Good morning, ladies and gentlemen, and welcome to Foot Locker's Third Quarter 2021 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 may contain forward-looking statements that reflect management's current views of future events and financial performance. Management undertakes no obligation to update these forward-looking statements, which are based on many assumptions and factors, including the impact of COVID-19, effects of currency fluctuations, customer preferences, economic and market conditions worldwide, and other risks and uncertainties described more fully in the Company's press release and in the reports filed with the SEC, including the most recently filed Form 10-K or Form-10-Q. 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. Please note that this conference is being recorded. I would now like to turn the call over to Jim Lance, Vice President Corporate Finance and Investor Relations. Mr. Lance, you may begin.

Thanks, Operator. Welcome everyone to Foot Locker Inc's Third Quarter Earnings Call. As described in today's earnings release, we reported third quarter net income of $158 million, inclusive of the recently announced closure of our acquisition of WSS compared to net income of $265 million for the third quarter of last year and net income of $125 million for the third quarter of 2019. On a per-share basis, third quarter earnings were $1.52 compared with $2.52 last year and $1.16 for the third quarter of 2019. During the third quarter of 2021, the Company recorded pre -tax adjustments to earnings, including a $30 million impairment in one of our Company's minority investments, $13 million of costs related to the wind-down of the Footaction banner, and $14 million of acquisition and integration costs related to WSS. As a reminder, last year's third quarter included a pre -tax non-cash gain of $190 million related to the higher valuation of GOAT. On a non-GAAP basis, earnings -per-share were $1.93 compared to $1.21 for the third quarter of last year and $1.13 for the third quarter of 2019. Unless otherwise noted, the figures and rates mentioned during our call today would be based on non-GAAP results. In reconciliation of GAAP to non-GAAP results is included in this morning's earnings release. We'll begin our prepared remarks with Dick Johnson, Chairman and Chief Executive Officer. Andy Gray, Executive Vice President and Chief Commercial Officer will then provide color on the key product and customer engagement highlights from the quarter. Andrew Page, Executive Vice President and Chief Financial Officer will then review our third quarter results and provide guidance for the current fiscal year. Following our prepared remarks, Dick and Andrew will respond to your questions. With that, I will now turn it over to Dick.

