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Finish Line Reports Fourth Quarter and Full Fiscal Year 2012 Results

Q4 comp store sales increased 10.8%; Q4 Non-GAAP EPS up 24.6% to $0.81

INDIANAPOLIS--(BUSINESS WIRE)--Mar. 30, 2012-- The Finish Line, Inc. (NASDAQ: FINL) today reported results for the fourth quarter and fiscal year, representing the 14-week and 53-week periods ended March 3, 2012.

For the fourth quarter ended March 3, 2012:

  • Consolidated net sales, inclusive of Finish Line and The Running Company, increased 18.6% to $456.3 million.
  • Finish Line comparable store sales increased 10.8%.
  • Digital sales, which are included in the comparable store sales results, were up 38.3%.
  • Non-GAAP diluted earnings per share, which excludes the impact of impairment charges, increased 24.6% to $0.81.
  • On a GAAP basis, diluted earnings per share increased 27.0% to $0.80.

For the fiscal year ended March 3, 2012:

  • Consolidated net sales, inclusive of Finish Line and The Running Company, increased 11.4% to $1.37 billion.
  • Finish Line comparable store sales increased 9.2%.
  • Digital sales, which are included in the comparable store sales result, were up 49.5%.
  • Non-GAAP diluted earnings per share, which excludes the impact of impairment charges, increased 25.0% to $1.60.
  • On a GAAP basis, diluted earnings per share increased 26.2% to $1.59.

The 53rd week of fiscal 2012 contributed $30.5 million of consolidated net sales and approximately $0.07 per diluted share to the fourth quarter and fiscal year.

“We ended the fiscal year with another strong quarter and positive momentum across our business,” said Chairman and Chief Executive Officer Glenn Lyon. “Our fourth quarter and full year results are a positive indication that the sales and merchandising strategies we are deploying across our multiple channels are resonating with consumers and influencing how they shop. As the retail landscape continues to rapidly evolve, we are committed to further distinguishing the Finish Line brand from the competition and building a sustainable multi-division, omni-channel business for the future. In the near-term, this will involve additional investments in technology, personnel, marketing and store upgrades that we believe will drive increased productivity and greater efficiency through our supply chain and lead to greater earnings power in the years ahead. We are confident we have the right strategic plan in place and we look forward to building on our consistent track record of creating value for our shareholders over the long term.”

Balance Sheet

As of March 3, 2012, consolidated merchandise inventories increased 13.9% to $220.4 million compared to $193.5 million as of February 26, 2011. For Finish Line, merchandise inventories increased by 11.9%.

The company repurchased 300,000 shares of its outstanding common stock in the fourth quarter, totaling $5.9 million. For the full year, Finish Line repurchased 2.9 million shares totaling $60.4 million. The company has 3.8 million shares remaining on its 5-million-share authorization.

At fiscal year-end, the company had no interest-bearing debt and $307.5 million in cash and cash equivalents, compared to $299.3 million at the end of fiscal 2011.

March Sales Update

Finish Line comparable store sales on a month-to-date basis for the period of March 4, 2012 through March 25, 2012 increased 10.0% on top of an 8.0% increase for the same period a year ago.

Outlook

The company is introducing guidance for the fiscal year ending March 2, 2013. Based on strategic investments in technology, stores and digital capabilities required to execute its omni-channel strategy, management expects to generate earnings per share growth in the mid-single digits in fiscal 2013 with comparable store sales expected in the mid-single digits as well. As the investments begin to drive returns, management expects earnings per share growth to accelerate into the low- to mid-teens beginning in fiscal 2014.

For the first quarter, the company expects comparable store sales to be up in the mid-single digit range. Based on the planned level of strategic investments, combined with lower product margins due to a shift in the promotional calendar, and occupancy cost deleverage, the company expects first quarter earnings per share to be down approximately 30%.

Q4 Fiscal 2012 Conference Call Today, March 30, 2012 at 8:30 a.m.

The company will host a conference call for investors today, March 30, 2012, 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 #59815545. 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 #59815545. This recording will be made available through Sunday, April 1, 2012. The replay will also be accessible online at www.finishline.com.

Annual Meeting July 19, 2012

The company’s Board of Directors has established July 19, 2012 as the date of the 2012 annual meeting of shareholders, with May 18, 2012 as the record date for this meeting.

