FINL
$15.85
Finish Line Cl A
$.57
3.73%
Earnings Details
Quarter February 2017
Friday, March 24, 2017 7:12:00 AM
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Summary

Finish Line Cl A Misses

Finish Line Cl A (FINL) reported Quarter February 2017 earnings of $0.50 per share on revenue of $557.5 million. The consensus earnings estimate was $0.70 per share on revenue of $554.2 million. The Earnings Whisper number was $0.71 per share. Revenue fell 3.9% compared to the same quarter a year ago.

The company said it expects fiscal 2018 earnings of $1.12 to $1.23 per share. The current consensus earnings estimate is $1.45 per share for the year ending March 3, 2018.

Finish Line Inc is a mall-based specialty retailer in the United States, and operates two retail divisions under the Finish Line brand name Finish Line and Running Specialty Group.

Results
Reported Earnings
$0.50
Earnings Whisper
$0.71
Consensus Estimate
$0.70
Reported Revenue
$557.5 Mil
Revenue Estimate
$554.2 Mil
Growth
Earnings Growth
Revenue Growth
Power Rating
Grade
Earnings Release

Finish Line Reports Fourth Quarter and Full Fiscal Year 2017 Results

The Finish Line, Inc. (FINL) today reported results for the fourth quarter and fiscal year 2017, representing the thirteen and fifty-two weeks ended February 25, 2017.

For the thirteen weeks ended February 25, 2017:

- Consolidated net sales were $557.5 million, a decrease of 0.4% from the prior year period.

- Finish Line comparable sales decreased 4.5%.

- Finish Line Macy’s sales increased 35%.

- On a GAAP basis, diluted earnings per share from continuing operations were $0.30.

- Non-GAAP diluted earnings per share from continuing operations, which primarily excludes the impact from store impairment charges, were $0.50.

For the fifty-two weeks ended February 25, 2017:

- Consolidated net sales were $1.84 billion, an increase of 2.5% over the prior year.

- Finish Line comparable sales increased 0.3%.

- Finish Line Macy’s sales increased nearly 30%.

- On a GAAP basis, diluted earnings per share from continuing operations were $0.85.

- Non-GAAP diluted earnings per share from continuing operations, which primarily excludes the impact from store impairment charges and severance related charges, were $1.06.

"Our fourth quarter earnings performance represented a disappointing finish to a challenging year financially for our company," said Sam Sato, Chief Executive Officer of Finish Line. "As elements of our footwear offering did not resonate with our customers as we expected and the overall retail environment in February became increasingly difficult, we made the decision to get more aggressive on pricing to be competitive and clear slow moving product. While this allowed us to end fiscal 2017 with clean inventory levels, it put significant pressure on fourth quarter product margins. We know we must improve the execution of our merchandise strategies to drive increased full price selling and fuel sustained comparable sales growth. At the same time, we are confident that the numerous operational improvements we made throughout the past year have created a more efficient company with a stronger foundation to support enhanced profitability and increased shareholder value over the long-term."

Balance Sheet

As of February 25, 2017, consolidated merchandise inventories decreased 4.8% to $331.1 million compared to $348.0 million as of February 27, 2016. Merchandise inventories decreased high-single digits at Finish Line and increased high-single digits at Macy’s.

The company repurchased 250,000 shares of common stock in the fourth quarter totaling $4.4 million. For the full year, Finish Line repurchased 2.5 million shares totaling $52.8 million. The company has 4.8 million shares remaining on its current Board authorized repurchase program.

As of February 25, 2017, the company had no interest-bearing debt and $90.9 million in cash and cash equivalents, compared to $79.5 million as of February 27, 2016.

Outlook

The fiscal year ending March 3, 2018 is a 53 week year. For the fiscal year ending March 3, 2018, Finish Line expects comparable sales to increase low-single digits and earnings per share to be in the range of $1.12 to $1.23 which is an increase of approximately 6% to 16% compared with the $1.06 Non-GAAP diluted earnings per share in this fiscal year ended February 25, 2017, which was a 52 week year. We estimate the additional week will contribute approximately $0.06 per share to our fourth quarter and full year fiscal 2018 results.

Q4 Fiscal 2017 Conference Call Today, March 24, 2017 at 8:30 a.m.

