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Analysts Bullish on Finish Line’s Q2

Finish Line Inc.’s earnings did more than hit the mark during the second quarter, and analysts are positive about the Indianapolis-based retailer’s ability to keep pace in the second half of the fiscal year.

RELATED STORY: Finish Line Earnings, Sales Up in Q2 >>
 
“I’m very pleased with the comp-store growth, given the amount of promotional activity and slowing in consumer traffic,” said Jeff Van Sinderen, an analyst with B. Riley & Co. He added that product innovation and sell-through from vendor partner Nike played a major role in the retailer’s success this past quarter.
 
Comparable-store sales at Finish Line increased 2.4 percent in the second quarter, beating B. Riley’s prediction for 2 percent. The retailer’s new partnership with Macy’s was also a highlight, as 41 branded shop-in-shops were added during the period, bringing the total count to 60.
 
“Cannibalization has not been an issue so far. The more casual-oriented product and higher women’s mix (given Macy’s female customer concentration), broadens Finish Line’s reach,” B. Riley reported in its note to investors. “Management continues to expect $130 million to $150 million in Macy’s sales for fiscal year 2014, with a projected store count of 180 by the end of the fiscal year. Overall, assuming strong execution, the Macy’s partnership should be a major growth contributor.”
 
The Buckingham Research Group also was bullish on Finish Line going forward. The firm cited the Macy’s partnership, a solid balance sheet and improvement in the running category as reasons for investors to be optimistic.
 
“We have liked Finish Line this year, based on the stock’s value characteristics, our expectations for accelerating trends against easier comparisons in the second half of this fiscal year and cautious sentiment from other investors,” Buckingham Research Group analyst John Zolidis noted in an investment note. “This thesis is playing out as comps accelerated against the company’s toughest comparison [this past quarter] and into the beginning of the third quarter of fiscal 2014.”
 
For the period ended Aug. 31, the athletic footwear retailer reported a net income of $26.5 million, or 54 cents a share, beating analysts’ predictions for earnings per share of 45 cents. It was a 6.1 percent increase over the year-ago period.

Net sales grew to $436 million, a 13.3 percent jump from the same period a year ago.

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