Finish Line Q2 Up Nearly 20%

The Finish Line Inc. is running quickly, and analysts are upbeat on the firm’s back half prospects.

“[Friday’s] beating of results, clean inventory positioning and continued momentum going into holiday are positive catalysts for [the firm],” said Kate McShane, analyst at Citi Investment Research.

Jeff Van Sinderen, analyst at B. Riley & Co., said, “Finish Line will continue to take market share, led by its digital segment. I expect that to outperform the brick-and-mortar in terms of comps.”

Aside from momentum in its core business, Finish Line also is banking on new businesses to add to both the top and bottom lines.

RELATED STORY: Finish Line Inks Major Macy’s Deal >>

The deal it signed with Macy’s Inc. on Friday will add $250 million to $350 million to group revenue in the long run and translate to a “much faster” growth rate for Finish Line’s business, Chairman and CEO Glenn Lyon said on a call with analysts.

“This is a product assortment that [the Macy’s] customer has not seen. So this is a much, much accelerated growth for them and for us,” said Lyon.

Calling the deal exciting, Van Sinderen said, “Macy’s has done a superb job in athletic, but it’s not a destination, so there’s an opportunity on both ends. Plus, [the two retailers] have similar points of view on the omnichannel strategy. It’s astute of Finish Line to partner with someone who shares its vision.”

He added, “It allows [Finish Line] to get at a different customer as they don’t get many moms and kids in [their] stores.”

Finish Line’s CFO, Ed Wilhelm, assuaged analysts’ fears about possible cannibalization between the two store concepts.

“We think the cannibalization will be minimal, if any, because this is a different customer than we’re dealing with in The Finish Line. And from a store standpoint, there are less than half of their 450 stores where we overlap.”

Lyon also said the firm is ramping up expansion plans for The Running Co. group of stores.

“We’re building a new store pipeline that will allow for organic growth. We expect to open 15 to 20 new stores and announce 15 to 20 store acquisitions over the course of the next 18 months,” he said.

Double-digit comps buoyed Finish Line to a strong second quarter that topped estimates.

For the period ended Sept. 1, net income at the Indianapolis-based retailer surged 19.4 percent to $25 million, or 49 cents a share, from $20.9 million, or 39 cents, in the same period a year ago.

Total revenue advanced 16.1 percent to $385 million on the back of a 12.3 percent comparable-store sales increase. E-commerce comps were up 29.6 percent.

Analysts, as polled by Yahoo Finance, had expected earnings per share of 44 cents on revenue of $358.3 million.

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