The company will host a conference call for investors today, March 24, 2017, at 8:30 a.m. Eastern. To participate in the live conference call, dial 866-923-8645 (U.S. and Canada) or 660-422-4970 (International), conference ID #34406218. The live conference call will also be accessible online at www.finishline.com. A replay of the conference call can be accessed approximately two hours following the completion of the call by dialing 855-859-2056, conference ID #34406218. This recording will be made available through Sunday, April 30, 2017. The replay will also be accessible online at www.finishline.com.

Annual Meeting July 13, 2017

The company’s Board of Directors has established July 13, 2017 as the date of the 2017 annual meeting of shareholders, with May 12, 2017 as the record date for this meeting.

Disclosure Regarding Non-GAAP Measures

This report refers to certain financial measures that are identified as non-GAAP. The company believes that these non-GAAP measures, including selling, general and administrative expenses, operating income, income tax expense, net income from continuing operations, and diluted earnings per share from continuing operations, are helpful to investors because they allow for a more direct comparison of the company’s year-over-year performance and are useful in assessing the company’s progress in achieving its long-term financial objectives. This supplemental information should not be considered in isolation or as a substitute for the related GAAP measures. A reconciliation of the non-GAAP measures to the comparable GAAP measures can be found in this release beginning on page 6 below.

About The Finish Line, Inc.

The Finish Line, Inc. is a premium retailer of athletic shoes, apparel and accessories. Headquartered in Indianapolis, Finish Line has approximately 950 Finish Line branded locations primarily in U.S. malls and shops inside Macy’s department stores and employs more than 14,000 sneakerologists who help customers every day connect with their sport, their life and their style. Online shopping is available at www.finishline.com and www.macys.com. Mobile shopping is available at m.finishline.com. Follow Finish Line on Twitter at Twitter.com/FinishLine or Twitter.com/FinishLineNews and "like" Finish Line on Facebook at Facebook.com/FinishLine. Track loyalty points and find store and product information with the free Finish Line app downloadable for iOS and Android customers.

Forward-Looking Statements

This news release includes statements that are or may be considered "forward-looking" within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. These forward-looking statements generally can be identified by the use of words or phrases such as "believe," "expect," "future," "anticipate," "intend," "plan," "foresee," "may," "should," "will," "estimates," "outlook," "potential," "optimistic," "confidence," "continue," "evolve," "expand," "growth" or words and phrases of similar meaning. Statements that describe objectives, plans or goals also are forward-looking statements.

All of these forward-looking statements are subject to risks, management assumptions and uncertainties that could cause actual results to differ materially from those contemplated by the relevant forward-looking statements. The principal risk factors that could cause actual performance and future actions to differ materially from the forward-looking statements include, but are not limited to, the company’s reliance on a few key vendors for a majority of its merchandise purchases (including a significant portion from one key vendor); the availability and timely receipt of products; the ability to timely fulfill and ship products to customers; fluctuations in oil prices causing changes in gasoline and energy prices, resulting in changes in consumer spending as well as increases in utility, freight and product costs; product demand and market acceptance risks; deterioration of macroeconomic and business conditions; the inability to locate and obtain or retain acceptable lease terms for the company’s stores; the effect of competitive products and pricing; loss of key employees; execution of strategic growth initiatives (including actual and potential mergers and acquisitions and other components of the company’s capital allocation strategy); cybersecurity risks, including breach of customer data; a major failure of technology and information systems; and the other risks detailed in the company’s Securities and Exchange Commission filings. Readers are urged to consider these factors carefully in evaluating the forward-looking statements. The forward-looking statements included herein are made only as of the date of this report and Finish Line undertakes no obligation to publicly update these forward-looking statements to reflect subsequent events or circumstances.

