FINL
$11.29
Finish Line Cl A
$.20
1.80%
Earnings Details
2nd Quarter August 2017
Friday, September 22, 2017 7:03:00 AM
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Summary

Finish Line Cl A Reports In-line

Finish Line Cl A (FINL) reported 2nd Quarter August 2017 earnings of $0.12 per share on revenue of $469.4 million. The consensus earnings estimate was $0.11 per share on revenue of $470.5 million. The Earnings Whisper number was $0.12 per share. Revenue fell 7.9% compared to the same quarter a year ago.

The company said it continues to expect a third quarter loss of $0.40 to $0.32 per share and fiscal 2018 earnings of $0.50 to $0.60 per share. The current consensus estimate is a loss of $0.36 per share for the quarter ending November 30, 2017 and $0.52 per share for the year ending February 28, 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
$0.12
Earnings Whisper
$0.12
Consensus Estimate
$0.11
Reported Revenue
$469.4 Mil
Revenue Estimate
$470.5 Mil
Growth
Earnings Growth
Revenue Growth
Power Rating
Grade
Earnings Release

Finish Line Reports Second Quarter Fiscal Year 2018 Results

The Finish Line, Inc. (FINL) today reported results for the thirteen weeks ended August 26, 2017.

For the thirteen weeks ended August 26, 2017:

Consolidated net sales were $469.4 million, a decrease of 3.3% over the prior year period.

-- Finish Line comparable store sales decreased 4.5%.

-- Finish Line Macy’s sales increased 5.6%.

On a GAAP basis, diluted earnings per share from continuing operations were $0.08.

Non-GAAP diluted earnings per share from continuing operations, which primarily excludes the impact from store impairment charges, were $0.12.

"Our second quarter results were shaped by a very promotional marketplace for athletic footwear," said Sam Sato, Chief Executive Officer of Finish Line. "With industry headwinds weighing on our sales and margin trends, we remain disciplined in managing our expenses and inventories. 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."

Balance Sheet

As of August 26, 2017, consolidated merchandise inventories decreased 11.1% to $308.1 million compared to $346.4 million as of August 27, 2016.

As of August 26, 2017, the company had no interest-bearing debt and $114.9 million in cash and cash equivalents.

Outlook

The company’s outlook remains unchanged from the update given August 28, 2017 which is Finish Line comparable sales to decrease 3% to 5% versus its previous guidance for an increase in the low-single digit range. Adjusted earnings per share are now expected to be in the range of $0.50 to $0.60 for the 53-week fiscal year ending March 3, 2018, versus the previous guidance range of $1.12 to $1.23, and compared with adjusted earnings per share of $1.06 for the fiscal year ended February 25, 2017, which was a 52-week year. The company estimates that the additional week will contribute approximately $0.06 per share to fourth quarter and full year fiscal 2018 results.

For the third quarter ending November 25, 2017, the company expects Finish Line comparable sales to decrease 3% to 5% and adjusted loss per share to be in the range of ($0.32) to ($0.40), compared with an adjusted loss per share of ($0.24) for the same period last year.

For the fourth quarter ending March 3, 2018, a 14-week quarter, the company expects Finish Line comparable sales to decrease 3% to 5% and adjusted earnings per share to be in the range of $0.50 to $0.58 inclusive of the $0.06 per share contribution from the extra week, compared with earnings per share of $0.50 for the fourth quarter ended February 25, 2017, a 13-week quarter.

Q2 Fiscal 2018 Conference Call Today, September 22, 2017 at 8:30 a.m.

The company will host a conference call for investors today, September 22, 2017, at 8:30 a.m. Eastern. To participate in the live conference call, dial 866-923-8645 (US and Canada) or 660-422-4970 (International), conference ID #82802203. 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 #82802203. This recording will be made available through Sunday, October 22, 2017. The replay will also be accessible online at www.finishline.com.

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 the company’s Form 8-K filed with the Securities and Exchange Commission with this release.

About The Finish Line, Inc.

