John A. Maurer - Foot Locker, Inc. Lauren B. Peters - Foot Locker, Inc. Richard A. Johnson - Foot Locker, Inc.

Paul Trussell - Deutsche Bank Securities, Inc. Marjorie Lopez Marinez - Barclays Capital, Inc. Robert F. Ohmes - Bank of America Merrill Lynch Matthew Robert Boss - JPMorgan Securities LLC Sam Poser - Susquehanna Financial Group LLLP Camilo Lyon - Canaccord Genuity, Inc. Christopher Svezia - Wedbush Securities, Inc. Tom Nikic - Wells Fargo Securities LLC

Good morning, ladies and gentlemen and welcome to Foot Locker's Fourth Quarter 2016 Financial Results Conference Call. At this time, all participants are in a listen-only mode. Later, we will conduct a question-and-answer session. This conference call may contain forward-looking statements that reflect management's current views of future events and financial performance. These forward-looking statements are based on many assumptions and factors, including the effects of currency fluctuations, customer preferences, economic and market conditions worldwide, and other risks and uncertainties described in the company's press releases and SEC filings. We refer you to Foot Locker, Inc.'s most recently filed Form 10-K or Form 10-Q for a complete description of these factors. Any changes in such assumptions or factors could produce significantly different results and actual results may differ materially from those contained in the forward-looking statements. If you have not received today's release, it is available on the Internet at www.prnewswire.com or www.footlockerinc.com. Please note that this conference is being recorded. I will now turn the call to John Maurer, Vice President, Treasurer and Investor Relations. Mr. Maurer, you may begin. John A. Maurer - Foot Locker, Inc.: Thanks, Kathy. Greetings, everyone. Welcome to Foot Locker, Inc.'s earnings conference call for the fourth quarter and full year 2016. As reported in this morning's press release, the company achieved net income of $189 million in the fourth quarter on a GAAP basis, up from $158 million in the fourth quarter last year. On a per share basis, we earned $1.42 this year, a 25% increase compared to the $1.14 the company earned in the same period a year ago. As also noted in our release, we had one-time items in fourth quarter both this year and last. This year, there were two large non-recurring items affecting our tax expense. We have adjusted our GAAP results for these items to drive our 2016 non-GAAP results. The first item is a tax rate change in France that goes into effect in 2019, but which caused us to write-down the value of certain deferred tax assets by $2 million in the fourth quarter, reducing GAAP earnings by $0.02 per share. The second adjustment stems from new regulations issued under Section 987 of the U.S. Tax Code. These regulations require the company to determine the tax effects of the unrealized foreign currency gains and losses on the balance sheets of foreign businesses that are operated as branches. This resulted in a $9 million non-cash reduction in current tax expense, which increased our GAAP earnings by $0.07 per share. Last year, the company recorded a pre-tax charge of $5 million, $4 million after tax in the fourth quarter to reflect the impairment of certain Runners Point Group assets, thus reducing earnings by $0.02 per share. Excluding these items, fourth quarter non-GAAP EPS was $1.37, an 18% increase over the $1.16 a share we earned on a non-GAAP basis last year. A reconciliation of our GAAP to non-GAAP results is included in our press release, and except as otherwise indicated, the numbers mentioned during the balance of our remarks this morning will be based on the non-GAAP results. The strong finish to the year brought our annual non-GAAP net income to $652 million, up 8% from a year ago and our sixth consecutive year achieving record annual earnings. On a per share basis, adjusted earnings were $4.82 for the full year, an increase of 12% over last year's $4.29. For a more detailed look at our fourth quarter financial performance, I'm joined this morning by Lauren Peters, Foot Locker's Executive Vice President and Chief Financial Officer. She will be followed by Dick Johnson, Chairman and Chief Executive Officer who will touch on product trends and the progress we've made towards our long-term financial objectives as we execute our strategic initiatives. Lauren will round out our prepared remarks with our initial outlook for 2017. Lauren? Lauren B. Peters - Foot Locker, Inc.: Thank you, John. Good morning to all of you and thank you for joining us this morning. I'm pleased to report that we delivered another great performance by our company in the fourth quarter. Starting with sale, we produced a 5% comparable sales gain in the quarter bringing our two-year stacked comp gain to 12.9%. Our total sales for the year were $7.8 billion, a 4.8% increase over last year's $7.4 billion. Our store segment posted a 4% comparable sales gain in the quarter. The top performance was by Champs Sports, which delivered a high single digit comparable sales increase, powered by a high single digit gain in footwear and a double digit gain in apparel. Foot Locker Canada finished off a stellar year with its fifth straight double digit quarterly comp sales increase. The strong results up north were broad based, with double digit gains in footwear and apparel and a mid single digit gain in accessories. Our SIX:02 banner generated another outstanding performance, leading our store segment and comp percentage growth for the second consecutive quarter with a strong double digit gain. This encouraging result was fueled by double digit gains in both footwear and apparel, led by lifestyle offerings from PUMA, adidas and Nike. Foot Locker in the U.S. and Footaction also delivered strong sales results, with both banners up mid single digits while Foot Locker Europe comped up low single digits despite traffic challenges across much of the continent. Kids Foot Locker's comp in the quarter was down at the low end of mid single digits. However, total sales increased low single digits, which reflects the addition of 21 net new Kids' stores in the U.S. during the year. Foot Locker Asia Pacific's comp sales were down mid single digits, largely due to the closure of its high profile George Street store in Sydney for the entire quarter. I'm happy to report that the newly remodeled store we opened in early February and introduced Foot Locker's first truly pinnacle retail experience for our Australian customers. Comparable sales at our Runners Point and Sidestep stores continued to decline double digits, as both banners continued to face a difficult retail climate in Germany, including especially significant declines in traffic there. Overall, our direct-to-customer segment posted another solid performance in the quarter as it has all year, with a comparable sales gain of 11.3%. This enabled our direct-to-customer business to top $1 billion in annual sales for the first time. Digital sales of our store banners in the U.S. continued to post strong increases, up collectively over 20%, while our digital businesses in Europe and Canada