Thank you, Jim. Good morning, everyone and thank you for joining us today. We are pleased to report that the third quarter was another great performance for our Company, as we camped a strong back-to-school season from last year, battled supply chain challenges, and delivered impressive bottom-line results. We also successfully completed the WSS acquisition during this quarter, and subsequent to the quarter-end, closed the Atmos transaction, as well, bringing both of these great companies into the Foot Locker family of brands. As we begin the fourth quarter in the all-important holiday season, we continue to see three macro trends working in our favor. Number one is the democratization of sneaker culture, with more brands and more consumers participating in the ecosystem of sneaker culture. With our position is a multi-branded retailer through Foot Locker, Kids Foot Locker, Champs Sports times Eastbay, and now WSS and Atmos, we have an incredible connection to the marketplace and consumers. Second is the growing emphasis on fitness and self-care, as people look to offset stress at work-from-home conditions by getting up and staying active to maintain their physical and mental wellness. Whether it's home fitness, running, training, hiking, or any number of other sport fitness categories, we see consumers are turning to and returning to Foot Locker to meet their fitness needs. And we see this trend increasing. And third is the overall athleisure trend and further casualization of society. Some of this is aided by the continued work-from-home environment, some of it by the new return-to-work hybrid model, but overall, people want to be more comfortable. And that certainly plays into our strengths, especially around footwear, but also in our apparel business, which has been performing extremely well this year. All of this to say, consumer demand remains strong, driven by megatrends in consumer adoption in demand that favors the brands in the categories we sell. Spending continues to be fueled by people wanting to look good as they venture out again. In terms of the global supply chain, we're all aware of the challenges. It's a fluid situation that we are making every effort to manage. And we do have a few advantages. First, we are truly multi-branded retailer with a diversified product mix, serving a broad range of consumer needs across price points. We like our position in terms of our assortment of brands, and we benefit from the very strong partnerships we have built with them over many decades. In times like these, our partnerships are mutually beneficial, enabling us to look together as far into the future as possible, to plan, collaborate, and be solution-oriented. Second, carrier capacity is something we always keep a close eye on. We are much better position this year than in the past with FedEx, UPS, and our pool carriers and with the US Postal Service as another alternative. We've got better visibility than we've ever had on where their hotspots are, so we can manage customer expectations appropriately. Third, we feel good about our distribution center staffing and capacity levels. We are building in some additional flex capacity for the fourth quarter to ensure we are doing everything we can to effectively mitigate any macro pressures. And fourth, we are focused on leveraging the advantage that having approximately 3,000 stores globally offers us to serve our customers and deliver the types of diversified product offerings inclusive of apparel accessories and complementary products that our customers come to us for. In the third quarter, we successfully launched our control brands. We are especially excited about this [Indiscernible]. Our teams have been working hard to bring it to life in a big way and we are poised to push these brands meaningfully forward in the coming seasons. At the same time, we are expanding our range of brand partners using programs like our innovative Greenhouse incubator and LEED initiative to invest in up-and-coming designers, new concepts, exclusive collaborations, and curated partnerships, all of which will ultimately help us provide a broader range of product offerings to our consumers. And finally, but perhaps most importantly, we are benefiting from great connectivity with our consumers, elevating the customer experience has long been one of our strategic pillars. We have great brand awareness and consumers continue to come to Foot Locker first. I believe we have the best team in retail, the best partners in the business, and we feel very good about where we're headed for the upcoming holiday season and beyond. Turning to our recent acquisition of WSS. It's been a great start with their back-to-school and overall Q3 results. Some of the early progress includes setting up our team addition offense for WSS, which we believe is a big operational opportunity to get speed-to-market to support their apparel business. We have also looked at our supply chain technology and other operating contracts, and we've been able to secure some wins here as well. All that to say, the early integration work is off to a good start. We are very bullish on WSS, driven in part by their strong connection to the Hispanic consumer and because it's very complementary to our existing portfolio from a consumer perspective, a merchandise assortment and pricing approach and a geography and real estate standpoint. We are encouraged to see new WSS stores perform above their budgets, giving us confidence to continue to expand the store base in the coming year. Texas is our next WSS growth market. Plans are well underway for Dallas and Houston. We also see some fill-in market opportunities. We continue to open stores in Northern California. Turning now to Atmos, we are excited to have closed the acquisition earlier this month. This premium globally recognized, digitally led brand sits at the center of sneaker culture. We are thrilled to have Hommyo - san and his talented team officially onboard. Similar to WSS, we are bullish on this high-growth business and are well underway with the integration process. Turning to Champs Sports Times Eastbay. It's been about 18 months since we combined these operating units. And in late January, we will be opening our first home field store in South Florida, which is the new concept where these two banners come together bringing the best of what they do individually to one singular location. Our first home field store will be the largest format we have in our global fleet at about 35,000 gross square feet. We will have several features that drop on the equity and the DNA of Champs Sports and Eastbay, inclusive of the best global brands and sport lifestyle performance. We'll also have a dedicated zone for Eastbay training and performance footwear and apparel. It will feature an athlete fuel station for guests with protein shakes and smoothies, nutrition bars, and post-recovery workout-type supplements that consumers can enjoy in the space itself, or buy products to take home with them. There will be several digital and interactive parts of the store, including an activation space, where we will hold coaching clinics, training sessions, and skill development or yoga workouts. We will be live and interactive and bring sport into the space and we're excited to be able to connect with the communities through those experiences. We'll also be able to leverage our Eastbay team sports division through existing and new relationships with key schools. In fact, there are 12 high schools within a 10-mile radius of the home field location. We will look to expand the relationships with those schools, building bridges and opportunities with the athletic directors, coaches, and athletes themselves. We're very excited to see this experience come together as we pilot this new concept. Turning to Footaction, our team has done an incredible job executing on the wind-down and transitioning some of the locations to other banners. To date, we've converted 18 locations, and there are another 900 constructions, with over half of them re-branding as Foot Locker. About 40% as Champs Sports and the remaining 10% as Kids Foot Locker. Without exception, we have seen encouraging productivity gains with these stores performing above expectations and well above their previous results. We have negotiated or worked with our lease flexibility to close about 85% of the total fleet by year-end. We are continuing our negotiations with landlords for the approximately 35 stores that will remain open into fiscal '22. We've had a great partnership with our vendors and are pleased with the vendor community’s reception to Footaction transition. We've been able to transfer not only inventory, but also access to some brands and concepts that will bode well for some of our go-forward banners, especially Champs Sports and Eastbay. Yesterday, we announced some exciting organizational enhancements to advance Foot Locker's long-term growth in omni -channel objectives. Frank Bracken, Executive Vice President and Chief Executive Officer, North America, has been Chief Operating Officer effective immediately. In his new role, Frank will oversee the Company's global operating divisions, the omni customer experience, inclusive of Global Technology Services and supply chain in our global franchise JB partnerships. Susie Kuhn, Senior Vice President, General Manager Foot Locker Europe, has been named as President of EMEA and General Manager of Foot Locker Europe, also effective immediately. Andy Gray, Chief Commercial Officer, will expand his responsibility by leading our global commercial unit including product, the powering up of our controlled brands, omni -marketing, membership, and commercial development and the LEED initiative. Together, the announced leadership appointments and organizational enhancements underscore our focus on aligning our commercial operations and finance functions to drive organizational productivity. With a more agile operational structure, we will be in an even stronger position to expand our customer base and grow our connectivity with sneaker culture and the communities we serve. Overall, our financial position remains strong. Our vendor relationships are very strategic in nature, and we continue to obsess around our customers, whether it's through our digital channels, social media, FLX, or an in-store customer experience. Our solid Q3 performance is why we remain optimistic about the strength of our portfolio, the power of our assortments, and the loyalty of our customers. We are confident that this positive momentum will continue into 2022 and beyond. Before I turn the call over, I want to express my sincere thanks to every team member at Foot Locker. It is their dedication and hard work that made these outstanding results possible and will enable us to continue to drive our business forward and fulfill our purpose to inspire into power youth culture. With that, I will now turn the call over to Andy.