The Finish Line, Inc.
Consolidated Statements of Operations (Unaudited)
(In thousands, except per share and store/shop data)
Thirteen Weeks Ended
Fifty-Two Weeks Ended
February 25,
February 27,
February 25,
February 27,
2017
2016
2017
2016
Net sales
$ 557,452
$ 559,845
$ 1,844,393
$ 1,798,982
Cost of sales (including occupancy costs)
395,298
368,845
1,295,989
1,242,960
Gross profit
162,154
191,000
548,404
556,022
Selling, general, and administrative expenses
128,705
136,594
480,897
469,836
Impairment charges and store closing costs
13,129
43,142
13,312
43,637
Operating income
20,320
11,264
54,195
42,549
Interest expense, net
101
61
279
65
Income from continuing operations before income taxes
20,219
11,203
53,916
42,484
Income tax expense
7,919
2,444
18,760
13,562
Net income from continuing operations
12,300
8,759
35,156
28,922
Net loss from discontinued operations, net of tax
(21,771 )
(4,723 )
(53,364 )
(7,126 )
Net (loss) income
(9,471 )
4,036
(18,208 )
21,796
Net loss attributable to redeemable noncontrolling interest of
--
--
--
96
discontinued operations
Net (loss) income attributable to The Finish Line, Inc.
$
(9,471 )
$
4,036
$
(18,208 )
$
21,892
Diluted (loss) earnings per share attributable to The Finish Line,
Inc. shareholders:
Continuing operations
0.30
0.20
0.85
0.64
Discontinued operations
(0.53 )
(0.11 )
(1.29 )
(0.16 )
Diluted (loss) earnings per share attributable to The Finish Line,
(0.23 )
0.09
(0.44 )
0.48
Inc. shareholders
Diluted weighted average shares
40,790
43,513
41,367
44,787
Dividends declared per share
$
0.11
$
0.10
$
0.41
$
0.37
Finish Line store activity for the period:
Beginning of period
580
617
591
637
Opened
--
--
6
8
Closed
(7 )
(26 )
(24 )
(54 )
End of period
573
591
573
591
Square feet at end of period
3,187,942
3,278,039
Average square feet per store
5,564
5,547
Branded shops within department stores activity for the period:
Beginning of period
392
394
392
395
Opened
--
--
1
1
Closed
(18 )
(2 )
(19 )
(4 )
End of period
374
392
374
392
Square feet at end of period
526,286
476,533
Average square feet per shop
1,407
1,216
Thirteen Weeks Ended
Fifty-Two Weeks Ended
February 25,
February 27,
February 25,
February 27,
2017
2016
2017
2016
Net sales
100.0
%
100.0
%
100.0
%
100.0
%
Cost of sales (including occupancy costs)
70.9
65.9
70.3
69.1
Gross profit
29.1
34.1
29.7
30.9
Selling, general, and administrative expenses
23.1
24.4
26.1
26.1
Impairment charges and store closing costs
2.4
7.7
0.7
2.4
Operating income
3.6
2.0
2.9
2.4
Interest expense, net
--
--
--
--
Income from continuing operations before income taxes
3.6
2.0
2.9
2.4
Income tax expense
1.4
0.4
1.0
0.8
Net income from continuing operations
2.2
1.6
1.9
1.6
Net loss from discontinued operations
(3.9 )
(0.9 )
(2.9 )
(0.4 )
Net (loss) income
(1.7 )
0.7
(1.0 )
1.2
Net loss attributable to redeemable noncontrolling interest of
--
--
--
--
discontinued operations
Net (loss) income attributable to The Finish Line, Inc.
(1.7
)%
0.7
%
(1.0
)%
1.2
%
Condensed Consolidated
Balance Sheets (Unaudited)
February 25,
February 27,
2017
2016
ASSETS
Cash and cash equivalents
$
90,856
$
79,495
Merchandise inventories, net
331,146
347,966
Other current assets
69,408
62,368
Assets held for sale
--
80,795
Property and equipment, net
247,897
239,067
Other assets, net
7,161
7,857
Total assets
$ 746,468
$ 817,548
LIABILITIES AND SHAREHOLDERS’ EQUITY
Current liabilities, excluding the revolving credit facility and
$ 221,971
$ 207,906
liabilities held for sale
Liabilities held for sale
--
15,185