were both up even more. On the other side of the ledger, sales at Eastbay declined mid single digits. For the quarter, direct-to-customer sales increased to 15.3% of sales up from 14.6% a year ago, and for the year, reached 13.2% of sales compared to 12.7% in 2015. In terms of comparable sales performance for the total company, our monthly cadence was positive throughout the quarter, with November and December comps up mid single digits and January up high single digits. Average selling prices were up, and unlike what we hear from much of the retail industry, our traffic in the U.S. increased low single digits. From the family of business perspective, both footwear and apparel posted solid mid single digit increases while accessories, which includes socks and hats, were down mid single digits. Within footwear, men's and kids were both up mid single digits while women's footwear had an exceptionally strong quarter, up in the teens. Women's footwear was led by casual styles such as PUMA Suedes and Creepers, and adidas Superstar. By category, we continue to see many of the same trends we spoke about throughout the year. Strong demand for lifestyle running products led to a double digit gain in running overall, while casual styles and basketball were up low single digits. Dick will provide some additional color on the product trends during his remarks. Moving down the income statement to gross margin. We produced a 10 basis point improvement in the quarter to 33.7% of sales from 33.6%. We picked up 20 basis points from an improved merchandise margin, largely by once again lowering the mark-down rates in our stores especially on apparel. Merchandise margin gain in the quarter was partially offset by occupancy deleverage. For the full year, gross margin improved 10 basis points, in line with our guidance at the beginning of 2016. Our team did an excellent job managing expenses in the quarter. Our SG&A expense rate decreased to 18.7% of sales from 19.3% of sales a year ago. SG&A improvement came from levering our fixed expenses and carefully managing variable expenses such as store wages and marketing. For the full year, our SG&A expense rate improved to 19% from 19.1% last year, also in line with our annual guidance. Depreciation expense increased slightly this quarter to $40 million from $39 million a year ago. For the full year, depreciation and amortization increased 7% to $158 million, due to the ongoing investment in our stores, digital sites, logistics network, and improvements in technology and other infrastructure. For the year, our adjusted earnings before interest and taxes topped $1 billion for the first time in the company's history. As a percent of sales, EBIT reached a rate of 13%, up from last year's 12.8%. Our fourth quarter non-GAAP effective tax rate was 35.1%, slightly below last year's Q4 rate. This was primarily due to the geographic mix of our income. Altogether, the fourth quarter was another period of strong profitable growth for the company, leading to a record full year net income margin of 8.4%, just shy of our long range goal of 8.5%. We invested $284 million of capital into our business in 2016. This was down slightly from our prior expectation, due primarily to shift in the timing of expenditures on certain technology projects into 2017, although the project timelines themselves are mostly unchanged. We also returned $147 million of cash to our shareholders in the form of dividends during 2016, which, combined with our share repurchase program, brought the total cash return to shareholders for the year to $579 million, more than 85% of our net income. As we announced last week, our board increased our quarterly dividend payout rate by 13% to $0.31 per share, and authorized a new $1.2 billion share repurchase program. We, and the board, believe the company is well-positioned financially to continue returning a significant portion of our annual cash flow to shareholders, while we also make the necessary investments in the business that will drive the company's long-term financial performance. Before I pause, I'd like to mention our inventory, which finished the year in solid position. At year-end, our inventory was up just 1.7% compared to the 5.3% quarterly sales increase I mentioned at the beginning of my remarks. Let me now turn the call over to Dick, although I will be back before we get to your questions to provide you with our initial plans for 2017. Dick? Richard A. Johnson - Foot Locker, Inc.: Thanks, Lauren. Good morning, everyone, and thank you for your participation on the call this morning. In today's challenging fast-changing retail landscape, the results Lauren just described are a truly exceptional achievement. It took an incredibly talented team of associates to produce the sixth consecutive year of all-time best financial performance as an athletic specialty company. And I want to start off my remarks by sincerely thanking each of our associates for their dedicated efforts in the quarter and throughout 2016. Their work has firmly positioned our banners at the center of sneaker culture, which not only has produced strong results in recent years, but has also established a strong foundation upon which to build and shape our business in the future. This work is an ongoing effort. We introduced a new strategic framework at the beginning of 2015, and revised the key strategic initiatives that the company has been working on diligently since 2010. These initiatives are: driving performance in the core business; expanding leadership in Kids; expanding in Europe; building our apparel business; elevating our digital business; and delivering growth in the women's business. As I'll describe next, these initiatives have driven our recent financial success. And we intend to continue to pursue these initiatives further in 2017 to sustain our key leadership position in the athletic retail industry. First, we drove strong performance in our core business, namely our male banners in North America including Foot Locker, Champs Sports and Footaction. Coming on top of last year's outstanding results, this year's strength spans several categories, the most important of which was lifestyle running. Nike remained the lead brand, with solid sales of Huarache and Presto, along with Air Max products, while adidas led the category's growth, with Nomad, Boost, AlphaBOUNCE, Tubular Shadow, and YEEZYs, all posting strong sell-throughs. The Jordan Retro assortments were very productive in the quarter, helping more than offset the declines in signature basketball. The overall basketball category posted a modest gain for the quarter and full year, led by the Jordan brand and Superstars. Classic sneakers remain very much on trend in our core business, led primarily by adi and PUMA, although Nike also had successes. The opening of our flagship store on 34th Street in August really energized many of our customers, as has the grand opening of the Foot Locker in Times Square earlier this month. It's great to see the excitement that these pinnacle retail destinations generate for our brand. As Lauren mentioned, we also have reopened a key store in Sydney