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2017 Annual Report REGIONAL CHAMPIONSHIP, KENOSHA, WISCONSIN SIX:02 EVENT, NEW YORK CITY NAS AT FOOT LOCKER CHAMPS SPORTS STORE OPENING, STATE STREET, CHICAGO PHADE APPEARANCE AT THE ARTS COLLECTIVE, NEW YORK CITY FOOT LOCKER STORE OPENING, PARIS CAM NEWTON WITH 2 CHAINZ AT CHAMPS SPORTS BROADWAY CLUB - THURSDAY, APRIL 6, 2017 SIDESTEP STORE OPENING, COLOGNE, GERMANY JASMINE SANDERS AT LADY FOOT LOCKER FOOT LOCKER STORE OPENING, GEORGE STREET, SYDNEY FOOT LOCKER STORE OPENING, ROME, ITALY FOOT LOCKER STORE OPENING, TIMES SQUARE, NEW YORK CITY Photography by Ryan Muir c/o Converse Inc. JOEL EMBIID AT CHAMPS SPORTS KEVIN LOVE VISITED BOYS & GIRLS CLUBS OF CLEVELAND FOR THE KIDS FOOT LOCKER FITNESS CHALLENGE TYLER THE CREATOR AT TIMES SQUARE, NEW YORK CITY KEVIN DURANT AT THE HARLEM HOUSE OF HOOPS, NEW YORK CITY FOOT LOCKER STORE OPENING, ROTTERDAM, NETHERLANDS FLY 89 GRAFFITI IN AMSTERDAM JAMES HARDEN FOOT LOCKER AD JUMPMAN STORE OPENING, TORONTO Connecting With Our Customers Connecting With Our Customers • • • • • • • • •• • • •• • • •• • • • • ••• • • • • • • ••• • ••• • • •• • • • • ••• ••• • •• • • •• • •• •• •• • • • • • • • • • •• • • • 330 WEST 34TH STREET 2017 Annual Report New York, NY 10001 • • • • • • Foot Locker, Inc. (NYSE: FL) is a leading global retailer of athletically The Company also operates a direct-to-customer business inspired shoes and apparel. Headquartered in New York City, the offering athletic footwear, apparel, and equipment through its Company operates 3,310 athletic retail stores in 24 countries in Internet, mobile, and catalog channels. In addition to websites North America, Europe, Australia, and New Zealand under the for each of the store banners, such as footlocker.com, the direct-to- brand names Foot Locker, Champs Sports, Kids Foot Locker, customer business includes Eastbay, a leading destination for the Footaction, SIX:02, Lady Foot Locker, Runners Point, and Sidestep. serious athlete. Financial Highlights* 2013 2014 2015 2016 2017 Sales** $ 6,505 $ 7,151 $ 7,412 $ 7,766 $ 7,687 Sales per Gross Square Foot $ 460 $ 490 $ 504 $ 515 $ 495 Adjusted Financial Results: Earnings Before Interest and Taxes** $ 676 $ 816 $ 946 $ 1,012 $ 762 EBIT Margin 10.4% 11.4% 12.8% 13.0% 9.9% Net Income** $ 432 $ 522 $ 606 $ 652 $ 510 Net Income Margin 6.6% 7.3% 8.2% 8.4% 6.6% Diluted EPS from Continuing Operations $ 2.87 $ 3.58 $ 4.29 $ 4.82 $ 3.99 Return on Invested Capital 14.1% 15.0% 15.8% 15.1% 11.0% Cash, Cash Equivalents and Short-Term Investment Position, Net of Debt** $ 728 $ 833 $ 891 $ 919 $ 724 * Results in this table and throughout pages 1 through 16 refer to non-GAAP, adjusted figures, on a 52-week basis. See pages 17-19 of Form 10-K for the reconciliation of GAAP to non-GAAP adjusted results. ** In Millions Financial Highlights ............................................................. 1 Footaction ............................................................................ 13 Our Vision, Core Values, Strategies, and Goals ................... 2 Eastbay ................................................................................. 14 Letter to Shareholders ........................................................ 3 Runners Point and Sidestep ................................................ 15 Foot Locker and Lady Foot Locker ...................................... 7 SIX:02 ................................................................................... 16 Foot Locker Europe.............................................................. 9 Our Community .................................................................... 17 Foot Locker Canada and Foot Locker Asia Pacific .............. 10 Form 10-K ............................................................................ 18 Kids Foot Locker .................................................................. 11 Board of Directors, Corporate Management, Champs Sports .................................................................... 12 Division Management, Corporate Information .................... IBC This report contains forward-looking statements within the meaning of the federal securities laws. Other than statements of historical facts, all statements which address activities, events, or developments that the Company anticipates will or may occur in the future, including, but not limited to, such things as future capital expenditures, expansion, strategic plans, financial objectives, dividend payments, stock repurchases, growth of the Company’s business and operations, including future cash flows, revenues, and earnings, and other such matters, are forward-looking statements. These forward-looking statements are based on many assumptions and factors which are detailed in the Company’s filings with the U.S. Securities and Exchange