Thanks, Dick and good morning, everyone. Throughout quarter, we remain ed laser-focused on continuing to strengthen our relationships with our existing consumers and bringing new ones into our business. This enabled us to beat our results from last year and continued to outpace 2019. To give you a breakdown of our performance, our footwear business decreased low-single-digits, while our apparel and accessory businesses were both up double-digits. All families of business were up relative to 2019. While our total men's business was down slightly, we saw acceleration in women's and positive momentum in kids ', driven by our success at growing in more consumers and the expansion of our sneaker community. Again, all areas were positive to 2019. We often saw great vendor diversity showcasing the health of our category and the expansion of our consumer's taste preferences as they fill their sneaker and apparel closet. The majority of our top 20 vendors posted gains, driving excitement in their respective categories, all of which helped to offset supply chain disruption that impacted the flow of some of our franchisees and launch products. Another area of our business that continues to gain momentum is apparel, which was up double-digits in men's, women's, and kids, [Indiscernible] both LOI and 2019. Our branding business remains strong across category and our own brand business has expanded and accelerating. In addition to our CSG business, which is our Champs Spot private-label offering, we re-imagined our Eastbay performance wear in the third quarter. With across category launch featuring Jalen Hurts. And we introduced our Locker brand for the first time to great reception from our customers. This momentum some continues into Q4. We're launching more owned brands, including Cozy and new apparel brand tailored for our female consumer. We just launched All City by Just Don, a lifestyle brand created with Don C, rooted in basketball and sneaker culture, that is inspired by the spirit of community. Don C has been a part of the cultural vanguard for decades as a music executive, fashion designer, sneaker collaborator, and brand store retailer and this launch immediately resonate it with the next-generation of streetwear enthusiasts. And we have upcoming exclusive partnerships with more tastemakers and celebrity curators like Melody Ehsani, as we continue to add dimension to our apparel business. Storytelling continues to evolve and enable us to connect with our consumers, as we work with all of our partners to deliver a strong pipeline of exciting, exclusive product content that set us apart in the marketplace. We delivered 15 exclusive concepts in the third quarter, which were significant in terms of scale and consumer engagement. And our powerful consumer concept often continues throughout the holiday season, including [Indiscernible] reveal with Nike, Adidas, and [Indiscernible], Crocs [Indiscernible] collaboration, Louis de Guzman and New Balance, and a whole host of excitement from Puma, including LaMelo Ball, LOL Surprise, and Staple. This [Indiscernible] together with our positioning in the key footwear franchisees, continued seasonal expansion with an increased focus on boots and fleece, and a very strong pipeline of product and inventory and apparel leaves us well positioned to delight the consumer in the holiday season. Next to our product diversity, our investment to enhance our omni -channel consumer journey was evident throughout the quarter, as we continue to welcome hundreds of millions of visits to our site and apps. Focal areas of development for the team in the quarter included enhancing our mobile and app experience, where we see 90% of our online traffic come from, evolving our launch reservation process with new data algorithms to improve fairness and work towards ensuring unique individual winners and enhancing our Buy Online Pick Up in Store experience leading to greater adoption. Lastly, the ongoing expansion of our community stores and [Indiscernible] is a critical component of our strategy. During the quarter, Downy and Ellie and Brixton in London open their doors to great reaction from our consumers. We also continue to build community through the roll out and expansion of our FLX Membership Program. We now have over 28 million enrolled members with over 3 million joining in this quarter alone. We remain encouraged by the results and engagement of our members who spend more and shop more often than non-members. And there's still a lot of opportunity ahead of us, with the program recently launching in Italy, Germany, and Spain. As we push our consumer-led, all fans forward, it's the combination of product leadership and diversity enhanced omni -experiences and our focus on community and purpose that continues to drive our leadership in the industry and strengthen our relationship with our consumers. Let me now pass the call over to Andrew.