this month and have similar openings coming up in Chicago, Los Angeles, Toronto, and Melbourne later this year. In other words, we're cultivating that strong connection with sneaker culture in major markets not just in the U.S., but in many of our key cities around the world. Second, our Kids business continues to generate the largest dollar sales increases among our growth pillars, driven by many of the same styles I mentioned for the core business. Our younger customers are connected digitally at a very early age and they really want the same cool sneakers that their big brother or sister or, oftentimes, their parents are wearing. And they want them now, not a few months down the road. A solid comparable sales increase of Kids footwear within our adult banners was partially offset by the sales decline Lauren mentioned at Kids Foot Locker. In part, this was a function of the fact that not all of today's hottest styles are available on the same timelines in sufficient quantity in kids' sizes. Nonetheless, total Kids Foot Locker sales in the U.S. increased and we expanded the banner's footprint outside the U.S. to 41 at year-end. Next, our Foot Locker banner in Europe produced another strong year. Although sales did not increase as rapidly in 2016 as they had in recent years, productivity and profitability remained high, with solid momentum across categories and families of business. As we have discussed, our customers in Europe are just as engaged with sneaker culture in their own way as their American peers. We continued to strengthen our pan-European presence by opening 22 new Foot Locker stores over the course of 2016. We're also investing in pinnacle retail experiences in Europe, as evidenced by the new Jumpman store in Paris that we opened in November, in partnership with brand Jordan. We intend to continue to invest aggressively in our European business, including new stores and remodels. As Lauren mentioned, our German-based Runners Point and Sidestep banners continued to struggle in Q4. We've recently had a management change there and we continue to work internally and with our vendors to position these banners over time with the trend-right assortments that we believe will resonate with their respective customers. We recently opened a new Sidestep store in Cologne, in a space that a Foot Locker store had outgrown and the early results from this somewhat larger space for Sidestep have been encouraging. Our fourth strategic initiative calls for building apparel penetration and profitability. In this case, we were one out of two, as the profitability piece improved across most of our banners in both the quarter and 2016. In the U.S., the growth of adidas in footwear was mirrored by strength in apparel, whereas internationally, it was Nike that posted the best apparel growth. On the women's apparel side, PUMA also contributed significantly. The focus on premium asset-connected, and predominantly branded apparel as opposed to the old cotton by the pound model, continues to help augment our connection with our customers beyond sneakers and push apparel margins ever closer to footwear margins. In total, apparel and accessories sales were just under 18% of our business, down a bit from the 18.5% for 2015. The digital business, our next growth pillar, had a good year, especially encouraging progress in Europe and Canada where the proportion of digital to total banner sales is still relatively low. In the U.S., sales in our much more mature store banner dot-com businesses collectively increased almost 20%. Although we report sales on sales channels, our customers don't think in those terms. They think in terms of our brands, excuse me. Foot Locker on their smartphone is the same to them as the Foot Locker store and they choose whether to transact with us digitally or in-store based on the variety of factors which continue to evolve. The investments we are making in our new ecommerce platform which will be rolled out by banner during the course of 2017, will provide us with tremendous capabilities to enhance and connect our customer experiences far better than we do today. The soft spot in our digital business in 2016 was Eastbay. While that customer still loves the performance gear Eastbay is best known for, we could have done a better job than the last year or two, keeping connected with that high-school athlete. While we've been focusing on providing him and her with the latest performance styles, we somewhat lost sight of the fact that for every pair of true performance shoes in their closet or locker, there're probably a half a dozen or more casual athletic pairs in there too. Our final growth pillar, women's, posted solid improvements in 2016. While the sale of women's footwear in our predominantly male banners was strong virtually all year, the SIX:02 results picked up especially in the second half of the year, after the new flagship store on 34th Street opened. Another key factor was the decision we made early in the year to fully integrate the SIX:02 digital and store teams, which has begun to bear fruit as seen in the substantial momentum at SIX:02.com in the fall season. As Lauren mentioned, much of that progress was driven by our relationship with PUMA and the position we were able to take in the highly sought-after FENTY product by Rihanna. Looking ahead, the new SIX:02 store in Times Square will introduce the banner to a vast number of new customers and we plan to open a similar pinnacle store in a new Foot Locker location in Los Angeles later this year. This brings me to the most important piece of our strategic framework; our people. I firmly believe we have the best team in retail, and I can't thank them enough for their performance in 2016. We have an enviable mix of backgrounds at Foot Locker, Inc. For example, we were recently recognized by Fortune magazine as having one of the Best Workplaces for Diversity. We have many industry veterans, people who have been with us for decades as well as some exceptional new talent that has joined us very recently. It's a diverse, inclusive, engaging, forward-thinking, and ever-changing mix of talent, that for me at least, makes everyday a fun and invigorating experience at Foot Locker, and makes Foot Locker a great place to work. So before we get to your questions, let me turn the call back to Lauren to give you our initial read on 2017. Lauren B. Peters - Foot Locker, Inc.: Thanks, Dick. We continue to see many opportunities to elevate the business on our way to reaching our long-term goals. As you mentioned in the press release this morning, we are planning yet again for a mid single digit comparable sales gain and a double digit percentage EPS increase in 2017. These plans are based on a comparable 52-week year. This year includes a 53rd week, which we expect will add about $0.12 per share to our fourth quarter and full year 2017 results. While we are optimistic about the full year, the quarterly cadence is not likely to be as even as we produced in 2016: The current delay in the release of tax refunds by the IRS compared to a year ago has led to a slower than usual start in the U.S., which is