Commission. These forward-looking statements are based largely on our expectations and judgments and are subject to a number of risks and uncertainties, many of which are unforeseeable and beyond our control. For additional discussion on risks and uncertainties that may affect forward-looking statements, see “Risk Factors” disclosed in the 2017 Annual Report on Form 10-K. Any changes in such assumptions or factors could produce significantly different results. The Company undertakes no obligation to update forward-looking statements, whether as a result of new information, future events, or otherwise. FOOT LOCKER FLAGSHIP STORE, HOLLYWOOD & HIGHLAND, LOS ANGELES 1 2 FOOT LOCKER FLAGSHIP STORE, HOLLYWOOD & HIGHLAND, LOS ANGELES 2 LETTER TO SHAREHOLDERS Current Long-Term 2015 2016 2017 Objectives Sales (billions)* $7.4 $7.8 $7.7 $10 Sales per Gross Square Foot $504 $515 $495 $600 Adjusted EBIT Margin 12.8% 13.0% 9.9% 12.5% Adjusted Net Income Margin 8.2% 8.4% 6.6% 8.5% Return on Invested Capital 15.8% 15.1% 11.0% 17% *On a 52-week basis. Connecting With Our Customers While 2017 proved to be a year with many challenges for 2017 SUMMARY Foot Locker, Inc., we remained a highly profitable company Against this challenging backdrop, we produced some and I am proud of the way our team handled the dramatic notable achievements, including: shifts influencing the preferences and shopping patterns of our customers. I believe the efforts, passion, and intensity • Reported total sales of $7.78 billion on a 53-week basis, of our global team of associates was just as strong in 2017 the most in our history as an athletic company despite as it was in recent years of record financial performance — the first comparable sales decline (-3.1 percent) in eight perhaps even more so. years; • Cash flow from operations of more than $800 million, Most of the challenges encountered this year were not an indication of the Company’s ability to generate unique to our Company, or even the broader athletic industry. substantial cash flow even in a challenging operating In fact, almost all of the retail industry was profoundly environment; affected by rapidly-changing customer expectations and behaviors, fueled largely by technology that allows virtually • $157 million of this cash was returned to shareholders in simultaneous global access to information, influences, and the form of dividends, with another $467 million returned ideas. Although our consistent focus on the core customers through share repurchases; of each of our banners enabled us to get started early on • A slight improvement in our inventory turnover rate to many efforts to respond to and harness the fundamental just below our long-term goal of 3 times, a testament to changes permeating retail, we and our outstanding our team’s sharp focus on managing our inventory levels industry partners recognize that we need to evolve together to be positioned for what we anticipate will be a stronger even faster in order to succeed with these fast-changing flow of product in 2018; and customers. A case in point is that in 2017 there was a lack of depth and variety, at least compared to recent years, of • Earnings on an adjusted basis of $3.99 per share, below innovative new product at the premium end of the athletic recent years’ record results but still a solid performance footwear market, which is the core of Foot Locker, Inc.’s given the disruption taking place throughout retail. position. This challenge, combined with an exceptionally promotional environment throughout most of the athletic market, led to intense pressure on profit margins. INDUSTRY POSITION In last year’s letter to shareholders, I described that being There were also some once-in-a-generation events that at the center of sneaker culture has been one of the most happened during the year, such as tax reform in the United important contributors to the progress we have made in States, which significantly lowered our profits in the fourth achieving our current vision, which is to be the leading global quarter of the year, but which will also be an important benefit in the future. There was also a difficult decision to retailer of athletically inspired shoes and apparel. The restructure our organization, which caused some highly efforts we undertake on a daily basis to maintain that central respected colleagues to leave the business. We did this position with our customers have led us to understand more primarily to facilitate shifting our focus forward onto a clearly than ever that sneaker culture — as number of initiatives, which I will describe below, to huge, global, and inclusive as it is — is transform our business to be in an even better in reality part of something even position to lead our industry from our larger,

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