About Finish Line

The Finish Line, Inc. is a premium retailer of athletic shoes, apparel and accessories. Headquartered in Indianapolis, the company has two retail divisions -- Finish Line, which operates 635 Finish Line brand stores in malls across the U.S., and The Running Specialty Group, which operates 19 specialty running shops in seven states and the District of Columbia under The Running Company banner. Finish Line stores employ more than 11,000 sneakerologists who help customers every day connect with their sport, their life and their style. Online shopping is available at www.finishline.com and mobile shopping is available at m.finishline.com. Follow Finish Line on Twitter at Twitter.com/FinishLine and “like” Finish Line on Facebook at Facebook.com/FinishLineUSA. The Running Company stores carry a deep assortment of performance running shoes, apparel and accessories. Their trained experts advise everyone from beginner to advanced runners and provide free gait analysis to ensure the proper fit for each customer. The Running Company is tightly connected to its communities, hosting regular neighborhood group runs and sponsoring local races. More information on The Running Company can be found at www.therunningcompany.net.

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, but not limited to, “believe,” “expect,” “anticipate,” “intend,” “plan,” “foresee,” “build”, “may,” “should,” “will,” “estimates,” “indication”, “potential,” “optimistic,” “confidence,” “momentum”, “continue,” “lead to”, “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 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 macro-economic 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); 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
(In thousands, except per share and store data)
 
 
 
Fourteen Thirteen Fifty-Three Fifty-Two
Weeks Ended Weeks Ended Weeks Ended Weeks Ended
March 3, February 26, March 3, February 26,
2012 2011 2012 2011
(Unaudited) (Unaudited) (Unaudited)
 
Net sales $ 456,260 $ 384,599 $ 1,369,259 $ 1,229,002
Cost of sales (including occupancy costs)   286,737     246,288     889,130     815,073  
Gross profit 169,523 138,311 480,129 413,929
 
Selling, general and administrative expenses 101,811 82,883 343,629 302,718
Store closing costs 226 263 1,191 350
Impairment charges   974     1,228     974     1,228  
Operating income 66,512 53,937 134,335 109,633
 
Interest income, net   57     138     447     508  
Income from continuing operations before income taxes 66,569 54,075 134,782 110,141
 
Income tax expense   24,649     19,818     49,978     41,277  
Income from continuing operations 41,920 34,257 84,804 68,864
 
Loss from discontinued operations, net of income taxes   -     (5 )   -     (30 )
Net income $ 41,920   $ 34,252   $ 84,804   $ 68,834  
 
Income per diluted share:
Income from continuing operations $ 0.80 $ 0.63 $ 1.59 $ 1.26
Loss from discontinued operations   -     -     -     -  
Net income $ 0.80   $ 0.63   $ 1.59   $ 1.26  
 
Diluted weighted average shares outstanding   52,041     53,467     52,818     53,775  
 
Dividends declared per share $ 0.06   $ 0.05   $ 0.21   $ 0.17  
 
 
Finish Line Store activity for the period:
Beginning of period 648 669 664 666
Opened - - 4 11
Closed   (11 )   (5 )   (31 )   (13 )
End of period   637     664     637     664  
Square feet at end of period 3,440,788 3,564,277
Average square feet per store 5,402 5,368
 
Running Company Store activity for the period:
Beginning of period 19 - - -
Acquired - - 18 -
Opened - - 1 -
Closed   -     -     -     -  
End of period   19     -     19     -  
Square feet at end of period 57,302
Average square feet per store 3,016
 
 
 
Fourteen Thirteen Fifty-Three Fifty-Two
Weeks Ended Weeks Ended Weeks Ended Weeks Ended
March 3, February 26, March 3, February 26,
2012 2011 2012 2011
Net sales 100.0

%

 

100.0

%

 

100.0

%

 

100.0

%

Cost of sales (including occupancy costs)   62.8     64.0     64.9     66.3  
Gross profit 37.2 36.0 35.1 33.7
 
Selling, general and administrative expenses 22.3 21.6 25.1 24.6
Store closing costs 0.1 0.1 0.1 -
Impairment charges   0.2     0.3     0.1     0.1  
Operating income 14.6 14.0 9.8 9.0
 
