02 Jan Finish Line Sees First Comp Gain In Four Quarters
The Finish Line Inc. reported a steep loss in the third quarter ended November 25 but it was better than guidance as the flagship Finish Line chain delivered its first comp gain in four quarters.
For the thirteen weeks ended November 25, 2017:
- Consolidated net sales were $378.5 million, an increase of 1.8 percent over the prior year period.
- Finish Line comparable store sales increased 0.8 percent.
- Finish Line Macy’s sales increased 2.3 percent.
- On a GAAP basis, diluted earnings per share from continuing operations showed a loss of 32 cents.
- Non-GAAP diluted earnings per share from continuing operations, which primarily excludes the impact from store impairment charges, were a loss of 26 cents a share.
When it reported second-quarter results on September 22, Finish Line said it expected Finish Line comparable sales to decrease 3 percent to 5 percent and adjusted loss per share to be in the range of 32 cents to 40 cents, compared with an adjusted loss per share of 24 cents for the same period last year. Wall Street was expecting an adjusted loss of 36 cents a share of $361.0 million.
The same-store gain for the Finish Line chain marked its first increase in four quarters. Same-store sales fell 4.5 percent in the second quarter, 1.1 percent in the first and 4.5 percent in the fourth quarter of its prior fiscal year. In the year-ago third quater, Finish Line comparable store sales increased 0.7 percent.
“We finished the third quarter ahead of expectations despite a highly promotional environment for athletic footwear,” said Sam Sato, chief executive officer of Finish Line. “The growth initiatives that we’ve put in place are driving increased traffic to our brand and helping increase conversion. While we responded to certain pricing actions in the marketplace to be competitive, we delivered gross margin in line with forecasts, and remained highly disciplined in managing expenses and inventories. Looking ahead, we continue to be cautious in the near-term, but I am confident that the work we are doing to position the company for long-term growth and enhanced profitability is gaining traction.”
Balance Sheet
As of November 25, 2017, consolidated merchandise inventories decreased 2.3 percent to $392.1 million compared to $401.5 million as of November 26, 2016.
As of November 25, 2017, the company had no interest-bearing debt and $77.2 million in cash and cash equivalents.
Outlook
The company’s outlook is Finish Line comparable sales to decrease 2 percent to 3 percent and adjusted earnings per share to be in the range of 59 to 67 cents for the 53-week fiscal year ending March 3, 2018 due to the third quarter out-performance, versus the previous guidance range of $0.50 to $0.60, and compared with adjusted earnings per share of $1.06 for the fiscal year ended February 25, 2017, which was a 52-week year. The company estimates that the additional week will contribute approximately 6 cents per share to fourth quarter and full year fiscal 2018 results.
For the fourth quarter ending March 3, 2018, a 14-week quarter, the company still expects Finish Line comparable sales to decrease 3 percent to 5 percent and adjusted earnings per share to be in the range of 50 to 58 cents inclusive of the 6 cents per share contribution from the extra week, compared with earnings per share of $0.50 for the fourth quarter ended February 25, 2017, a 13-week quarter.
The Finish Line, Inc. is a premium retailer that carries the latest and greatest shoes, apparel, and accessories. Headquartered in Indianapolis, Finish Line runs approximately 950 branded locations in U.S. malls and shops inside Macy’s department stores.
Photo courtesy Finish Line