likely to result in the challenging first quarter. It is our belief that our customers' fundamental appetite for the product has not changed. However, the timing of their cash flows and their ability to buy the product has been impacted. For the full year, we are planning for a flat to slightly up gross margin rate, driven by a modest improvement in our merchandise margin rate. In terms of SG&A, we will remain disciplined in managing our expenses in 2017. Although there are minimum wage increases and higher health benefit costs, which will make achieving significant leverage a challenge, we are planning our SG&A rate to be flat for the year. With a shift of some capital expenditures from 2016 into 2017, we are now planning this year's capital program to be $277 million. We continue to invest in the key real estate initiatives mentioned by Dick, along with our store banner remodel program. We finished 2016 having touched just over 40% of the Foot Locker fleet in the U.S., and about a third of the fleet in Europe; just under 40% of the Champs Sports fleet, and about 25% of the Footaction stores. We will make steady progress on each of those banners in 2017 and 2018. We are also investing in technology and customer experience, including the roll out of the order-planning module of our merchandise allocation system, new ecommerce platform, and the pilot and planned rollout of our new generation point-of-sales system later in 2017. Each of these new systems will be implemented globally, giving each of our banners around the world access to the same best-in-class technology. One result of that investment is additional depreciation, which we expect to be approximately $175 million in 2017. We are planning to open 90 stores and close about 100 stores in 2017. The new stores will be concentrated in Europe, Kids Foot Locker, and Footaction, along with the high-profile Foot Locker and Champs Sports locations that Dick mentioned. In addition, we plan to open three SIX:02 stores in 2017 which includes the second New York City location inside our new Times Square flagship store. We are planning interest expense to be relatively flat to the $2 million of expense in 2016. For taxes, we are planning for an effective rate of approximately 34% in 2017. For lower rate than past guidance reflects the change required by ASC Topic 718 and the treatment of the excess tax benefits from stock-based compensation. Under the new rule, the tax effects of share based compensation will be recorded on the income statement, rather than equity as before. I would point out, however, that if the level of stock option exercise activity in 2017 is lower than we assumed in the plan, our tax rate will be closer to the 36% it has been in the past. Our guidance of a double-digit percentage increase in earnings per share also assumes a lower share count, based on the execution of our newly expanded share repurchase program. As a high-performing company, we have built a lot of momentum over the years. We are continuing to make prudent investments in our people, our store fleet, our digital business and our infrastructure in order to deliver even stronger results in the future. We've a lot of really exciting initiatives ahead of us in 2017 that we believe will keep us at the center of sneaker culture, and give us the right foundation on which to succeed over the long-term. Kathy, let's please open the call for questions now.

Thank you. Ladies and gentlemen, we will now begin the question-and-answer session. And our first question comes from the line of Paul Trussell with Deutsche Bank Research. Please proceed with your question. Paul Trussell - Deutsche Bank Securities, Inc.: Hey, good morning. Richard A. Johnson - Foot Locker, Inc.: Good morning, Paul. Paul Trussell - Deutsche Bank Securities, Inc.: Another great quarter. Congratulations. Lauren B. Peters - Foot Locker, Inc.: Thank you. Richard A. Johnson - Foot Locker, Inc.: Thank you. Paul Trussell - Deutsche Bank Securities, Inc.: Just wanted to kind of dig into your guidance for mid single digits comps for this upcoming year despite what seems to be a tough start for broader retail this month. What's in the pipeline that gets you excited? And what is the consumer kind of telling you where they are moving towards from a category or a type of product standpoint? Richard A. Johnson - Foot Locker, Inc.: Well, Paul, I think that the consumer is moving towards cool, right? I mean, that's what our – really drives sneaker culture and them finding the coolest sneaker at the right time is what's important. We don't believe that fundamentally, the consumer's appetite has changed at all for products. So the guidance around mid single digit comps, we know that the tax checks are going to flow and we know that our consumer likes to buy new sneakers when they get their tax refunds. So as important as the running category was in 2016, we continue to see that category being important. We see some life in basketball. There's been some sparks that certainly we saw down in New Orleans at the All-Star Game. We expect that to continue to improve throughout 2017. Casual has sort of the life of its own and the consumer moves from silhouette to silhouette depending on their need on any given day. And then I see continued strength in apparel. So our families of business, from men's, women's, and Kids continue to have opportunity across various categories. So the confidence and our consumer still having a huge passion around sneakers is still there. Paul Trussell - Deutsche Bank Securities, Inc.: That's very helpful. And then just around ASP, certainly that was up again. How do you view that to contribute in 2017? Richard A. Johnson - Foot Locker, Inc.: We expect ASP growth to continue to have some upside, Paul. We've talked about it many times that our ASP model is pretty complex. There's a shift from one silhouette to another in footwear. There's a shift amongst preschool, infant and grade school. There's more expensive apparel that's being sold rather than less expensive. So we see that there is upside in our ASP certainly in 2017. Lauren B. Peters - Foot Locker, Inc.: Right. And even in the classic styles, that customer knows to come to us for unique iterations and that preference they've got tends to help support these ASPs and the growth of. Paul Trussell - Deutsche Bank Securities, Inc.: Great. And then very quick, last question just, Lauren, anything we should keep in mind from a cadence standpoint, whether it's via comps or timing of certain expenses flowing through? Lauren B. Peters - Foot Locker, Inc.: Yeah. Well, I don't know what more I would add on the top-line to what Dick has already described. We continue to believe that there's opportunity in margin, as we work on allocation, et cetera. And on SG&A, as we evidenced throughout 2016, we carefully control that, but as far as unique, I mean the only thing that's unique was our first quarter office relo that pops to mind, yeah, from a non-GAAP perspective. Paul Trussell - Deutsche Bank Securities, Inc.: Great. Thanks for the help. Best of luck to you. Richard A. Johnson - Foot Locker, Inc.: Thanks, Paul.

