Finish Line Q2 Sales & Profit Fall Short Amid Athletic Slowdown

Investors had been punishing Finish Line Inc.’s shares in premarket today after the firm reported second-quarter earnings for 2017 signaling that its business remains under pressure.

While most of the results were no surprise — the specialty athletic retailer last month preannounced a negative second quarter — investors sent the firm’s down nearly 9 percent in premarket trading. As of 9:45 a.m., Finish Line shares began to reverse those losses, climbing 0.9 percent to $9.80.

Consistent with its preannouncement, Finish Line said its net sales fell 3.3 percent year-over-year to $469.4 million, roughly in line with analysts’ predictions. Comparable sales also decreased 4.5 percent. Finish Line Macy’s remained a bright spot for the company, posting a sales gain of 5.6 percent.

Profits were $2.8 million, or 8 cents per diluted share. Adjusted profits, at 12 cents per diluted share, missed analysts’ bets for adjusted diluted earnings per share of 14 cents. (In August, Finish Line forecasted that its Q2 profits would be in the range of 8 to 12 cents per share.) CEO Sam Sato said the company’s Q2 results were influenced by a “very promotional” athletic footwear environment.

“With industry headwinds weighing on our sales and margin trends, we remain disciplined in managing our expenses and inventories,” Sato said in a release. “While we are planning for a challenging retail environment in the near term, we are confident that the merchandise, digital, in-store and operational initiatives currently in place will allow us to achieve our current full-year outlook and best position the company to deliver increased shareholder value over the long term.”

Looking ahead, Finish Line maintained its full year outlook, announced in August, and called for a soft third-quarter performance. The company expects Q3 comparable sales to decrease 3 percent to 5 percent and adjusted loss per share in the range of 32 cents to 40 cents, compared with an adjusted loss per share of 24 cents for the same period last year.

For several months, U.K.-based sporting goods firm Sports Direct has been aggressively snapping up Finish Line shares via contracts for difference as well as outright purchases of beneficial shares, spurring takeover speculation. While Finish Line has not publicly addressed whether a buyout by Sports Direct is on the table, the company adopted a shareholder rights plan, or “poison pill,” last month to foil a potentially hostile takeover.

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