulated Other Comprehensive Loss) (Details) - USD ($) $ in Millions	Oct. 28, 2017	Jan. 28, 2017		Oct. 29, 2016
Accumulated Other Comprehensive Loss [Abstract]
Foreign currency translation adjustments	$ (57)	$ (127)		$ (116)
Cash flow hedges	2	1		6
Unrecognized pension cost and postretirement benefit	(231)	(236)		(243)
Unrealized loss on available-for-sale security		(1)
Accumulated other comprehensive income (loss), net of tax, total	$ (286)	$ (363)	[1]	$ (353)

[1] The balance sheet at January 28, 2017 has been derived from the previously reported audited financial statements at that date, but does not include all of the information and footnotes required by U.S. generally accepted accounting principles for complete financial statements. For further information, refer to the consolidated financial statements and footnotes thereto included in Foot Locker, Inc.'s Annual Report on Form 10-K for the year ended January 28, 2017

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Accumulated Other Comprehensive Loss (Changes in Accumulated Other Comprehensive Loss) (Details) $ in Millions	9 Months Ended
	Oct. 28, 2017 USD ($)
Accumulated Other Comprehensive Income (Loss) [Line Items]
Beginning Balance	$ (363)	[1]
OCI before reclassification	71
Reclassified from AOCI	6
Other comprehensive income	77
Ending Balance	(286)
Foreign Currency Translation Adjustments [Member]
Accumulated Other Comprehensive Income (Loss) [Line Items]
Beginning Balance	(127)
OCI before reclassification	70
Reclassified from AOCI
Other comprehensive income	70
Ending Balance	(57)
Cash Flow Hedges [Member]
Accumulated Other Comprehensive Income (Loss) [Line Items]
Beginning Balance	1
OCI before reclassification	1
Reclassified from AOCI
Other comprehensive income	1
Ending Balance	2
Items Related to Pension and Postretirement Benefits [Member]
Accumulated Other Comprehensive Income (Loss) [Line Items]
Beginning Balance	(236)
OCI before reclassification	(1)
Reclassified from AOCI	6
Other comprehensive income	5
Ending Balance	(231)
Unrealized Loss on Available-For-Sale Security [Member]
Accumulated Other Comprehensive Income (Loss) [Line Items]
Beginning Balance	(1)
OCI before reclassification	1
Reclassified from AOCI
Other comprehensive income	1
Ending Balance

[1] The balance sheet at January 28, 2017 has been derived from the previously reported audited financial statements at that date, but does not include all of the information and footnotes required by U.S. generally accepted accounting principles for complete financial statements. For further information, refer to the consolidated financial statements and footnotes thereto included in Foot Locker, Inc.'s Annual Report on Form 10-K for the year ended January 28, 2017

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Accumulated Other Comprehensive Loss (Reclassifications from Accumulated Other Comprehensive Loss) (Details) $ in Millions	9 Months Ended
	Oct. 28, 2017 USD ($)
Reclassification Adjustment Out Of Accumulated Other Comprehensive Income [Line Items]
Net periodic benefit cost (see Note 12)	$ 9
Income tax benefit	(3)
Net of tax	6
Pension Benefits [Member]
Reclassification Adjustment Out Of Accumulated Other Comprehensive Income [Line Items]
Net periodic benefit cost (see Note 12)	10
Postretirement Benefits [Member]
Reclassification Adjustment Out Of Accumulated Other Comprehensive Income [Line Items]
Net periodic benefit cost (see Note 12)	$ (1)

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Financial Instruments (Narrative) (Details) - USD ($) $ in Millions	3 Months Ended	9 Months Ended
	Oct. 29, 2016	Oct. 28, 2017	Oct. 29, 2016
Derivatives Designated as Hedging Instruments [Member]
Derivative [Line Items]
Gain included in AOCL			$ 0
Derivatives Designated as Hedging Instruments [Member] | Forward Foreign Exchange Contracts [Member]
Derivative [Line Items]
Notional value of contracts outstanding		$ 138
Amount of hedge gain (loss) included in AOCI		2
Increase (decrease) in fair value of hedge positions	$ 1	1	$ 4
Derivatives Designated as Non-Hedging Instruments [Member] | Forward Foreign Exchange Contracts [Member]
Derivative [Line Items]
Notional value of contracts outstanding		$ 2
Foreign exchange derivative NOT designated as cash flow hedges, gain (loss)	$ 1
Maximum [Member] | Derivatives Designated as Hedging Instruments [Member] | Forward Foreign Exchange Contracts [Member]
Derivative [Line Items]
Derivative contracts maturity date		2019-01
Maximum [Member] | Derivatives Designated as Non-Hedging Instruments [Member] | Forward Foreign Exchange Contracts [Member]
Derivative [Line Items]
Derivative contracts maturity date		2017-11

