Finish Line’s Sales & Profit a ‘Disappointment’ in Third Quarter

Finish Line Inc.’s shares are feeling the pressure today on the heels of the firm’s third-quarter earnings release, which showed the company missing forecasts across the board. (As of 10:15 a.m. ET, the specialty athletic retailer’s shares were down 14 percent, to $19.80.)

While Finish Line’s third-quarter revenues increased 3 percent year-over-year, to $371.7 million, the results fell significantly below market watchers’ estimates for revenues of $411.3 million. Comparable store sales increased 0.7 percent, a substantial miss against estimates for a comp gain of 8.3 percent.

The firm also widened its reported net losses, to $40.4 million, or 26 cents per diluted share, from $21.8 million, or 44 cents per diluted share. Non-GAAP diluted loss per share were 24 cents, missing analysts’ expectations for diluted losses per share of 18 cents.

Finish Line CEO Sam Sato said he was disappointed with the results and that steep declines in apparel and accessories offset a high-single digit footwear comp gain and a 33 percent sales increase in the firm’s Macy’s business.

While we continue to work on narrowing our soft goods assortment and aligning our offering with customer demand, our primary focus remains on growing the cornerstones of the company’s foundation — our Finish Line footwear business and our partnership with Macy’s — through enhanced customer engagement,” Sato said in a release. “At the same time, we are making progress developing a more efficient operating model that drives increased profitability and greater shareholder value over the long term.”

Sato added that the firm is now “fully benefitting” from supply chain improvements made following last year’s disruption and is “just beginning to realize the $6 million in annualized savings from our actions aimed at streamlining our organizational structure.”

In conjunction with the earnings release, Finish Line also significantly lowered its full-year outlook. The company now expects comparable store sales to range between flat to up 1 percent, compared with prior guidance of 3 percent to 5 percent. Adjusted diluted EPS are now predicted to land between $1.24 and $1.30, compared with the prior range of $1.50 to $1.56.

After announcing last month that it is exploring strategic alternatives for its JackRabbit business, Finish Line further hinted that a divestiture is in the works as the results of JackRabbit are now being reported within discontinued operations.

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