And our next question comes from the line of Matt McClintock with Barclays. Please proceed with your question. Marjorie Lopez Marinez - Barclays Capital, Inc.: Hi. This is Marjorie Lopez on for Matt McClintock. Thank you for taking our question. Just wanted to ask a little bit more about your remodeling program, and to understand if you're going to make any changes in 2017. And also, in terms of the improvements you've made in the two New York locations for SIX:02, will you be applying these learnings and changes to your older SIX:02 stores or just the new ones going forward? Thank you. Richard A. Johnson - Foot Locker, Inc.: Well, in terms of remodels, we've talked about an ongoing program. Lauren detailed the capital expense plans for 2017. So we'll continue certainly to upgrade the fleet. And we manage a big portfolio of stores and with our real estate and store development team continue to identify the right opportunities to upgrade those stores from a remodel perspective. So that program will continue. And we certainly have had some great learnings with SIX:02 on Times Square and on 34th Street. And, as Lauren mentioned, or I guess I mentioned, we'll open another SIX:02 store inside a flagship Foot Locker out in Los Angeles later this year. We will continue to upgrade our current fleet from the learnings that we've got around brands, merchandising, et cetera, that we learned from these two pinnacle spaces; also take some of the learnings that we get from our online digital business. Are there brands that we've tested there that we should roll out? Those are the key learnings that we'll use to help mature that SIX:02 brand. Marjorie Lopez Marinez - Barclays Capital, Inc.: Great. Thank you. And just as a quick follow-up, I wanted to get a little bit more color on the Kids Foot Locker performance. I know you mentioned differing timeline and not sufficient sizes for popular styles in Kids. How should we think about this going forward? And just in terms of looking at it from a historical perspective, was this worse than in the past? Thank you. Richard A. Johnson - Foot Locker, Inc.: Well, Kids Foot Locker did underperform its past track record, and I think certainly the fourth quarter was in (39:33) a bit of an anomaly. We still have a lot of faith in the Kids Foot Locker banner as we continue to expand its footprint. We had some doors where we added a partnership space, the Fly Zone, so there's some learnings that go along with the right amount of space allocation between the Fly Zone product and the base Kids Foot Locker product. So our Kids Foot Locker team is energized for 2017 and they're certainly making great decisions in terms of the products that they're flowing in. We continue to work with our vendors to help them understand that our family of muse is actually in Kids Foot Locker between the young male, the young female, and the parents that are providing the money to shop, they look for the same products as Foot Locker has, or Lady Foot Locker, SIX:02 or Champs Sports have all at the same time. And we're working with our vendors to try to ensure that deliveries line up, so that when cool hits the big brother store, it's also there for the little brother. Marjorie Lopez Marinez - Barclays Capital, Inc.: Okay. Lauren B. Peters - Foot Locker, Inc.: And that customer is really technically wired and are digitally savvy and they know as much about this product as their big brother. So they want it at the same time. Marjorie Lopez Marinez - Barclays Capital, Inc.: Got it. Thank you for that. Richard A. Johnson - Foot Locker, Inc.: Okay, Kathy?

And our next question comes from the line of Robby Ohmes with Bank of America Merrill Lynch. Please proceed with your question. Robert F. Ohmes - Bank of America Merrill Lynch: Hey good morning, guys. Great quarter in a very tough fourth quarter for most. Richard A. Johnson - Foot Locker, Inc.: Thank you. Robert F. Ohmes - Bank of America Merrill Lynch: Dick, two topics I was hoping you could maybe help us with. One, I know it's hard to quantify, but can you give us a sense of where, when you look at the casual style percent of your business or mix of your business, where are we versus historical standards and maybe a sense of how far and how long can casual keep leading the way? I think even in basketball, you mentioned Superstars as one of the drivers, so even basketball sounds like it's leaning very casual. And then the other topic, it sounds like, and, again, I may be wrong in this, but it sounds like the trends in Europe are very different than the U.S. in what's driving the business. And also, you called out traffic. It sounds like it might mostly be Germany, but can you also just sort of give us some color on what's going on in Europe versus the U.S.? And is it deviating more than usual in terms of what are driving those two regions? Thanks. Richard A. Johnson - Foot Locker, Inc.: Sure. Thanks, Robby. First, from a casual perspective, I think it's important to remember that virtually the vast majority of our shoes are sold from a casual hook-up to what I'm wearing today sort of mindset for our consumer. So again, Superstars in basketball, Huaraches in running, all of those sneakers are viewed – we put them in categories, but just the same way that our customer doesn't think in channels, they don't really think in categories. So wherever the heat is brought by our tremendous vendor partners, the consumer is going to move there. Whether they decide to play basketball in a basketball shoe or they decide to hang out on the street with their friends, they're the ones that ultimately make the determination. So, I don't want to get into sort of the crystal-balling of how each category will respond. I have a huge amount of faith in our vendor partners and our merchant teams to move the dollars where the customer is and is going to be. So, again, I don't worry about casual versus basketball versus running. I'm sure that there are models out there that want to understand how each of those levers move, but our kid is really concerned about the coolness of the sneaker, not the category that it comes from. And I think the trends in Europe, just to get to your second question Robby, the trends in Europe have always been a bit different. Running was far more important to Europe from a category and coolness perspective than it is in the U.S. The team over there is trying to help the consumer understand how cool some basketball silhouettes are. The vendor mix is a little bit different, still the same group of vendors but the percentages are different continent-to-continent. So I don't see that there's been any acceleration or significant change in the trends. And I think it's just that the trends get a little more accentuated because the running silhouette is the coolest silhouette that's out there right now for most consumers. Traffic, certainly Lauren called out the traffic in Germany as being down. We saw traffic in some other countries impacted by some of the macro events that have happened across Europe, but the consumer is still shopping. They certainly still want sneakers. As Lauren pointed out, the Foot Locker Europe comped up for the fourth quarter after being down a little bit in the third quarter. So again, good response from the consumer in Europe. Robert F. Ohmes - Bank of America Merrill Lynch: Great. Thank you very much. Richard A. Johnson - Foot Locker, Inc.: You bet, Robby.