Thanks, Andy. It is my pleasure to join you this morning to discuss our third quarter results. As we navigate the ongoing supply chain challenges, our strong third quarter results demonstrate the resilience and flexibility that our diversified product mix and our strong vendor relationships afford us. During my review of the results, I would like to note that in addition to comparing to last year, I will also reference comparisons to the third quarter of 2019 where it is helpful. On a year-over-year comparable basis, our third quarter sales were up 2.2% and earnings per share grew almost 60%. Impressively, this strong result was on top of the robust 7.7% comp gain in last year's third quarter and speaks to the strong connection we have built with our customer base. This connection was apparent during the back-to-school period, where we saw strong customer engagement in our stores, digital and social channels, and growing attachment to our key initiatives like our FLX membership program. From a cadence perspective, with school openings on a more normal schedule, August led with a low double-digit comp gain, while September comps, which benefited last year from the latest SKU openings declined high single-digits. We then saw momentum turn meaningfully positive in October with comp sales up low single-digits. Total sales for the quarter rose to $2.2 billion, or a 3.9% increase over the prior year, and up 13.3% versus the third quarter of 2019. This includes a $56 million contribution from WSS since the close of the transaction in mid-September. For the third quarter, our global fleet with open for 97% of possible operating days with temporary closures in Australia, New Zealand, certain markets in Asia, and Germany. Our year-over-year comp sales through our store channel increased 4.2%. Store traffic increased approximately 30% compared to Fiscal 2020 as our customers continue to want an in-store experience with our multi-brand product assortment. When compared to Fiscal 2019, traffic was down high single-digits, and conversion was up significantly. In our digital channels, which continue to be an important connection point with customers, sales were down 4.6% in the third quarter, as we lapped an approximate 50% increase from last year. Digital sales penetration rate was 19.8%. While down 160 basis points of 2020, it was well above the 15.3% from 2019. Our customers continue to overwhelmingly start their shopping journey with us digitally. And as we continue to create a seamless omni -experience, they can easily close their transactions through our apps, our websites, or in our physical stores. Turning now to some highlights of our three geographies. In North America, our Champs Sports, Foot Locker Canada, and Kids Foot Locker banners led the way with low single-digit comp gains. Top of last year's double-digit increases. The other North American banners posted comp declines with Foot Locker in the U.S. down low single-digits, Eastbay down high single-digits, and Footaction in wind down mode close the quarter down over 20%. In EMEA, pent-up demand continues to drive growth as stores reopened across all countries with strength across apparel, women's footwear, and strategic brands like Converse and New Balance, leading to another double-digit comp gain at Foot Locker Europe, and high teens comp gain at Tristep. Our EMEA fleet was open 99% of possible operating days in the quarter, compared to 96% in the third quarter of last year. Our APAC region was down slightly due to ongoing challenges related to COVID. The fleet was open approximately 55% of possible operating days, down from 82% in Q2 of this year. Foot Locker Pacific leveraged strong demand through the digital channel, to offset the impact of the store closures and finished with a low single-digit comp gain, while Foot Locker Asia was down mid-single-digits. We continue to make progress on our expansive strategy within Asia. As we opened 2 new stores and sold during the third quarter. And earlier this month, we completed the acquisition of Atmos, giving us a strong presence in Japan. One of the key markets in sneaker culture. Across our markets, regions, and channels, the combination of more limited promotional environment, solid demand, and a higher penetration and our stores led to a low single-digit increase in average selling prices, while units were down slightly. Moving down the income statement, gross margin was 34.7% compared to 30.9% last year and 32.1% in the third quarter of 2019. The improvement in our gross margin was driven by many of the same trends from the first half of 2021, as the combination of robust demand and fresh and lean inventory drove meaningfully lower levels of promotional activity. Our merchandise margin rate improved 470 basis points over last year, and 80 basis points over 2019, driven primarily by the meaningful reduction in lockdowns. Looking into the holiday season and the fourth quarter, we expect the promotional activity to remain favorable relative to both 2020 and 2019. As a percent of sales, our occupancy and bias compensation costs the leveraged 90 basis points over Q3 of 2020. As a reminder, and last year's third quarter, we've benefited from $32 million of COVID related tenancy relief versus $3 million this year. When compared to Q3 of 2019, we leveraged our occupancy expense by a 180 basis points. Our SG&A expense came in at 20.9% of sales in the quarter, compared to 20.1% in the prior-year period. When compared to 2019 SG&A rate improved by 40 basis points. For the quarter depreciation expense was $49 million up from $44 million last year. Interest expense rose to $4 million from $2 million in the prior year due to the incremental expense related to the Company's new bond issuance. Within other income, there was a benefit of $26 million or $0.18 per share from the mark-to-market of our investment in Retailers Limited. As a reminder, Retailers Limited is our partner in the joint venture that manages our Foot Locker stores in select Eastern and Central European markets and is also our franchise partner in Israel. Our non-GAAP tax rate came in at 27.8% compared to last year's rate of 30.7%. Turning to the balance sheet, we ended the quarter with approximately $1.3 billion of cash, down $54 million from a year ago. At the end of the quarter, inventory was up 9.1% to last year, driven by our supply chain and logistics team efforts to position us well for the upcoming holiday season, combined with the inventory that was included in the WSS acquisition. On a constant currency basis, inventory was up 8.5% and sales increased 3.6%. In terms of capital expenditures, we invested $50 million in the quarter, bringing the year-to-date total to $137 million. This funded the opening of 32 new stores, including new Foot Locker community stores in Downy, California and Brixton, UK, Champs Sports Power stores in the Bronx, New York, and Torrance, California, the expansion of Sidestep in Belgium, and the conversion of 18 Footaction stores. We also relocated or remodeled 29 stores and closed 80 stores in the quarter, including 50 Footaction stores. With the addition of WSS stores, we finished the quarter with 2,956 Company owned stores. For the full year, we now expect to open approximately 144 stores, including 8 new WSS stores, remodel or relocate 200 stores, and close 370 stores, including about 205 Footaction's doors. Looking forward, we now expect to invest approximately $240 million in capital expenditures this year, lower than our prior guidance of $260 million due primarily to supply chain challenges with the balance shifting into 2022. Turning to capital allocation. We and our Board are confident in the financial position of the Company and continue to believe that returning cash to our shareholders is an important aspect of the Company's capital allocation strategy. First, we returned $30 million to our shareholders through our quarterly dividend program. Next, we saw opportunity, given the value of the Company stock, and we repurchased 2.75 million shares of common stock for a $129 million during the quarter. In total, we have returned $242 million to shareholders through the first 9 months of the year, through share repurchases and dividends, while continuing to make strategic investments to fuel our growth. We also returned to the capital markets during the quarter, taking advantage of favorable market conditions to create more flexibility by issuing $400 million worth of 4% senior notes due in 2029. Proceeds from the issuance will be used for general corporate purposes, such as repaying $98 million of senior notes due in January 2022 and replenishing our inventory levels. Of note, following the capital raise, our liquidity position is comparable to pre -pandemic levels. In summary, we are still on track with our capital allocation program, investing in our business first, with the continued focus on returning cash to shareholders through our dividends and opportunistic share repurchase programs. Finally, turning to our full-year outlook, which now includes the benefits from WSS and Atmos. We believe we are well-positioned for the holiday season in terms of both strong customer demand and inventory levels to support that demand. Like other companies, we expect global supply chain constraints, including factory shutdowns and port congestion to continue to be a headwind through the fourth quarter and into 2022. As such, we remain appropriately cautious in the near-term. Based on our current visibility, we expect to deliver sales growth in the high teens for the full year with comp sales in the mid-teens. We are expecting the gross margin rate to be up 540 to 550 basis points for the full year versus 2020, mostly driven by a more rational promotional environment. Our SG&A expense rate is expected to leverage between 40 and 50 basis points, year-over-year. Moving down the income statement, we expect depreciation and amortization expense to be approximately a $190 million; Interest expense, about $14 million, and our year-over-year effective tax rate around 28%. We now expect our non-GAAP earnings range to be approximately $7.53 to $7.60 per share. This guidance reflects our strong performance in the first 9 months of the year and our increased visibility in the fourth quarter, while recognizing the supply chain challenges that we discussed. As we look ahead to Fiscal 2022, powered by the strength of our portfolio, the breadth of our assortments, and the loyalty of our customers, we look forward to providing our Fiscal 2022 outlook on our fourth quarter earnings call. In closing, we believe the combination of our financial strength, strategic relationships with our vendor partners, and deep connection with our customers provide us with flexibility to maneuver in this rapidly evolving marketplace through the fourth quarter and beyond, executing towards our long-term strategic imperative, and driving shareholder value. We remain very confident in our strategy, are pleased with the trajectory we are currently on, and we look forward to updating you on our progress in the coming quarters with that Operator, please open up the call for questions.