Interest income, net   -     -     -     -  
Income from continuing operations before income taxes 14.6 14.0 9.8 9.0
 
Income tax expense   5.4     5.1     3.6     3.4  
Income from continuing operations 9.2 8.9 6.2 5.6
 
Loss from discontinued operations, net of income taxes   -     -     -     -  
Net income   9.2

%

 

  8.9

%

 

  6.2

%

 

  5.6

%

 
     

 

 

 

Condensed Consolidated Balance Sheet

 
March 3,

February 26,

2012 2011
(Unaudited)
ASSETS
Cash and cash equivalents $ 307,494 $ 299,323
Merchandise inventories, net 220,405 193,505
Other current assets 24,849 16,856
Property and equipment, net 126,997 126,510
Other assets   31,751   28,651
Total assets $ 711,496 $ 664,845
 
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities $ 138,683 $ 126,420
Deferred credits from landlords 30,080 34,653
Other long-term liabilities 13,196 13,527
Shareholders' equity   529,537   490,245
Total liabilities and shareholders' equity $ 711,496 $ 664,845
 
             
The Finish Line, Inc.
Reconciliation of GAAP to Non-GAAP Consolidated Statements of Income (Unaudited)
Fourteen Weeks Ended March 3, 2012 and Thirteen Weeks Ended February 26, 2011
(In thousands, except per share data)
 

Fourteen Weeks Ended

Thirteen Weeks Ended

March 3, 2012

February 26, 2011

 
GAAP Adjustments Non-GAAP GAAP Adjustments Non-GAAP
 
 
Net sales $ 456,260 $ - $ 456,260 $ 384,599 $ - $ 384,599
Cost of sales (including occupancy costs)   286,737   -     286,737   246,288     -     246,288  
Gross profit 169,523 - 169,523 138,311 - 138,311
 
Selling, general and administrative expenses 101,811 - 101,811 82,883 - 82,883
Store closing costs 226 - 226 263 - 263
Impairment charges (1)   974   (974 )   -   1,228     (1,228 )   -  
Operating income 66,512 974 67,486 53,937 1,228 55,165
 
Interest income, net   57   -     57   138     -     138  
Income from continuing operations before income taxes 66,569 974 67,543 54,075 1,228 55,303
 
Income tax expense (2)   24,649   371     25,020   19,818     463     20,281  
Income from continuing operations 41,920 603 42,523 34,257 765 35,022
 
Loss from discontinued operations, net of income taxes   -   -     -   (5 )   -     (5 )
Net income $ 41,920 $ 603   $ 42,523 $ 34,252   $ 765   $ 35,017  
 
Income per diluted share:
Income from continuing operations $ 0.80 $ 0.01 $ 0.81 $ 0.63 $ 0.02 $ 0.65
Loss from discontinued operations   -   -     -   -     -     -  
Net income $ 0.80 $ 0.01   $ 0.81 $ 0.63   $ 0.02   $ 0.65  
 
Diluted weighted average shares outstanding   52,041   -     52,041   53,467     -     53,467  
 
 

Fourteen Weeks Ended

Thirteen Weeks Ended

March 3, 2012

February 26, 2011

 
GAAP Adjustments Non-GAAP GAAP Adjustments Non-GAAP
Net sales 100.0 % - % 100.0 % 100.0 % - % 100.0

%

Cost of sales (including occupancy costs)   62.8   -     62.8   64.0     -     64.0  
Gross profit 37.2 - 37.2 36.0 - 36.0
 
Selling, general and administrative expenses 22.3 - 22.3 21.6 - 21.6
Store closing costs 0.1 - 0.1 0.1 - 0.1
Impairment charges (1)   0.2   (0.2 )   -   0.3     (0.3 )   -  
Operating income 14.6 0.2 14.8 14.0 0.3 14.3
 
Interest income, net   -   -     -   -     -     -  
Income from continuing operations before income taxes 14.6 0.2 14.8 14.0 0.3 14.3
 
Income tax expense (2)   5.4   0.1     5.5   5.1     0.1     5.2  
Income from continuing operations 9.2 0.1 9.3 8.9 0.2 9.1
 
Loss from discontinued operations, net of income taxes   -   -     -   -     -     -  
Net income   9.2 %   0.1   %   9.3 %   8.9   %   0.2   %   9.1   %
 
 
 
Footnotes to explain adjustments
 
(1) Fiscal 2012 and 2011 amounts reflect charges to write down long-lived assets of the Company.
 