And our next question comes from the line of Matthew Boss with JPMorgan. Please proceed with your question. Matthew Robert Boss - JPMorgan Securities LLC: Thanks. And great quarter, guys. Richard A. Johnson - Foot Locker, Inc.: Thanks, Matt. Matthew Robert Boss - JPMorgan Securities LLC: So on the gross margin, can you just help rank the merchandise margin drivers this year? And just, Dick, what do you see as the appropriate level for the business on gross margin from 34% today? Do you still continue to see opportunity? Richard A. Johnson - Foot Locker, Inc.: We continue to believe that there's leverage. I'm not going to rank them for you, Matt. You know, we... Lauren B. Peters - Foot Locker, Inc.: We worked on all the levers. Richard A. Johnson - Foot Locker, Inc.: Exactly. And they don't necessarily move at the same pace. So, Lauren mentioned rolling out the second phase of our merchandise allocation system, the order-planning piece. And we've talked about that over the past quarters that it's a learning system and the allocation piece continues to learn, and our team continues to learn with it, to work with it. And now we'll feed that information into the order planning end of it, which again should help us order the right quantities and then the allocation piece helps us get those quantities in the right stores at the right times, so don't have to take as many markdowns or ship as many products store-to-store. So we continue to work with our vendor partners to drive great, exciting product. As the product excitement continues to grow, we operate at the premium end of the spectrum and try to manage the markdowns. Certainly we – it's not that we don't have markdowns in the store, but we try to manage them. So each of the levers gets worked on and the teams are very aggressive to continue to get some leverage in the margin line. Lauren B. Peters - Foot Locker, Inc.: So we've continued to see improvement made in the footwear margins, and in the fourth quarter especially improvement came out of apparel. So as that growth initiative gains traction and we can continue to improve on those apparel margins, that further supports our overall merchandise margins. Matthew Robert Boss - JPMorgan Securities LLC: Got it. And then just on the SG&A front, so really nice leverage in the fourth quarter on the mid single digit comp. Lauren, can you just elaborate a little bit on some of the headwinds offsetting your ability to leverage more this year if you were to hit a similar mid single digit comp. Lauren B. Peters - Foot Locker, Inc.: Yeah. So the bigger components within SG&A being selling wages and then our marketing publicity. On the selling wage front, a bit of the headwind is in the U.S. We've got changes in minimum wage and health care costs, but as you've seen us do, we're very, very careful about managing the hours to make sure that we've got the hours where we've got peak traffic and that helps us manage through that. So we remain focused on having very competitive pay for our sales associates where – have a commission structure that works nicely in ensuring that as your wages change, you're also driving the top-line to help manage the rate, but it's a dynamic that we have to very closely manage. Matthew Robert Boss - JPMorgan Securities LLC: Great. Best of luck. Richard A. Johnson - Foot Locker, Inc.: Thanks, Matt. Okay, Kathy?

And our next question comes from the line of Sam Poser with Susquehanna Financial Group. Please proceed with your question. Sam Poser - Susquehanna Financial Group LLLP: Good morning, everybody. Thank you for taking my question. Couple of things; number one, can you talk about what your thoughts are on border adjustment and on all this new tax policy going on? You've got to be paying close attention to that. Richard A. Johnson - Foot Locker, Inc.: Yeah. Sam, this is one place that I don't know that there's a game plan, right. So the shift is going to be a little bit hard to read. The February started with a weak difference in President's Day and the All-Star Game shift. The start of Easter is a couple of weeks later, the Easter season. So there's a lot of moving parts, probably the biggest of which is the PATH Act that required certain EITC and child care credits... Sam Poser - Susquehanna Financial Group LLLP: Dick, I was asking about the border adjustments, not about the (49:29)... Richard A. Johnson - Foot Locker, Inc.: I'm sorry. I'm sorry. I misunderstood. I thought you meant the income tax. Sam Poser - Susquehanna Financial Group LLLP: No. Richard A. Johnson - Foot Locker, Inc.: So, no. Sam, I think it's too early to speculate about a border adjustment tax. Certainly we know that there aren't very many sneakers made in the U.S. at this point. So obviously depending on whatever the administration ultimately ends up putting in place, we'll have to react. And we'll work with our vendor partners to understand. I think the implications and the impact to our core consumer of a border adjustment tax is it's fairly significant. So, it's... Lauren B. Peters - Foot Locker, Inc.: Across many categories of spending for them, not just our product. Richard A. Johnson - Foot Locker, Inc.: That's right. Sam Poser - Susquehanna Financial Group LLLP: And then secondly, can you talk to – on the week 53 this year and then the take-out next year, Lauren, can you give us some idea of – you said it's $0.12, but can you give us the dollar amount for that week on how you're modeling it for how much that week is worth from a dollar amount and then how much we'll have to take out next year? And could you give us any thought as to how to think about 2018, because you're going to have week one next year up against week two this year on a comp basis. It's very dizzying, more next year than this year. Richard A. Johnson - Foot Locker, Inc.: Yeah. Welcome to our world. Lauren B. Peters - Foot Locker, Inc.: Is it dizzying for you? $0.12, that's what our current model is on the bottom-line and tied to that. Our last 53rd week was 2012. So if you went back to that, you'd get some more color around top-line, bottom line, et cetera but we recognize as we work through the math, that we're a bit more productive than we were in 2012 and so we've factored that into the thinking. Richard A. Johnson - Foot Locker, Inc.: We haven't started looking at the quarters of 2018 and how they're going to compare to 2017 yet. That's an exercise for the future. Sam Poser - Susquehanna Financial Group LLLP: I was more – not about specific guidance but just to let people understand how the weeks match up because you guys generally give a comp by week guidance and then there's a variance off of the revenue because the fiscal month doesn't match up with the comp, looking into 2018. Lauren B. Peters - Foot Locker, Inc.: We don't give that kind of guidance. Richard A. Johnson - Foot Locker, Inc.: We don't give out comp week guidance. Again, I think Lauren's point is right. If you go back and look at 2012, you'll have a better understanding of the pattern, but that's the level of detail we're going to provide. Sam Poser - Susquehanna Financial Group LLLP: All right. Well, thanks very much and continued success. Richard A. Johnson - Foot Locker, Inc.: Thanks, Sam.