Thank you. Ladies and gentlemen, we will now begin the question-and-answer session. [Operator Instructions]. The first question comes from Susan Anderson from B. Riley. Please go ahead.

Hi. Good morning. Really nice job on the quarter. I guess, I'm curious on the inventory. Obviously, it's pretty lean out there, how you're feeling for holiday. And then also maybe if you could talk about by brand, the athletic brands versus lifestyle, if you're in better position, 1 category or the other?

Okay Susan, thanks. We -- our team did a tremendous job in the third quarter. They actually get our inventory ahead of last year's. We ended the second quarter down, I think 7, 7.5, slightly more than that in our target really during the third quarter was to get well-positioned going into the holidays. So, working with our vendor partner, working with our supply chain team and the logistics team, we were actually able to get ahead on the inventory. So, as we ended the quarter with our inventory up, I feel good about where we're at. Now the content of the inventory will be moving throughout the quarter or some launch date shift then -- and some things move around, but then -- again, we've got good relationships with all of our vendor partners. And I think our preferred source of destination for the product that does get into the countries. So, again, I feel good about how we're positioned for the fourth quarter and clearly, consumer demand remains strong.

Great. That sounds really positive. And then if I could add a follow-up on the own brands that you are launching, I guess, the ones that you've already launched. If you could talk about, maybe, if there's any early consumer response? It sounds like they're doing well. Are they in line with your expectations or better than your expectations, so far?

Thanks for the question, Susan. We are really positive about our own brand strategy and we've been in the business for a long time with our Champs Sports gear CSG. And the launch of the Eastbay performance brand in the third quarter and Locker in the third quarter, the work that we've done with Don C, we're -- the only brand that I have any hesitation about and it's not the content, it's clearly the delivery, but we're scheduled to look -- to launch our women's Cozy brand in the fourth quarter, and as we continue to push through the supply chain, that's -- that for a little bit tipped that the response from our consumers system's strong, both in-stores and online across the geography in North America where we did the first launch. So again, I think that Eastbay performance brand has been led a little bit by compression and certainly the performance silhouettes, Locker has been well received from a lifestyle and streetwear perspective in the launch that we just had with Don C has been really well received by that next generation of street wear fans and CSG just continues to perform well. So, we're very positive about our own brand strategy moving forward.

Great. And is this replacing branded apparel within the stores and is there an expectation on what percentage of the business that own brands could be longer-term?

What's really complementary to the brand of products that we've got in the store. Sometimes there are price point gaps that we find sometimes there are silhouette gaps that we find it and we'll use and creates stories around our control brands and private brands to complement the branded product in the stores than we haven't publicly talked about a target for our control brands yet but as we launched them in gain some strength with them, we will certainly look to expand the presence globally.

Great, thanks so much, good luck this holiday.

Thanks, Susan. Appreciate it.

The next question comes from Paul Lejuez of Citi. Please go ahead.

Hey, thanks guys. Curious if you feel that the third quarter sales were constrained at all by supply chain pressures or any delayed deliveries. And curious if you think that that gets better or worse as you look out into the fourth quarter 1Q? Just in terms of how sales might be moving around. And then related to that, curious have seen any evidence of customers coming in to stores for certain items and maybe they're not available, whether they're buying something else or if it is truly in the sale? Thanks.

Thanks for the question, Paul and I would say that certainly there's probably a little bit of sales in the third quarter that were impacted by the supply chain. I mean, you read the same news that we read, you see the 81-vote stocked off of LA and Long Beach and the delays in getting product through ports but our team did a fantastic job of working with better partners, identifying other ports, identifying more rapid deployment out into our stores and through our network. So, I think that we're balancing things the best that we can with our vendor partners and our supply chain partners. So again, I think that the customers are walking into our stores. They may be not finding their first choice, but it's pretty clear to me based on the traffic that we saw in stores and the results that we just reported, that our consumers are buying the best available product and our consumers continue to be driven by high heat products. And if their size, color, style doesn't happen to be available, they've shown a real propensity to continue to shop, work with our associates in the store and find the next best product. And clearly, I think the results from the third quarter proved that the customer appetite for products in our categories continues to be higher.

Thanks, Dick. And just one follow-up on the Footaction closing, the stores that are closing, what percent of those are located in a center where you've got another one of your banners? And do you look at that as a comp driver?

Well, certainly any time that we'd close a door on our portfolio we expect to recapture some of those sales across other banners in our portfolio. Andrew or Jim, you may have the exact number, but my memory says that it's somewhere between 70% and 80% of the doors are in centers where we cross ed over with at least one of our other banners. Again, we do expect where we lose 100% of the production sales, when we close the doors, we do expect those customers to find great opportunities to shop in Champs or Foot Locker or Kids Foot Locker across our portfolio.

Got it. Thank you. Good luck.

Thanks, Paul.

The next question comes from Michael Binetti with Credit Suisse. Please go ahead.

Hey guys. Thanks for taking our questions here. I guess -- I think some -- I think the big question here is as on inventory visibility for the spring. We've been through the python here with Vietnam. You gave us some help on 4Q. It sounds like everything is okay here, but how much visibility do you have into the exact launch calendar for the spring given the issues the footwear category has been dealing in your words from the last call, the knock-on effects from Vietnam and everything you guys have to sort through. How do you know which shoes you're getting? How many pairs you're getting? How far are you from what you consider to be normal as far as visibility into allocations and dates like that for the spring at this point?

Well, I would say, Michael, that initial visibility is not where we expect it to be. That being said, the launch calendar throughout the third quarter has shifted and moved, and quantities have shifted and moved and some on time for the launch, some late for the launch; and we saw our team able to maneuver through that. We expect the same thing to happen in Q4. Again, the best laid plans, and if you watch some of the launch calendars out there if you're on footlocker.com or our app, when you're looking at launched calendars, you'll see that some of those dates shift. We expect that to continue in Q4 and into Q1, right? The farther we get away from that, the shutdown in Vietnam, the more predictable, at least the production side of the equation will be, and will still be battling port congestion and some supply chain challenges as the product starts to move. But as we work with our vendor partners, it seems that we have been really well-positioned in order to take advantage when the product arrives. We'd always like more visibility, right? We'd like to know exactly what it's going to show up in the port and when we'll get it through. But I think our team in conjunction with our strong relationships with our vendor partners has best informed as possible.

