The Finish Line is running ahead, and analysts are upbeat on the firm’s future in the strong athletic cycle.
Sam Poser, analyst at Sterne Agee, said, “Last year the company’s inventory levels were too lean and sales were disappointing. This year, inventory levels were corrected and the improved product offerings in running, training and basketball likely drove the better-than-expected results.”
Speaking to Footwear News late Thursday, Ed Wilhelm, Finish Line’s CFO, said momentum has continued into the third quarter, with comparable-store sales for September-to-date up 9 percent year-over-year, “marking a very good back-to-school season for us.”
He added, “What we continue to see is when product is good, customers are willing to spend the money to buy it. We’re [experiencing] strong sell-throughs at full retail, and there’s been no need to discount [merchandise].”
Wilhelm also said the firm is actively looking for small, bolt-on acquisitions to complement the Running Co. group of stores, which it bought for $8.5 million earlier this month.
“A lot of [Running Co.’s] brands are the same as [those at Finish Line], so there is a lot of commonality in our businesses. We’ll combine [future acquisitions] with strategic store openings, as well as add an e-commerce channel, which [the chain] doesn’t have,” he said.
Christopher Svezia, analyst at Susquehanna Financial, noted, “Finish Line’s recent acquisition of the 18-store specialty running chain … should put to rest concerns that the company would entertain a large acquisition.”
For the period ended Aug. 27, the Indianapolis-based retail chain earned a net income of $20.9 million, or 39 cents a share, a 24 percent increase from $16.8 million, or 31 cents, a year ago.
Revenue rose 10 percent to $331.5 million, buoyed by a comp-store sales increase of 11 percent, and driven by double-digit growth in both running and basketball.
The firm beat estimated earnings of 38 cents a share on revenue of $321.93, as polled by Yahoo Finance.
Gross profit margin also improved 200 basis points to 35.1 percent.
Finish Line ended the quarter with $289.6 million in cash and cash equivalents, up from $253.7 million a year ago, and no long-term debt.