Foot Locker reported today that it will be closing the 22 CCS brick-and-mortar store locations due to under performance, making the CCS division of its business digital only, according to a conference call led by Lauren Peter, executive VP and chief financial officer, who added that the company hopes to re-tool its strategy for the core skate market by focusing on the online business.

TransWorld Business was able to learn more from a spokesperson from Foot Locker’s Investor Relations Group, who says  that CCS’s online business will continue as it has in the past, and that the company will offer as many associates as possible the opportunity to transition to other positions within the Foot Locker umbrella.

“ was an online-only business when we acquired it in 2008,” the spokesperson says. “We tested the viability of operating CCS stores, but the stores did not pass our return hurdles.  As a result we are returning to the digital-only model.”

Foot Locker was not able to disclose specific numbers on CCS’s earnings for 2012 and Q4, and also was not able to outline the specifics of the company’s new capital expenditure plan in regards to CCS. In addition to the 22 CCS locations that will be shuttered, Foot Locker also plans to close another 88 stores, bringing the total of closed stores to 110 locations across the Foot Locker brand, mostly throughout U.S. divisions. “Part of our strategy to improve overall productivity measures involves closing underperforming stores,” the spokesperson added.

Foot Locker’s net income of $104 million, or $0.68 per share, for the 14 weeks ended February 2, 2013, included an after-tax charge of $7 million, or $0.05 per share, for the impairment of certain tangible and intangible assets related to the company's CCS division. According to the conference call,  part of the impairment expenditures come from exiting leases and severances, and the charge will be reflected at about a penny per share in the fourth quarter, according to Peter.

“We have made the strategic decision to focus our future efforts on the skate category on our core online business where we believe we have the scale and expertise to be successful,” Peter said in the March 8th conference call. “We did incur a CCS-related impairment charge of 12 million dollars pre-tax in the fourth quarter or .05 cents per share after tax. Approximately 7 million dollars of this charge came from reducing the caring value of the CCS trade name. The remainder of the impairment charge was due to writing off the value of CCS store-related PP & E. We will operate the banner as a digital only business and so we intend to close the 22 CCS stores in the current quarter due to their ongoing under performance. This decision will result in an additional charge in the first quarter of 2013 for such costs as exiting leases and severance. Our current estimate will be that this charge will be about a penny per share in Q1.”

The company reported its 2012 Q4 net income is up 28% compared to last year, with a comp sales increase of 7.9%. Annual results for 2012 also saw a favorable gain, with full year comp sales up 9.4% and total sales up 20% over the last two year to $6.2 million, according to the conference call.

Here’s the full company statement from Foot Locker:

• Fourth Quarter GAAP Net Income of $0.68 Per Share, 28 Percent Above Last Year

• Comparable-Store Sales Increased 7.9 Percent in Fourth Quarter

• Annual Sales and Profit Highest Ever As Athletic Company

• Return on Invested Capital Reaches 14.2 Percent in 2012

NEW YORK, NY, March 8, 2013 – Foot Locker, Inc. (NYSE: FL), the New York-based specialty athletic retailer, today reported financial results for its fourth quarter and full year. The Company's fiscal year ended on February 2, 2013, reflecting a 14-week fourth quarter and 53-week year, compared to the 13-week and 52-week periods in fiscal 2011. The additional week is not included in comparable store sales results for the quarter or the year.

Fourth Quarter Results

The Company reported net income of $104 million, or $0.68 per share, for the 14 weeks ended February 2, 2013. These results included an after-tax charge of $7 million, or $0.05 per share, for the impairment of certain tangible and intangible assets related to the Company's CCS division. In the 13-week period a year ago, the Company reported net income of $81 million, or $0.53 per share, which included an after-tax charge of $3 million, or $0.02 per share, for the impairment of certain intangible assets.

Excluding the charges in both years, fourth quarter non-GAAP net income was $111 million, or $0.73 per share, in 2012, versus $84 million, or $0.55 per share, in 2011. The extra week in this year's fourth quarter results contributed $14 million to net income, or $0.09 per share. Excluding this benefit, non-GAAP net income was $0.64 per share.

With the benefit of the extra week, total fourth quarter sales increased 14.0 percent, to $1,713 million this year, compared with sales of $1,502 million for the corresponding prior-year period. Fourth quarter comparable-store sales increased 7.9 percent. Foreign exchange rate fluctuations were not a material factor in the quarter.

Fiscal Year Results

For fiscal year 2012, which included 53 weeks, the Company reported net income of $397 million, or $2.58 per share. These results included the fourth quarter after-tax charge of $7 million mentioned above. In the 52 weeks last year, the Company reported net income of $278 million, or $1.80 per share, including the net charge of $3 million after-tax.

Excluding the impairment charges in both years, one-time tax benefits totaling $0.07 per share in 2012, and the benefit from the 53rd week, full-year non-GAAP net income was $380 million in 2012, or $2.47 per share, an increase of 36 percent over the $1.82 per share recorded in 2011. Total sales increased 9.9 percent in 2012 to $6,182 million, compared with sales of $5,623 million last year.

Excluding the effect of foreign currency fluctuations, total sales for the full year increased 11.4 percent. Comparable-store sales increased 9.4 percent in 2012.

“With the momentum we built from executing our strategic initiatives, the team at Foot Locker, Inc. was able to drive our sales and profits substantially higher than last year's record results," said Ken C. Hicks, Chairman of the Board and Chief Executive Officer of Foot Locker, Inc. "We believe that we can continue to build on this momentum and deliver a double digit percentage earnings per share gain for full-year 2013, compared to our 2012 non-GAAP results of $2.47 per share."

"Our team is focused on consistently improving our financial and operational performance," added Lauren B. Peters, Executive Vice President and Chief Financial Officer. "Our success in 2012 can be seen in such productivity measures as the 14.2 percent return on invested capital and the $443 in sales per gross square foot that we achieved."

Financial Position

The Company's merchandise inventory at February 2, 2013 was $1,167 million, which was $98 million, or 9.2 percent, higher than at the end of last year. The increase was primarily attributable to the 53rd week, during which the Company brought in additional inventory to position itself for February sales. On a comparable week basis, inventory was approximately flat.

At year-end 2012, the Company's cash and short-term investments totaled $928 million, while the debt on its balance sheet was $133 million. The Company's total cash position, net of debt, was $79 million higher than at the same time last year.

During the fourth quarter of 2012, the Company repurchased approximately 1 million shares of its common stock for $35 million. For the full year, the Company repurchased 4 million shares for approximately $129 million. As announced in February, the Company's financial position has enabled it to undertake three key capital allocation initiatives in 2013: an 11 percent increase in its quarterly dividend to 20 cents per share; a new $600 million share repurchase program, replacing its previous $400 million program; and an increase in capital expenditures to $220 million, from the $163 million spent in 2012.

Store Base Update

The Company opened 85 new stores, remodeled or relocated 198 stores, and closed 119 stores during fiscal 2012. At February 2, 2013, the Company operated 3,335 stores in 23 countries in North America, Europe, Australia, and New Zealand. In addition, 42 franchised stores were operating in the Middle East and South Korea.

The Company is hosting a live conference call at 9:00 a.m. (EST) today to discuss these results and provide its current outlook for 2013, comment on the status of its current initiatives, and discuss trends in its business and the athletic industry. This conference call may be accessed live from the Investor Relations section of the Foot Locker, Inc. website at http://www.footlocker-inc