Okay. Thanks for that. And then if I could ask a follow-up. As you look more towards hopefully a more normal world as we get past all this year, what's striking is the cash balance here. You have over 20% of your market cap in cash, just very high levels. As you look at a more normal world, what do you see is the areas that you find the most opportunity to push harder into the biggest long-term value creators for the Company, for shareholders on a multiyear basis and what maybe doesn't need as much investment as it did pre -COVID as you think about what's really exciting to you as we get our pass than the last 2 years?

I think we've been pretty consistent. I don't know that COVID has changed our thoughts around that, right? First and foremost, we're going to invest in the business and that means physical stores, digital experiences, supply chain, technology; all of those things. And the need there has probably accelerated a bit quite honestly. It's customers’ expectations for great experiences will continue to accelerate as we come out of COVID into whatever the new normal is. With the acquisition of WSS and Atmos, we expect to continue to invest in those brands, to continue their double-digit growth that we've seen and obviously as we open, I think Andrew talked about 8 stores opening in the fourth quarter for WSS and that's really exciting as we start to move that brand out of Southern California. So, all of those things, from technology to in-store experiences, the home field store that we talked about down in Florida that we'll open later in January with the Champs x Eastbay effort. All of those things are going to continue to require capital. That being said, the board and our team is really confident about the strength of the business. We continue to pay the dividend; we've got a share repurchase program that's got value left in it and we continue to look for opportunistic chances to be in the market to buy our shares back. We also continue to look at capability gaps, whether that's on the digital front, whether that's in a platform sort of arrangement. We continue to scour and look for capabilities that can accelerate our experiences in connectivity with the consumer. And we continue to roll out things like in our enhanced launch-up, continue to open more countries with FLX. All of those things that require time, attention, and capital at the end of the day.

Okay. Thanks for the thoughts. Have a good one.

Michael, this is Andrew Page, as well. Also recall that while our cash balance at the end of the quarter is $1.3 billion, there is the disbursement associated with paying for the Atmos deal would not have happened by the end of the third quarter, that's $300 million out, as well as the repayment of our upcoming bond maturity of $98 million. So that's $400 million of net balance that we spoke of at the end of third quarter already spoken for.

Okay. Thanks a lot.

Thanks, Michael.

The next question comes from John Kernan with Cowen, please go ahead.

Good morning, guys. Thanks for taking our question.

Good morning, John.

I have a top line question and a gross margin question. Maybe we'll start with the implied comp guidance for the fourth quarter. What are you seeing maybe from a supply chain perspective, launch cadence perspective, just overall retail condition perspective that implies the slowdown that you're seeing from what you saw in October? It's feels like there was a big pickup in the business towards the end of October. Just curious what you're seeing as we enter Q4. It seems like the implied comp guidance is down around mid-singles for Q4. So just if you could walk us through the assumptions in that, whether it's supply chain constraints, something you're seeing the launch cadence that implies that de-sell from Q3.

Well, Q3 comp was 22, right? So again, we actually feel good about the fourth quarter as it relates to comps. And if you stack the comps in Q3, Q4, I think that they'll come out very favorable. As Andrew talked about, we had a more normalized Q3, if you will, with August in a more traditional back-to-school sort of time frame, September down a bit based on back-to-school openings from a year ago and then momentum back in the low single-digits -- low to mid-single-digits in October. So, again, there's not a significant step change, John, in Q4. Our math on our end might look a little bit different than your model math, but we feel good about Q4. Obviously, launches as I've talked about in the Q&A session, and we talked through the call, continue to move around both quantities and dates. Where there's traditionally been a big black Friday launch, that launch has been pushed back a little bit and will be early in December. The launch calendar, while strong, is always variable based on some of the supply chain that we've talked about and getting products in on the exact date of launches so, again, we feel good about Q4. We think that the strength of the inventory that will coming in to the quarter with in the flow that we see right now, we'll certainly fuel us as we think about growth in the fourth quarter.

Got it. Maybe just 1 quick follow-up on gross margin, which has been phenomenal in the first 9 months of this year. Andrew, what do you see in the model as being a normalized gross margin and merch margin is as we go into next year? Been pretty tremendous expansion on the merch margin off of 2019 pace this year, I'm curious what you think, maybe a more normalized level of gross margin and merch margin sets. Thank you.