The Finish Line, Inc. is a premium retailer that carries the latest and greatest shoes, apparel, and accessories. Headquartered in Indianapolis, Finish Line runs approximately 950 branded locations in U.S. malls and shops inside Macy’s department stores. Finish Line employs more than 14,000 associates who connect customers to sneaker culture through style and sport. Shop online at www.finishline.com or get access to everything on the Finish Line app. Also keep track of what’s fresh by following Finish Line on Instagram, Snapchat, and Twitter.

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 Income (Unaudited)
(In thousands, except per share and store/shop data)
Thirteen Weeks Ended
Twenty-Six Weeks Ended
August 26,
August 27,
August 26,
August 27,
2017
2016
2017
2016
Net sales
$ 469,352
$ 485,156
$ 899,124
$ 915,200
Cost of sales (including occupancy costs)
339,020
331,447
641,365
628,314
Gross profit
130,332
153,709
257,759
286,886
Selling, general, and administrative expenses
121,772
116,511
234,184
234,060
Impairment charges and store closing costs
2,335
182
4,493
182
Operating income
6,225
37,016
19,082
52,644
Interest income (expense), net
10
(32 )
10
(26 )
Income from continuing operations before income taxes
6,235
36,984
19,092
52,618
Income tax expense
2,888
13,627
7,748
19,173
Net income from continuing operations
3,347
23,357
11,344
33,445
Net loss from discontinued operations, net of tax
(504 )
(1,282 )
(361 )
(1,744 )
Net income
$
2,843
$
22,075
$
10,983
$
31,701
Diluted earnings per share:
Continuing operations
0.08
0.56
0.28
0.79
Discontinued operations
(0.01 )
(0.03 )
(0.01 )
(0.04 )
Diluted earnings per share
0.07
0.53
0.27
0.75
Diluted weighted average shares
40,260
41,122
40,311
41,506
Dividends declared per share
$
0.11
$
0.10
$
0.22
$
0.20
Finish Line store activity for the period:
Beginning of period
571
586
573
591
Opened
--
4
--
5
Closed
(2 )
(5 )
(4 )
(11 )
End of period
569
585
569
585
Square feet at end of period
3,175,989
3,249,455
Average square feet per store
5,582
5,555
Branded shops within department stores activity for the period:
Beginning of period
375
392
374
392
Opened
3
--
4
--
Closed
--
(1 )
--
(1 )
End of period
378
391
378
391
Square feet at end of period
533,219
509,880
Average square feet per shop
1,411
1,304
Thirteen Weeks Ended
Twenty-Six Weeks Ended
August 26,
August 27,
August 26,
August 27,
2017
2016
2017
2016
Net sales
100.0
%
100.0
%
100.0
%
100.0
%
Cost of sales (including occupancy costs)
72.2
68.3
71.3
68.7
Gross profit
27.8
31.7
28.7
31.3
Selling, general, and administrative expenses
26.0
24.0
26.0
25.5
Impairment charges and store closing costs
0.5
0.1
0.6
--
Operating income
1.3
7.6
2.1
5.8
Interest income (expense), net
--
--
--
--
Income from continuing operations before income taxes
1.3
7.6
2.1
5.8
Income tax expense
0.6
2.8
0.8
2.1
Net income from continuing operations
0.7
4.8
1.3
3.7
Net loss from discontinued operations, net of tax
(0.1 )
(0.2 )
(0.1 )
(0.2 )
Net income
0.6
%
4.6
%
1.2
%
3.5
%
Condensed Consolidated Balance Sheets
August 26, 2017
August 27, 2016
February 25, 2017
(Unaudited)
(Unaudited)
ASSETS
Cash and cash equivalents
$ 114,918
$ 114,301
$
90,856
Merchandise inventories, net
308,074
346,385
331,146
Other current assets
46,045
34,972
69,408
Assets held for sale
--
76,089
--
Property and equipment, net
153,347
153,453
157,594
Intangible assets, net
86,215
92,542
90,303
Other assets, net
5,440
7,579
7,161
Total assets
$ 714,039
$ 825,321
$
746,468
