Finish Line’s Share Price Soars on Solid Q1, Street Beat

Glenn Lyon
Finish Line CEO Glenn Lyon.
Fairchild Archive.

Finish Line Inc.’s share price is still surging today following a better-than-expected close to its first quarter.

During today’s conference call, CEO Glenn Lyon discussed how the company plans to continue strategizing around three key metrics — merchandising, service and supply chain — to maintain and eventually accelerate the momentum of Q1.

In addition to beating estimates for revenues and earnings per share, the Indianapolis-based athletic footwear and apparel retailer also posted a 5.5 percent jump in comparable-store sales.

Despite its strong results, Finish Line reiterated its guidance for the remainder of the year, which analysts focused on during the call.

Here’s the earnings breakdown.

Net Income: Profit for the quarter ended on May 30, 2015, soared 29 percent, to $13.7 million, compared with the year-ago quarter’s $10.7 million.

EPS: Earnings per diluted share spiked 5 cents year over year, to 30 cents.

Net Revenue: Net revenue rose 9 percent, to $443 million, compared with the year-ago quarter’s $407 million.

Hit, Miss or Beat: Finish Line delivered a solid beat on Wall Street’s estimates for the quarter. Analysts polled by Yahoo! Finance had predicted revenues of $430 million and EPS of 24 cents.

Executive Insights

CEO Glenn Lyon on merchandising: “Over the past several months, we worked down our inventory of slower-moving platforms, which allowed us to increase the penetration of new innovations and today’s most sought-after styles.”

Lyon on supply chain: “Over the second half of fiscal 2016 — this current year — we will go live with our companywide supply-chain enhancements, which will get fresh product to our stores, and ultimately to our customer, faster. We will experience improved efficiencies and our direct-to-consumer business, relating to order routing and fulfillment.”

Lyon on service: “Our integrated store and digital network, supported by our technologically advanced fulfillment capabilities, allows our customers to see our entire inventory position in real time and select timely and cost-efficient options for picking up or scheduling delivery of their purchases. Our customer-centric infrastructure consistently achieves in excess of 90 percent fulfillment of all online orders within 24 hours.”

Lyon on the Running Specialty Group: “We are confident that we have a sound plan in place to profitably grow this business. By pausing our acquisition and new-store expansion strategy, we have focused more time and resources on improving execution and achieving operational excellence to better serve the customer … RSG is a work-in-progress.”

CFO Edward Wilhelm on guidance: “We certainly feel very good about our first quarter performance and how we’re starting the year … we’re optimistic, we’re bullish.… That said, it’s still very early in the year. It’s only the first quarter. We have three quarters ahead of us, which is a substantial amount of business for the year, and at this point, we’re not revising our guidance.”

Looking Ahead: For the fiscal year ending Feb. 27, 2016, the company still expects comp-store sales to be up in the low-single to mid-single-digit range and earnings per share to increase in the low-single to mid-single-digit range over fiscal year 2015 non-GAAP diluted earnings per share of $1.67.