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Financial Instruments (Fair Value Derivative Contracts on Gross Basis by Type of Contract) (Details) - Forward Foreign Exchange Contracts [Member] - USD ($) $ in Millions	Oct. 28, 2017	Jan. 28, 2017	Oct. 29, 2016
Derivatives Designated as Hedging Instruments [Member] | Current Assets [Member]
Derivative [Line Items]
Fair value of derivative hedging assets	$ 2	$ 3	$ 7
Derivatives Designated as Hedging Instruments [Member] | Current Liabilities [Member]
Derivative [Line Items]
Fair value of derivative hedging liability	$ 1	$ 3
Derivatives Designated as Non-Hedging Instruments [Member] | Current Assets [Member]
Derivative [Line Items]
Fair value of derivative hedging assets			$ 1

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Fair Value Measurements (Assets and Liabilities Measured at Fair Value on Recurring Basis) (Details) - Fair Value, Measurements, Recurring [Member] - USD ($) $ in Millions	Oct. 28, 2017	Jan. 28, 2017	Oct. 29, 2016
Level 1 [Member]
Fair Value, Assets and Liabilities Measured on Recurring Basis, Unobservable Input Reconciliation [Line Items]
Assets measured at fair value on recurring basis
Liabilities measured at fair value on recurring basis
Level 1 [Member] | Available-for-sale Securities [Member]
Fair Value, Assets and Liabilities Measured on Recurring Basis, Unobservable Input Reconciliation [Line Items]
Assets measured at fair value on recurring basis
Level 2 [Member]
Fair Value, Assets and Liabilities Measured on Recurring Basis, Unobservable Input Reconciliation [Line Items]
Assets measured at fair value on recurring basis	9	9	15
Liabilities measured at fair value on recurring basis	1	3
Level 2 [Member] | Available-for-sale Securities [Member]
Fair Value, Assets and Liabilities Measured on Recurring Basis, Unobservable Input Reconciliation [Line Items]
Assets measured at fair value on recurring basis	7	6	7
Level 3 [Member]
Fair Value, Assets and Liabilities Measured on Recurring Basis, Unobservable Input Reconciliation [Line Items]
Assets measured at fair value on recurring basis
Liabilities measured at fair value on recurring basis
Level 3 [Member] | Available-for-sale Securities [Member]
Fair Value, Assets and Liabilities Measured on Recurring Basis, Unobservable Input Reconciliation [Line Items]
Assets measured at fair value on recurring basis
Forward Foreign Exchange Contracts [Member] | Level 1 [Member] | Derivative Financial Instruments, Liabilities [Member]
Fair Value, Assets and Liabilities Measured on Recurring Basis, Unobservable Input Reconciliation [Line Items]
Liabilities measured at fair value on recurring basis
Forward Foreign Exchange Contracts [Member] | Level 1 [Member] | Derivative Financial Instruments, Assets [Member]
Fair Value, Assets and Liabilities Measured on Recurring Basis, Unobservable Input Reconciliation [Line Items]
Assets measured at fair value on recurring basis
Forward Foreign Exchange Contracts [Member] | Level 2 [Member] | Derivative Financial Instruments, Liabilities [Member]
Fair Value, Assets and Liabilities Measured on Recurring Basis, Unobservable Input Reconciliation [Line Items]
Liabilities measured at fair value on recurring basis	1	3
Forward Foreign Exchange Contracts [Member] | Level 2 [Member] | Derivative Financial Instruments, Assets [Member]
Fair Value, Assets and Liabilities Measured on Recurring Basis, Unobservable Input Reconciliation [Line Items]
Assets measured at fair value on recurring basis	2	3	8
Forward Foreign Exchange Contracts [Member] | Level 3 [Member] | Derivative Financial Instruments, Liabilities [Member]
Fair Value, Assets and Liabilities Measured on Recurring Basis, Unobservable Input Reconciliation [Line Items]
Liabilities measured at fair value on recurring basis
Forward Foreign Exchange Contracts [Member] | Level 3 [Member] | Derivative Financial Instruments, Assets [Member]
Fair Value, Assets and Liabilities Measured on Recurring Basis, Unobservable Input Reconciliation [Line Items]
Assets measured at fair value on recurring basis