And our next question comes from the line of Camilo Lyon with Canaccord Genuity. Please proceed with your question. Camilo Lyon - Canaccord Genuity, Inc.: Good morning, everyone. Great job on the quarter. Richard A. Johnson - Foot Locker, Inc.: Thanks, Camilo. Camilo Lyon - Canaccord Genuity, Inc.: I wanted just to get a little bit more clarity on what your thinking is around these tax refund delays. And if you consider them, Dick and Lauren, as loss sales or sales that will be recovered in the later weeks when those refunds do flow? And if you can give any sort of detail or guidance on how these delays are impacting the Q1 comps, just so that we have our models appropriately tuned into what's actually happening here? That'd be great. Richard A. Johnson - Foot Locker, Inc.: Yeah. Camilo, we're not going to go back to giving quarter-to-date comps. We stopped that a few quarters ago and we'll stay in that position. The guidance that Lauren gave for the full year is pretty clear; the mid single digit comp and double digit bottom-line that we believe that we'll achieve. The challenge will be this game plan that we don't have for the shift in tax returns that I started to explain to Sam, but was answering the wrong question. So, the year has some shifts in it, right? The year, or the week shift of the All-Star Game, the week shift of Presidents' Day, the start of Easter being later, so Mardi Gras and Carnival all shifting and then the PATH Act that required this delay in some of the tax returns. So certainly, there have been buying opportunities that have passed when our consumer didn't have cash in their hands, but we firmly believe that the consumer still has a huge desire for the products that we have in our store. We have a huge belief that our vendors continue to bring heat in our category to our stores and websites. So, we're confident that the sales will start to flow when the tax checks start to flow. Camilo Lyon - Canaccord Genuity, Inc.: And is there an expectation that those sales will be recovered once those flows actually start coming through, or are they just past and will be lost and therefore you're kind of saddled with releases that were launched during that period that no one was able to buy? Just trying to understand really the dynamics that have happened and maybe there's some historical context you can reflect on? Richard A. Johnson - Foot Locker, Inc.: Well, there is no historical context, unfortunately. We've had minor delays in tax checks being issued, but never sort of this glut that built and built. So... Lauren B. Peters - Foot Locker, Inc.: But we're not selling lettuce that has a really short shelf life, right? So as the cash flow improves, we know we've got really cool product that the customer will find in our store. Camilo Lyon - Canaccord Genuity, Inc.: Okay. Great. Then, if we could just shift gears a little bit towards a comment you made, Dick, about basketball seeing some life and that you would expect it to improve throughout the year. Could you just describe what you think will drive that improvement? Is it more just that it's easier comparisons or that you're actually seeing some product that's coming down the pipeline that is exciting that you think will reinvigorate the category? Richard A. Johnson - Foot Locker, Inc.: Well, it's combination of both. We know that certainly end of 2015 and throughout 2016, basketball had some challenges, especially in the signature basketball category. And we need to sort of confine the remarks to signature basketball, because as we talked about on basketball business, in totality, when you throw in the Retro, some of the Casual things was up for the quarter and the year. So, we've seen some sparks that our team was down in New Orleans over All-Star week. And, again, there were people lined up for basketball and basketball-related products that seemed to be indicating that when the right product is there with the right story, the right asset, there's still excitement around the category. So, as we look through 2017, we certainly see some things changing from all of the key vendors from a basketball perspective. So, we've said all along when the excitement and the price value relationship is there for our customer, they will gravitate to whatever the coolest at the time. And I envision or I see certainly some basketball product that I think will continue to excite our consumer. Camilo Lyon - Canaccord Genuity, Inc.: Okay, great. And then my last question, it's pretty remarkable that you're continuing to experience positive traffic when I don't think anyone else is, certainly in the mall. Could you just remind us what it is that you're doing or what it is that you have, relative to even your competitors, that allows you to continue to generate positive traffic growth in the U.S.? Richard A. Johnson - Foot Locker, Inc.: Well, I give our team a ton of credit. I mean, they do a great job on the social media and through the digital arm to drive excitement for products that are being found in our store. I give our store associates a tremendous amount of credit, because they want to engage when the customers come in. We're focused on creating consistent, authentic and memorable experiences for our consumers, so that the striper, the person in Footaction, the guy or gal in blue at Champs, they're the resident experts. The stylists – the style associates that we've got in our SIX:02 business. Our consumers want to be there. And they see it a place where there is cool product, they're among their peers, they're among their friends. And there is an environment that they're comfortable to shop in. Not all of our stores are like 34th Street and Times Square, but there's still a level of excitement that's brought by the product and the associates in the door. The energy level is high. They're just great places. And a lot of credit goes to the teams that make – help, I should say, not make – that help drive the excitement. But it also goes to our vendor partners who bring great products. They connect those products with great stories and assets that allow our consumer to really find them relevant and cool. Lauren B. Peters - Foot Locker, Inc.: So, our customers know. They got to come into our brands to check it out, because we're going to have the coolest stuff, and that shows up in that traffic number. Camilo Lyon - Canaccord Genuity, Inc.: Perfect. So, just one final one on the Q1. Could you just tell us what's the largest month within the quarter? Just trying to understand the weightings of February, March and April. Richard A. Johnson - Foot Locker, Inc.: Well, historically, February would be, but with the Easter shift, I mean, this year's a little bit of a different dynamic. But historically, February would be the largest month of the quarter. Camilo Lyon - Canaccord Genuity, Inc.: Okay. Thanks very much, guys. Good luck with the year. Richard A. Johnson - Foot Locker, Inc.: Thank you, Camilo. Lauren B. Peters - Foot Locker, Inc.: Thank you. Richard A. Johnson - Foot Locker, Inc.: Okay, Kathy?