(2) Fiscal 2012 and 2011 amounts reflect the income tax effect of the pre-tax adjustments noted above.

 
                 
The Finish Line, Inc.
Reconciliation of GAAP to Non-GAAP Consolidated Statements of Income (Unaudited)
Fifty-Three Weeks Ended March 3, 2012 and Fifty-Two Weeks Ended February 26, 2011
(In thousands, except per share data)
 
 

Fifty-Three Weeks Ended

Fifty-Two Weeks Ended

March 3, 2012

February 26, 2011

 
GAAP Adjustments Non-GAAP GAAP Adjustments Non-GAAP
 
 
Net sales $ 1,369,259 $ - $ 1,369,259 $ 1,229,002 $ - $ 1,229,002
Cost of sales (including occupancy costs)   889,130   -     889,130   815,073     -     815,073  
Gross profit 480,129 - 480,129 413,929 - 413,929
 
Selling, general and administrative expenses 343,629 - 343,629 302,718 - 302,718
Store closing costs 1,191 - 1,191 350 - 350
Impairment charges (1)   974   (974 )   -   1,228     (1,228 )   -  
Operating income 134,335 974 135,309 109,633 1,228 110,861
 
Interest income, net   447   -     447   508     -     508  
Income from continuing operations before income taxes 134,782 974 135,756 110,141 1,228 111,369
 
Income tax expense (2)   49,978   371     50,349   41,277     463     41,740  
Income from continuing operations 84,804 603 85,407 68,864 765 69,629
 
Loss from discontinued operations, net of income taxes   -   -     -   (30 )   -     (30 )
Net income $ 84,804 $ 603   $ 85,407 $ 68,834   $ 765   $ 69,599  
 
Income per diluted share:
Income from continuing operations $ 1.59 $ 0.01 $ 1.60 $ 1.26 $ 0.02 $ 1.28
Loss from discontinued operations   -   -     -   -     -     -  
Net income $ 1.59 $ 0.01   $ 1.60 $ 1.26   $ 0.02   $ 1.28  
 
Diluted weighted average shares outstanding   52,818   -     52,818   53,775     -     53,775  
 
 

Fifty-Three Weeks Ended

Fifty-Two Weeks Ended

March 3, 2012

February 26, 2011

 
GAAP Adjustments Non-GAAP GAAP Adjustments Non-GAAP
Net sales 100.0 % - % 100.0 % 100.0

%

 

- % 100.0

%

 

Cost of sales (including occupancy costs)   64.9   -     64.9   66.3     -     66.3  
Gross profit 35.1 - 35.1 33.7 - 33.7
 
Selling, general and administrative expenses 25.1 - 25.1 24.6 - 24.6
Store closing costs 0.1 - 0.1 - - -
Impairment charges (1)   0.1   (0.1 )   -   0.1     (0.1 )   -  
Operating income 9.8 0.1 9.9 9.0 0.1 9.1
 
Interest income, net   -   -     -   -     -     -  
Income from continuing operations before income taxes 9.8 0.1 9.9 9.0 0.1 9.1
 
Income tax expense (2)   3.6   0.1     3.7   3.4     -     3.4  
Income from continuing operations 6.2 - 6.2 5.6 0.1 5.7
 
Loss from discontinued operations, net of income taxes   -   -     -   -     -     -  
Net income   6.2 %   -   %   6.2 %   5.6

%

 

  0.1   %   5.7

%

 

 
 
 
Footnotes to explain adjustments
 
(1) Fiscal 2012 and 2011 amounts reflect charges to write down long-lived assets of the Company.
 
(2) Fiscal 2012 and 2011 amounts reflect the income tax effect of the pre-tax adjustments noted above.

Source: The Finish Line, Inc.

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

"Safe Harbor" Statement under the Private Securities Litigation Reform Act of 1995: Statements in this press release regarding Finish Line's business which are not historical facts are "forward-looking statements" that involve risks and uncertainties. For a discussion of such risks and uncertainties, which could cause actual results to differ from those contained in the forward-looking statements, see "Risk Factors" in the Company's Annual Report or Form 10-K for the most recently ended fiscal year.
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