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Fair Value Measurements (Carrying Value and Estimated Fair Value of Long-Term Debt) (Details) - USD ($) $ in Millions	Oct. 28, 2017	Jan. 28, 2017	Oct. 29, 2016
Fair Value Measurements [Abstract]
Long-term debt, Carrying value	$ 126	$ 127	$ 128
Long-term debt, Fair value	$ 145	$ 148	$ 150

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Earnings Per Share (Narrative) (Details) - shares shares in Millions	9 Months Ended
	Oct. 28, 2017	Oct. 29, 2016
Earnings Per Share [Abstract]
Contingently issuable shares excluded from diluted earnings per share	0.4	0.3

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Earnings Per Share (Computation of Basic and Diluted Earnings Per Share) (Details) - USD ($) $ / shares in Units, shares in Millions, $ in Millions	3 Months Ended		9 Months Ended
	Oct. 28, 2017	Oct. 29, 2016	Oct. 28, 2017	Oct. 29, 2016
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items]
Net Income	$ 102	$ 157	$ 333	$ 475	[1]
Weighted-average common shares outstanding	126.0	132.9	129.6	134.6
Dilutive effect of potential common shares	0.4	1.1	0.7	1.1
Weighted-average common shares outstanding assuming dilution	126.4	134.0	130.3	135.7
Basic earnings per share (in dollars per shares)	$ 0.81	$ 1.18	$ 2.57	$ 3.53
Diluted earnings per share (in dollars per share)	$ 0.81	$ 1.17	$ 2.55	$ 3.50
Stock Option Plans [Member]
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items]
Anti-dilutive share-based awards excluded from diluted calculation	2.0	0.5	1.6	0.4

[1] Amounts for the thirty-nine weeks ended October 29, 2016 have been revised from previously reported amounts to reflect the adoption of new accounting standards in the first quarter of 2017. For additional information, see the Recently Adopted Accounting Pronouncements note.

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Pension and Postretirement Plans (Narrative) (Details) $ in Millions	Feb. 23, 2017 USD ($)
U.S. Qualified Pension Plan [Member]
Defined Benefit Plan Disclosure [Line Items]
Employer's contribution	$ 25

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Pension and Postretirement Plans (Net Benefit Expense (Income)) (Details) - USD ($) $ in Millions	3 Months Ended		9 Months Ended
	Oct. 28, 2017	Oct. 29, 2016	Oct. 28, 2017	Oct. 29, 2016
Pension Benefits [Member]
Defined Benefit Plan Disclosure [Line Items]
Service cost	$ 4	$ 4	$ 12	$ 12
Interest cost	6	6	19	19
Expected return on plan assets	(9)	(9)	(28)	(27)
Amortization of net loss (gain)	3	4	10	11
Net benefit expense (income)	$ 4	5	13	15
Postretirement Benefits [Member]
Defined Benefit Plan Disclosure [Line Items]
Service cost
Interest cost		1		1
Expected return on plan assets
Amortization of net loss (gain)		(1)	(1)	(2)
Net benefit expense (income)			$ (1)	$ (1)

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Share-Based Compensation (Narrative) (Details) - USD ($) $ in Millions	3 Months Ended		9 Months Ended
	Oct. 28, 2017	Oct. 29, 2016	Oct. 28, 2017	Oct. 29, 2016
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Proceeds from exercise of stock options			$ 12	$ 24	[1]
Stock Option Plans [Member]
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Fair value of options vested			8	9
Proceeds from exercise of stock options	$ 2	$ 10	12	24
Tax benefit realized from options exercised	2	$ 7	8	$ 17
Restricted Stock and Units [Member]
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Unrecognized compensation cost	$ 10		$ 10
Share-based compensation arrangement by share-based payment award, non-option equity instruments, outstanding, number	361,137	678,466	361,137	678,466
Fair value of awards			$ 14	$ 8
Awards vesting period description			Generally, awards fully vest after the passage of time, typically three years. However, RSU awards made in connection with the Company's performance-based long-term incentive program are earned after the attainment of certain performance metrics and vest after the passage of time.
Nonvested Stock Options [Member]
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Unrecognized compensation cost	$ 7		$ 7
Unrecognized compensation cost related to nonvested stock options, weighted-average period expected to be recognized			1 year 6 months

[1] Amounts for the thirty-nine weeks ended October 29, 2016 have been revised from previously reported amounts to reflect the adoption of new accounting standards in the first quarter of 2017. For additional information, see the Recently Adopted Accounting Pronouncements note.