And our next question comes from the line of Christopher Svezia with Wedbush Securities. Please proceed with your question. Christopher Svezia - Wedbush Securities, Inc.: Good morning, everyone. Congrats on the quarter as well. Richard A. Johnson - Foot Locker, Inc.: Thank you. Christopher Svezia - Wedbush Securities, Inc.: I guess, just, I want to go back to this first quarter for a second. I think last year, we had somewhat of a similar slightly maybe less delay with regard to tax refunds. I think, Lauren, you called out that you expected double-digit earnings growth for the year and mid-single digit comp. However, Q1 will be hard, I think, to do that, in part maybe due to the timing of tax refund. Is that a fair characterization, maybe as we think about Q1 relative to your annual guidance for the year, just given how Q1 is starting? Lauren B. Peters - Foot Locker, Inc.: There is a difference in the tax shift of a year ago and the delay this year. They're just different orders of magnitude. Richard A. Johnson - Foot Locker, Inc.: And if you go to the IRS, the February 10 data, they were 60% behind distributing checks. The data that's out there from February 17 has caught up a bit, but they're still significantly behind in the distribution of checks. And the distribution of checks doesn't necessarily correlate to when the money is available in accounts, et cetera. So, again, there is not a historical reference that we can use that has shifted this amount of tax money this much. So, again, as Lauren said, and I said in my prepared remarks, the first quarter is going to be a bit more challenging, but we're highly confident that we can deliver double-digit bottom line growth and mid-single digit comps for the year. Lauren B. Peters - Foot Locker, Inc.: For the year. Christopher Svezia - Wedbush Securities, Inc.: For the year? But that's when the... Lauren B. Peters - Foot Locker, Inc.: It points back to the customers' appetite for the product hasn't changed. This is a cash flow for them with the tax refund delay. Christopher Svezia - Wedbush Securities, Inc.: Okay. So, just to be clear, so, every quarter you expect mid-single digit comp and double-digit earnings growth, does it apply...? Richard A. Johnson - Foot Locker, Inc.: I don't think that's what we said. We expect to deliver double-digit EPS growth... Christopher Svezia - Wedbush Securities, Inc.: For the year. Richard A. Johnson - Foot Locker, Inc.: ...and mid-single... Lauren B. Peters - Foot Locker, Inc.: And mid-single digits for the year. Christopher Svezia - Wedbush Securities, Inc.: Year, but not necessarily for the first quarter. That's all I'm just trying to... Richard A. Johnson - Foot Locker, Inc.: We haven't given quarter-by-quarter guidance. Lauren B. Peters - Foot Locker, Inc.: We didn't give quarter guidance. We've got this first quarter that we're dealing with. Christopher Svezia - Wedbush Securities, Inc.: Okay. With regard to the gross margin and SG&A guidance that you gave flat on gross margins, up in SG&A, flattish in terms of sales, that excludes the extra week, Lauren, correct? Richard A. Johnson - Foot Locker, Inc.: Yeah. Lauren B. Peters - Foot Locker, Inc.: Yes. It does not include the 53rd week. Christopher Svezia - Wedbush Securities, Inc.: Okay. All right. And then finally, just on apparel, I guess, great to see the performance. Lifestyle apparel seems to be working. You're doing a nice job on the brand and private label side. If that were to continue to comp at the rate that it's comping, do you believe you'll start to cross-over footwear relative to merchandise margins, potentially in 2017? In other words, any update on where we are on that? Lauren B. Peters - Foot Locker, Inc.: Well, we would describe it as the chase on gross margin rate is back on between footwear and apparel. We have, over the years, continued to make progress on footwear margins. That was true in 2016. But, we had good improvement in the productivity of those apparel margins in 2016. So the chase is back on, if you will. We think, long-term, the finish apparel margins can be meaningfully ahead of footwear margins. And again, it's about lowering overall markdown rates on that apparel. Christopher Svezia - Wedbush Securities, Inc.: Okay. Got it. All right. That's all I had. Thank you, and all the best to you. Richard A. Johnson - Foot Locker, Inc.: Thanks, Chris. John A. Maurer - Foot Locker, Inc.: Kathy, we have time for one more question.

Thank you. And our next question comes from the line of Tom Nikic with Wells Fargo Securities. Please proceed with your question. Tom Nikic - Wells Fargo Securities LLC: Hi. Good morning, everyone. Thanks for squeezing me in. Just a quick one on the gross margin line, I guess, on a 5% comp, there was a little bit of occupancy deleverage, which kind of seems like a bit of a high hurdle to get over. I was just kind of wondering for going forward, how we should think about the leverage point on occupancy. Thanks very much. Lauren B. Peters - Foot Locker, Inc.: Yeah. So, part of this dynamic is that we have these high-profile locations that we've gone into and they come with higher rent. Also, as you're building those out, you get some dark rent, if you will, and that we're building out the store if it's not open for sales yet, so we're paying rent. And that's part of the pressure. But as you get further into those doors being opened, the return on them improves and the leverage point would improve. For 2017, we are, with this leverage that it needs a solid mid-single digit to lever that occupancy. But future periods that should start to improve again. Tom Nikic - Wells Fargo Securities LLC: All right. Thanks very much. Best of luck this year. Lauren B. Peters - Foot Locker, Inc.: Thank you. Richard A. Johnson - Foot Locker, Inc.: Thanks, Tom. John A. Maurer - Foot Locker, Inc.: Okay. That concludes the call for today. Thank you for your questions. I'll be back at my desk shortly. If we didn't get to your question, I can answer at any follow-ups that you may have. Please join us on our next earnings call, which we anticipate will take place at 9 AM on Friday, May 19, following the release of our first quarter results earlier that morning. Thanks again, and goodbye.

Thank you, ladies and gentlemen. That concludes today's conference. Thank you for participating. You may now disconnect.