Deferred credits from landlords
32,133
30,503
Other long-term liabilities
40,866
36,310
Shareholders’ equity
451,498
527,644
Total liabilities and shareholders’ equity
$ 746,468
$ 817,548
Reconciliation of Selling, General, and Administrative Expenses,
GAAP to
Selling, General, and Administrative Expenses, Non-GAAP (Unaudited)
(In thousands)
Thirteen Weeks Ended
Fifty-Two Weeks Ended
February 25, 2017
February 27, 2016
February 25, 2017
February 27, 2016
Selling, general, and administrative expenses, GAAP
$ 128,705
23.1
%
$ 136,594
24.4
%
$ 480,897
26.1
%
$ 469,836
26.1
%
Employee severance, retirement, and other costs
--
--
(3,710 )
(0.7 )
(2,132 )
(0.2 )
(3,710 )
(0.2 )
Selling, general, and administrative expenses, Non-GAAP
$ 128,705
23.1
%
$ 132,884
23.7
%
$ 478,765
25.9
%
$ 466,126
25.9
%
Reconciliation of Operating Income, GAAP to Operating Income,
Non-GAAP (Unaudited)
(In thousands)
Thirteen Weeks Ended
Fifty-Two Weeks Ended
February 25, 2017
February 27, 2016
February 25, 2017
February 27, 2016
Operating income, GAAP
$
20,320
3.6
%
$ 11,264
2.0
%
$ 54,195
2.9
%
$ 42,549
2.4
%
Employee severance, retirement, and other costs
--
--
3,710
0.7
2,132
0.2
3,710
0.2
Impairment charges and store closing costs
13,129
2.4
43,142
7.7
13,312
0.7
43,637
2.4
Operating income, Non-GAAP
$
33,449
6.0
%
$ 58,116
10.4
%
$ 69,639
3.8
%
$ 89,896
5.0
%
Reconciliation of Income Tax Expense, GAAP to Income Tax Expense,
Non-GAAP (Unaudited)
(In thousands)
Thirteen Weeks Ended
Fifty-Two Weeks Ended
February 25, 2017
February 27, 2016
February 25, 2017
February 27, 2016
Income tax expense, GAAP
$
7,919
1.4
%
$
2,444
0.4
%
$ 18,760
1.0
%
$ 13,562
0.8
%
Tax affect of:
Employee severance, retirement, and other costs
--
--
1,428
0.3
1,453
0.1
1,428
0.1
Impairment charges and store closing costs
5,053
0.9
16,610
3.0
5,125
0.3
16,799
0.9
Income tax expense, Non-GAAP
$
12,972
2.3
%
$ 20,482
3.7
%
$ 25,338
1.4
%
$ 31,789
1.8
%
Reconciliation of Net Income From Continuing Operations, GAAP to
Net Income From Continuing Operations, Non-GAAP (Unaudited)
(In thousands)
Thirteen Weeks Ended
Fifty-Two Weeks Ended
February 25, 2017
February 27, 2016
February 25, 2017
February 27, 2016
Net income from continuing operations, GAAP
$
12,300
2.2
%
$
8,759
1.6
%
$ 35,156
1.9
%
$ 28,922
1.6
%
Employee severance, retirement, and other costs, net of income taxes
--
--
2,282
0.4
679
0.1
2,282
0.1
Impairment charges and store closing costs, net of income taxes
8,076
1.5
26,532
4.7
8,187
0.4
26,838
1.5
Net income from continuing operations, Non-GAAP
$
20,376
3.7
%
$ 37,573
6.7
%
$ 44,022
2.4
%
$ 58,042
3.2
%
Reconciliation of Diluted Earnings Per Share From Continuing
Operations, GAAP to
Diluted Earnings Per Share From Continuing Operations, Non-GAAP
(Unaudited)
Thirteen Weeks Ended
Fifty-Two Weeks Ended
February 25,
February 27,
February 25,
February 27,
2017
2016
2017
2016
Diluted earnings per share from continuing operations, GAAP
$
0.30
$ 0.20
$ 0.85
$
0.64
Employee severance, retirement, and other costs, net of income taxes
--
0.05
0.02
0.05
Impairment charges and store closing costs, net of income taxes and
0.20
0.60
0.19
0.59
redeemable noncontrolling interest
Diluted earnings per share from continuing operations, Non-GAAP
$
0.50
$ 0.85
$ 1.06
$
1.28

Note: See Disclosure Regarding Non-GAAP Measures above.

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The Finish Line, Inc.
Media Contact:
Dianna L. Boyce, 317-613-6577
Corporate Communications
or
Investor Contact:
Ed Wilhelm, 317-613-6914
Chief Financial Officer