Sure. Yes, thank you. If you get into -- as you start thinking about our gross margin for the current year, we've spoke a number of times that obviously 2021 is significantly impacted by the favorable promotional environment or less favorable environment, more rational promotions and therefore able to sell products at a more full-price basis. We've talked a number of times about going forward while we expect this favorable promotional environment to continue to persist through the fourth quarter, we do expect it to be a lesser extent than what you've seen going forward. So, we haven't provided what we believe is our normalized guidance for 2022. We look forward to updating you in the Q4 about that, but we do expect the promotional environment to -- the favorable closer environment to start to subside.

Understood. Thank you.

Thanks, John.

The next question comes from Robert Drbul with Guggenheim Securities. Please go ahead.

Good morning. Couple of questions for me. I think the first one is, as you look to '22 and you think about the Footaction store closures, can you talk about the margin opportunity with the remaining change and what you see, how they can stay in their lanes and how that could add to the financial performance of the business. And I guess the second question that I have is on, I mean, you talked about carrier availability in the next couple of quarters. Is there a -- I mean, next couple of weeks or months with FedEx, UPS, and the postal service. Is there a big financial variability on the shipping cost to you as you just try to find like the optimal solution to shipping our products to the customers?

Thanks for the questions, Bob, from the margin profits Footaction, again as we wind Footaction down, we're being as judicious as we can with our markdowns and moving products around. And as we talked about in our comments, we've had the ability to move product and even some brand opportunities from Footaction into specifically Champs in these phases that will benefit them in the long run. So again, I think the swim lanes for Foot Locker and Champs, and since they are both pretty clear. Champs, they're focused on that sport performance kid from a lifestyle perspective to the field of play. Foot Locker's very much around sneaker culture in that street wear sort of opportunity for the kids. I don't know that there is -- once we get through the closures that there's much impact of the margin from Footaction. The team is doing a great job of winding them down. We're working hard with our landlord partners and with our vendor partners to make sure that we get them closed effectively and efficiently. And certainly, as we optimize -- on your second question, Bob. Certainly, as we optimize the shipments, we try to balance speed with cost in utilizing the right carrier, the right place to pick up and deliver, trying to work with our customers quite honestly for them to pick up product in the stores. But as you cover a lot of folks, you know that the cost of freight is going up, both the ocean freight and airfreight to get product into the country and then the delivery to our distribution center and from our distribution centers to our stores. So again, it is certainly a bit of a headwind as we think about the macroeconomics of the supply chain. But our team is building -- has built and continues to build a network that I think is pretty darn efficient and effective.

Great. And I don't know if I missed this, Dick, but are you guys doing the Week of Greatness? Is that still on the docket?

Well, we've expanded beyond the Week of Greatness five, right, I mean we've done that a couple of years ago as we took the Black Friday and tried to extend it into the week. And now we're really just looking at the holiday season because of some of the variability of these deliveries, we're trying to control some storytelling around our private brands, control brands and the things that we're confident that we'll deliver on time but we're really just celebrating the season with a campaign called celebrate and you fill in the blank with what you want to celebrate, and again part of it is about great sneakers, part of it is about the connectivity that we've got with our consumers in trying to help them find some normalcy this holiday season.

Great. Thank you very much. Happy holidays.

Same to you Drbul. Thank you.

Our last question today comes from Kate McShane, Goldman Sachs. Please go ahead.

Hi. Good morning. Thanks for taking our question.

Morning Kate.

I also have an inventory question. I was wondering, as we get a little bit more into next year, specifically given that the Vietnam challenges do seem like they're going to just persist as those factories get ramped up into 2022, could we see a meaningful change in mix in terms of presentation in your store? Will you be leaning into brands that have less Vietnam exposure? And how much flexibility do you have within the mix of brands presenting in the store in that time period, in addition to all the other things you've walked through with your levers in the supply chain?

Okay. Our customers don't really care where the product is built. So, we're trying to create the most optimal assortment for our customers to meet their demands. And obviously, as we wait the assortment and we look at those production startups that you mentioned, we will assort this to bring the best product then. And as I talked about earlier, our consumers are pretty resilient right now in that they're moving from one product to the next best available product if we're not able to service -- excuse me, service them with their top priority. So, I think you will see some assortment changes in the store, but it's more reflective on customer taste and mixing in the best product available. More so than really thinking about the demand constraints or excuse me, the supply constraints coming out of Vietnam. So, it is a -- it is a bit of a supply challenge for the industry right now. It's certainly not a demand challenges as our customers. remain robust, they're spending remains robust in the categories in the products that we've got in store.

Thank you.

This concludes our question-and-answer session. I would like to turn the conference back over to Mr. Jim Lance for any closing remarks.

Thank you for joining us today. Please join us again for our next earnings call, which we anticipate will take place at 9:00 AM on Friday, February 25th. The call will follow the release of our fourth quarter results earlier that morning. Thanks, again, and we want to wish everyone a happy Thanksgiving. Goodbye.

Thank you, ladies and gentlemen. The conference has now concluded. Thank you for participating in today's presentation. You may now disconnect.