LIABILITIES AND SHAREHOLDERS’ EQUITY
Current liabilities
$ 195,241
$ 231,379
$
221,971
Liabilities held for sale
--
16,210
--
Deferred credits from landlords
34,255
32,021
32,133
Other long-term liabilities
30,919
30,517
40,866
Shareholders’ equity
453,624
515,194
451,498
Total liabilities and shareholders’ equity
$ 714,039
$ 825,321
$
746,468
Reconciliation of Selling, General, and Administrative Expenses,
GAAP to Selling, General, and Administrative Expenses, Non-GAAP
(Unaudited)
(In thousands)
Thirteen Weeks Ended
Twenty-Six Weeks Ended
August 26, 2017
August 27, 2016
August 26, 2017
August 27, 2016
Selling, general, and administrative expenses, GAAP
$ 121,772
26.0
%
$ 116,511
24.0
%
$ 234,184
26.0
%
$ 234,060
25.5
%
Employee severance, retirement, and other costs
--
--
--
--
(338 )
--
--
--
Selling, general, and administrative expenses, Non-GAAP
$ 121,772
26.0
%
$ 116,511
24.0
%
$ 233,846
26.0
%
$ 234,060
25.5
%
Reconciliation of Operating Income, GAAP to Operating Income,
Non-GAAP (Unaudited)
(In thousands)
Thirteen Weeks Ended
Twenty-Six Weeks Ended
August 26, 2017
August 27, 2016
August 26, 2017
August 27, 2016
Operating income, GAAP
$
6,225
1.3
%
$
37,016
7.6
%
$ 19,082
2.1
%
$
52,644
5.8
%
Employee severance, retirement, and other costs
--
--
--
--
338
--
--
--
Impairment charges and store closing costs
2,335
0.5
182
0.1
4,493
0.6
182
--
Operating income, Non-GAAP
$
8,560
1.8
%
$
37,198
7.7
%
$ 23,913
2.7
%
$
52,826
5.8
%
Reconciliation of Income Tax Expense, GAAP to Income Tax Expense,
Non-GAAP (Unaudited)
(In thousands)
Thirteen Weeks Ended
Twenty-Six Weeks Ended
August 26, 2017
August 27, 2016
August 26, 2017
August 27, 2016
Income tax expense, GAAP
$
2,888
0.6
%
$
13,627
2.8
%
$ 7,748
0.8
%
$
19,173
2.1
%
Tax effect of:
Employee severance, retirement, and other costs
--
--
--
--
130
--
--
--
Impairment charges and store closing costs
895
0.2
70
0.1
1,726
0.3
70
--
Income tax expense, Non-GAAP
$
3,783
0.8
%
$
13,697
2.9
%
$ 9,604
1.1
%
$
19,243
2.1
%
Reconciliation of Net Income From Continuing Operations, GAAP to
Net Income From Continuing Operations, Non-GAAP (Unaudited)
(In thousands)
Thirteen Weeks Ended
Twenty-Six Weeks Ended
August 26, 2017
August 27, 2016
August 26, 2017
August 27, 2016
Net income from continuing operations, GAAP
$
3,347
0.7
%
$
23,357
4.8
%
$ 11,344
1.3
%
$
33,445
3.7
%
Employee severance, retirement, and other costs, net of income taxes
--
--
--
--
208
--
--
--
Impairment charges and store closing costs, net of income taxes
1,440
0.3
112
--
2,767
0.3
112
--
Net income from continuing operations, Non-GAAP
$
4,787
1.0
%
$
23,469
4.8
%
$ 14,319
1.6
%
$
33,557
3.7
%
Reconciliation of Diluted Earnings Per Share From Continuing
Operations, GAAP to
Diluted Earnings Per Share From Continuing Operations, Non-GAAP
(Unaudited)
Thirteen Weeks Ended
Twenty-Six Weeks Ended
August 26,
August 27,
August 26,
August 27,
2017
2016
2017
2016
Diluted earnings per share from continuing operations, GAAP
$
0.08
$
0.56
$
0.28
$
0.79
Employee severance, retirement, and other costs, net of income taxes
--
--
--
--
Impairment charges and store closing costs, net of income taxes
0.04
--
0.07
--
Diluted earnings per share from continuing operations, Non-GAAP
$
0.12
$
0.56
$
0.35
$
0.79

Note: See Disclosure Regarding Non-GAAP Measures above.

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SOURCE: The Finish Line, Inc."> <Property FormalName="PrimaryTwitterHandle" Value="@FinishLineNews

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