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Share-Based Compensation (Total Compensation Expense Included in SG&A and the Related Tax Benefits Recognized) (Details) - USD ($) $ in Millions	3 Months Ended		9 Months Ended
	Oct. 28, 2017	Oct. 29, 2016	Oct. 28, 2017	Oct. 29, 2016
Share-based Compensation Arrangement by Share-based Payment Award, Compensation Cost [Line Items]
Total share-based compensation expense	$ 3	$ 6	$ 11	$ 17	[1]
Tax benefit recognized	1	2	3	5
Stock Option Plans [Member]
Share-based Compensation Arrangement by Share-based Payment Award, Compensation Cost [Line Items]
Allocated share-based compensation expense	2	3	7	8
Restricted Stock [Member]
Share-based Compensation Arrangement by Share-based Payment Award, Compensation Cost [Line Items]
Allocated share-based compensation expense	$ 1	$ 3	$ 4	$ 9

[1] Amounts for the thirty-nine weeks ended October 29, 2016 have been revised from previously reported amounts to reflect the adoption of new accounting standards in the first quarter of 2017. For additional information, see the Recently Adopted Accounting Pronouncements note.

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Share-Based Compensation (Assumptions Used to Compute Share-Based Compensation Expense) (Details) - $ / shares	9 Months Ended
	Oct. 28, 2017	Oct. 29, 2016
Stock Option Plans [Member]
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Weighted-average risk free rate of interest	2.10%	1.40%
Expected volatility	25.00%	30.00%
Weighted-average expected award life (in years)	5 years 4 months 24 days	5 years 8 months 12 days
Dividend yield	1.90%	1.70%
Weighted-average fair value	$ 14.74	$ 15.71
2013 ESPP [Member]
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Weighted-average risk free rate of interest	0.90%	0.40%
Expected volatility	29.00%	27.00%
Weighted-average expected award life (in years)	1 year	1 year
Dividend yield	2.00%	1.70%
Weighted-average fair value	$ 10.84	$ 14.04

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Share-Based Compensation (Options Granted Under Stock Option Plans) (Details) shares in Thousands	9 Months Ended
	Oct. 28, 2017 $ / shares shares
Number of Shares
Options outstanding at beginning of year	2,806
Granted	547
Exercised	(536)
Expired or cancelled	(19)
Options outstanding at end of period	2,798
Options exercisable at end of period	1,729
Options available for future grant at end of period	10,759
Weighted-Average Exercise Price
Options outstanding at beginning of year | $ / shares	$ 42.61
Granted | $ / shares	69.58
Exercised | $ / shares	21.38
Expired or cancelled | $ / shares	61.01
Options outstanding at end of period | $ / shares	51.82
Options exercisable at end of period | $ / shares	$ 42.91
Options outstanding, weighted-average remaining contractual life	6 years 8 months 12 days
Options exercisable at end of period, Weighted-average remaining contractual life	5 years 4 months 24 days

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Share-Based Compensation (Total Intrinsic Value of Options Exercised) (Details) - USD ($) $ in Millions	3 Months Ended		9 Months Ended
	Oct. 28, 2017	Oct. 29, 2016	Oct. 28, 2017	Oct. 29, 2016
Intrinsic value of stock options
Exercised	$ 5	$ 19	$ 20	$ 45

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Share-Based Compensation (Aggregate Intrinsic Value for Stock Options Outstanding and Exercisable) (Details) - USD ($) $ in Millions	Oct. 28, 2017	Oct. 29, 2016
Share-Based Compensation [Abstract]
Outstanding	$ 5	$ 78
Outstanding and exercisable	5	71
Vested and expected to vest	$ 5	$ 78

