29 Sep Finish Line Says Weak Basketball Offering Hurt Fiscal Q2 Results
Finish Line Inc. reported consolidated net sales reached $466.9 million in the fiscal second quartered ended Aug. 30, up 7.1 percent over the prior year period. Comparable store sales increased 1.5 percent. Net income came in at $26.2 million, or 54 cents per diluted share, flat with a year earlier and below analysts’ consensus estimate of 60 cents.
“Our second quarter results fell short of our expectations due to softness within elements of our basketball offering while our running business was up mid single digits driven by casual and performance styles,” said Glenn Lyon, Chairman and Chief Executive Officer. “We are confident that we can reaccelerate sales trends in basketball by working closely with our brand partners to improve our assortments. In combination with our market leadership position in running, advanced omnichannel capabilities and growing business relationship with Macy’s, this will fuel sustainable sales and earnings growth over the long-term.”
Finish Line ended the period with consolidated merchandise inventories of $329.9 million, up 11.5 percent compared to $296.0 million as of Aug. 31, 2013.
The company repurchased 133,333 shares of its common stock in the second quarter, totaling $3.6 million. The company has 3.1 million shares remaining on its current Board authorized repurchase program. As of Aug. 30, 2014, the company had no interest-bearing debt and $190.6 million in cash and cash equivalents, compared to $203.8 million in the prior year.
For the fiscal year ending Feb. 28, 2015, the company still expects Finish Line comparable store sales to be up mid-single digits and earnings per share to increase in the high-single to low-double-digit range over fiscal year 2014 non-GAAP diluted earnings per share of $1.66.
Headquartered in Indianapolis, Finish Line has approximately 1,020 Finish Line branded locations primarily in U.S. malls and shops inside Macy’s department stores as well as finishline.com. Finish Line also operates the Running Specialty Group. This includes 58 specialty running stores in 12 states and the District of Columbia under The Running Company, Run On!, Blue Mile, Boulder Running Company, Roncker’s Running Spot, Running Fit and VA Runner banners.
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The Finish Line, Inc.
Consolidated Statements of Income (Unaudited) (In thousands, except per share and store/shop data) |
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| Thirteen Weeks Ended | Twenty-Six Weeks Ended | |||||||||||||||||||
| August 30,
2014 |
August 31,
2013 |
August 30,
2014 |
August 31,
2013 |
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| Net sales | $ | 466,880 | $ | 436,030 | $ | 873,411 | $ | 787,083 | ||||||||||||
| Cost of sales (including occupancy costs) | 311,760 | 289,693 | 589,411 | 533,751 | ||||||||||||||||
| Gross profit | 155,120 | 146,337 | 284,000 | 253,332 | ||||||||||||||||
| Selling, general and administrative expenses | 111,882 | 103,455 | 220,778 | 202,811 | ||||||||||||||||
| Store closing costs | 115 | 17 | 361 | 203 | ||||||||||||||||
| Impairment charges | 264 | — | 2,332 | — | ||||||||||||||||
| Operating income | 42,859 | 42,865 | 60,529 | 50,318 | ||||||||||||||||
| Interest (expense) income, net | (1 | ) | 10 | 6 | 24 | |||||||||||||||
| Income before income taxes | 42,858 | 42,875 | 60,535 | 50,342 | ||||||||||||||||
| Income tax expense | 16,699 | 16,682 | 23,721 | 19,635 | ||||||||||||||||
| Net income | 26,159 | 26,193 | 36,814 | 30,707 | ||||||||||||||||
| Net (income) loss attributable to redeemable noncontrolling interest | (2 | ) | 314 | 1,778 | 875 | |||||||||||||||
| Net income attributable to The Finish Line, Inc. | $ | 26,157 | $ | 26,507 | $ | 38,592 | $ | 31,582 | ||||||||||||
| Diluted earnings per share attributable to The Finish Line, Inc. shareholders | $ | 0.54 | $ | 0.54 | $ | 0.79 | $ | 0.64 | ||||||||||||
| Diluted weighted average shares | 48,202 | 48,757 | 48,281 | 48,744 | ||||||||||||||||
| Dividends declared per share | $ | 0.08 | $ | 0.07 | $ | 0.16 | $ | 0.14 | ||||||||||||