Finish Line Beats Street In Q4, Guidance Weighs On Stock

Finish Line
A Finish Line store at the Mall of Millenia in Orlando.
Courtesy of retailer.

Things are looking up for Finish Line Inc.

The athletic footwear-and-apparel retailer’s shares surged in early morning trading today after the company beat estimates for sales and profit in Q4.

Finish Line said its net income for the quarter, which ended Feb. 27, totaled $4 million, or 9 cents per diluted share, compared to net income of $40.8 million, or 87 cents per diluted share in the year-ago same period. Non-GAAP diluted earnings per share were 83 cents, beating analyst estimates for diluted EPS of 80 cents.

Q4 net sales were $580.3 million, a 5.2 percent gain over the comparable quarter’s sales of $551.3 million. Analyst had predicted sales of $568.1 million. Despite a tough macroeconomic backdrop for the past two quarters, which caused many retailers to post negative comps, Finish Line’s comparable store sales increased 4.6 percent in the quarter.

While investors appeared initially upbeat on the results, the firm’s outlook may have weighed on the stock after the conference call.

For the fiscal year ending Feb. 25, 2017, Finish Line expects comparable store sales to increase in the 3 percent to 5 percent range and earnings per share to be between $1.50 and $1.56.

At 10:45 a.m. EST, Finish Line’s share price had declined 2.2 percent.

Sam Sato, who replaced Finish Line CEO of eight years Glenn Lyon on Feb. 28, addressed investors and analysts as CEO for the first time during the firm’s conference call.

As I have taken on my role as CEO, I tried to evaluate Finish Line’s business with a fresh perspective. In my review, I’ve seen the significant strengths routed at the core of our business, including a dedicated team, collaborative and supportive vendor partnerships and a capacity to grow,” Sato said. “I’m also keenly aware of where we need to focus our attention and efforts primarily with basic blocking and tackling to drive improved performance near-term and position Finish Line to compete and succeed long-term.”

In addition to continuing to address supply chain issues by investing in temporary resources, Sato said his long-term priorities include strengthening customer engagement; ramping up efforts in the Macy’s and JackRabbit businesses; and leveraging omnichannel.

For the full year, net sales totaled $1.9 billion, an increase of 3.8 percent over the prior year. Comparable store sales increased 1.8 percent. On a GAAP basis, diluted EPS were 48 cents and non-GAAP diluted EPS, excluding the impact from the write-off of technology assets and store impairment charges, were $1.21.