XML

Share-Based Compensation (Information about Stock Options Outstanding and Exercisable) (Details) - $ / shares shares in Thousands	9 Months Ended
	Oct. 28, 2017	Jan. 28, 2017
Share-based Compensation, Shares Authorized under Stock Option Plans, Exercise Price Range [Line Items]
Options Outstanding, Number of Shares	2,798	2,806
Options outstanding, weighted-average remaining contractual life	6 years 8 months 12 days
Options Outstanding, Weighted-Average Exercise Price	$ 51.82	$ 42.61
Options Exercisable, Number of Shares	1,729
Options Exercisable, Weighted-Average Exercise Price	$ 42.91
$9.85 to $24.75 [Member]
Share-based Compensation, Shares Authorized under Stock Option Plans, Exercise Price Range [Line Items]
Range of Exercise Prices, Lower Limit	9.85
Range of Exercise Prices, Upper Limit	$ 24.75
Options Outstanding, Number of Shares	344
Options outstanding, weighted-average remaining contractual life	2 years 8 months 12 days
Options Outstanding, Weighted-Average Exercise Price	$ 16.77
Options Exercisable, Number of Shares	344
Options Exercisable, Weighted-Average Exercise Price	$ 16.77
$30.92 to $45.75 [Member]
Share-based Compensation, Shares Authorized under Stock Option Plans, Exercise Price Range [Line Items]
Range of Exercise Prices, Lower Limit	30.92
Range of Exercise Prices, Upper Limit	$ 45.75
Options Outstanding, Number of Shares	787
Options outstanding, weighted-average remaining contractual life	5 years 6 months
Options Outstanding, Weighted-Average Exercise Price	$ 38.33
Options Exercisable, Number of Shares	747
Options Exercisable, Weighted-Average Exercise Price	$ 38.50
$48.55 to $62.11 [Member]
Share-based Compensation, Shares Authorized under Stock Option Plans, Exercise Price Range [Line Items]
Range of Exercise Prices, Lower Limit	48.55
Range of Exercise Prices, Upper Limit	$ 62.11
Options Outstanding, Number of Shares	704
Options outstanding, weighted-average remaining contractual life	6 years 10 months 24 days
Options Outstanding, Weighted-Average Exercise Price	$ 61.05
Options Exercisable, Number of Shares	472
Options Exercisable, Weighted-Average Exercise Price	$ 61.35
$63.79 to $73.21 [Member]
Share-based Compensation, Shares Authorized under Stock Option Plans, Exercise Price Range [Line Items]
Range of Exercise Prices, Lower Limit	63.79
Range of Exercise Prices, Upper Limit	$ 73.21
Options Outstanding, Number of Shares	963
Options outstanding, weighted-average remaining contractual life	8 years 9 months 18 days
Options Outstanding, Weighted-Average Exercise Price	$ 68.60
Options Exercisable, Number of Shares	166
Options Exercisable, Weighted-Average Exercise Price	$ 64.35

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Share-Based Compensation (Changes in Nonvested Options) (Details) - Restricted Stock and Units [Member] $ / shares in Units, shares in Thousands, $ in Millions	9 Months Ended
	Oct. 28, 2017 USD ($) $ / shares shares
Number of Shares
Nonvested, Beginning Balance | shares	798
Granted | shares	328
Vested | shares	(286)
Expired or cancelled | shares	(447)
Nonvested, Ending Balance | shares	393
Aggregate value | $	$ 23
Wtg. Avg. remaining contractual life (in years)	1 year 6 months
Weighted-Average Grant Date Fair Value per Share
Nonvested, Beginning Balance | $ / shares	$ 56.91
Granted | $ / shares	63.72
Vested | $ / shares	49.55
Expired or cancelled | $ / shares	64.74
Nonvested, Ending Balance | $ / shares	$ 59.07

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Legal Proceedings (Narrative) (Details) - USD ($) $ in Millions	3 Months Ended		9 Months Ended
	Jul. 29, 2017	Oct. 31, 2015	Oct. 28, 2017
Litigation charges			$ 50
Osberg V. Foot Locker, Inc [Member]
Litigation charges	$ 50	$ 100
Loss contingency loss in period after tax	$ 30	$ 61
Estimated Litigation Liability, Noncurrent			150
Minimum [Member] | Osberg V. Foot Locker, Inc [Member]
Loss contingency, range of possible loss			150
Maximum [Member] | Osberg V. Foot Locker, Inc [Member]
Loss contingency, range of possible loss			$ 260