Finish Line Q2 Momentum Slows

Improved operating margins lifted Finish Line to a second-quarter profit.

For the 13 weeks ended Aug. 28, the Indianapolis-based athletic retail chain earned $16.8 million, or 31 cents a share, compared with a net loss of $874,000, or 2 cents, in the same period a year earlier.

Net sales edged slightly higher to $301 million for the quarter, up 0.8 percent from $298.7 million a year ago. Comparable store sales increased 2 percent in the quarter, compared to a comparable store sales decline of 9.9 percent a year ago.

Finish Line’s chairman and CEO, Glenn Lyon, said the firm had “a productive quarter.”
“We continue to prove that we can effectively leverage even a modest sales gain as we did this quarter, and we are making investments within our existing business to drive top-line growth. At the same time, we are also assessing growth opportunities outside of our core business,” said Lyon in a company statement.

But analysts polled by Yahoo! Finance were looking for earnings of 36 cents a share on revenue of $315 million. In contrast, Finish Line beat The Street in the first quarter, earning 10 cents more per share than expected.

Sam Sato, Finish Line’s president and chief merchandising officer, said the company “remains focused on putting quality of inventory first, in terms of the brands we do business with [and] relevance, innovation, design and technology.”

The company noted it is seeing higher average dollars per transaction as well as less aging inventory. Finish Line’s consolidated merchandise inventories decreased by 2 percent to $217 million at the end of the quarter, compared to $221.4 million a year ago.

Finish Line ended the quarter with no debt, and cash and cash equivalents of $253.7 million, up 78 percent from $142.9 million a year ago.

Strategies for the cash flow will be dedicated to driving long-term growth in value for shareholders, said company CFO Ed Wilhelm.

“Acquisitions could be in the pipeline, [but there are] organic growth opportunities as well. We’ll be very disciplined and smart as we go about this,” he added.

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