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Finish Line Reports Second Quarter Fiscal Year 2013 Results

Q2 comp store sales increased 12.3%; Q2 EPS of $0.49; Company Raises Full Year Outlook

INDIANAPOLIS--(BUSINESS WIRE)--Sep. 28, 2012-- The Finish Line, Inc. (NASDAQ: FINL) today reported results for the 13-week and 26-week periods ended September 1, 2012.

For the thirteen weeks ended September 1, 2012:

  • Consolidated net sales, inclusive of Finish Line and The Running Company, increased 16.1% to $385.0 million.
  • Finish Line comparable store sales increased 12.3% on top of an 11.0% increase for the same period a year ago.
  • Digital comparable sales, which are included in the comparable store sales results, were up 29.6%.
  • Earnings per diluted share increased 25.6% to $0.49.

“We are very pleased with the strength of our second quarter performance,” said Chairman and Chief Executive Officer Glenn Lyon. “Our ability to achieve double digit comps in the second quarter, on top of a double digit comp increase in the prior year period illustrates our ability to further expand our leadership position in athletic footwear. Second quarter sales were driven by market share gains in running and basketball as we have been able to capitalize on recent trends in each category enabled by our strong relationships with both vendors and consumers. Importantly, we translated a 16% top-line increase into 26% earnings growth even as we make the necessary investments in order to successfully execute our omni-channel vision. We move forward with sound strategies in place that we believe will further improve our consumer mindshare, deliver consistent sales and earnings growth, and return increased value to our shareholders.”

Balance Sheet

As of September 1, 2012, consolidated merchandise inventories increased 9.0% to $250.6 million compared to $229.8 million as of August 27, 2011. For Finish Line, merchandise inventories increased by 6.3%.

As of September 1, 2012, the company had no interest-bearing debt and $254.2 million in cash and cash equivalents, compared to $289.6 million a year ago.

Outlook

Based on second quarter results, the company now expects earnings per share for the fiscal year ending March 2, 2013 to increase between 6 to 9% over the $1.53 in fiscal 2012, which excludes the $0.07 impact from the 53rd week, up from its most recent guidance of 6 to 7% growth. This guidance assumes an annual comparable store sales increase of 6 to 8%.

Q2 Fiscal 2013 Conference Call Today, September 28, 2012 at 8:30 a.m.

The company will host a conference call for investors today, September 28, 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 #29801370. 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 #29801370. This recording will be made available through Friday, October 5, 2012. The replay will also be accessible online at www.finishline.com.

About Finish Line

The Finish Line, Inc. is a premium retailer of athletic shoes, apparel and accessories. The company has two retail divisions -- Finish Line, which operates 638 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.run.com.

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 the company 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 data)
 
Thirteen Thirteen Twenty-Six Twenty-Six
Weeks Ended Weeks Ended Weeks Ended Weeks Ended
September 1, August 27, September 1, August 27,
2012 2011 2012 2011
 
Net sales $ 385,011 $ 331,514 $ 704,060 $ 630,988
Cost of sales (including occupancy costs)   250,461     215,180     464,851     411,391  
Gross profit 134,550 116,334 239,209 219,597
 
Selling, general and administrative expenses 94,711 82,076 179,557 158,751
Store closing costs   325     580     420     597  
Operating income 39,514 33,678 59,232 60,249
 
Interest income, net   58     139     129     281  
Income before income taxes 39,572 33,817 59,361 60,530
 
Income tax expense   15,136     12,897     22,844     23,194  
Net income 24,436 20,920 36,517 37,336
Net loss attributable to redeemable noncontrolling interest   537     -     734     -  
Net income attributable to The Finish Line, Inc. $ 24,973   $ 20,920   $ 37,251   $ 37,336  
 
Diluted earnings per share attributable to The Finish Line, Inc. shareholders $ 0.49   $ 0.39   $ 0.72   $ 0.69  
 
Diluted weighted average shares   50,866     53,143     51,135     53,573  
 
Dividends declared per share $ 0.06   $ 0.05   $ 0.12   $ 0.10  
 
Finish Line store activity for the period:
Beginning of period 640 657 637 664
Opened 4 - 13 -
Closed   (6 )   (10 )   (12 )   (17 )
End of period   638     647     638     647  
Square feet at end of period 3,449,041 3,487,044
Average square feet per store 5,406 5,390
 
Running Company store activity for the period:
Beginning of period 19 - 19 -
Opened - - - -
Closed   -     -     -     -  
End of period   19     -     19     -  
Square feet at end of period 60,436 -
Average square feet per store 3,181 -
 
 
 
Thirteen Weeks Ended Twenty-Six Weeks Ended
September 1, August 27, September 1, August 27,
2012 2011 2012 2011
Net sales

100.0

%

 

100.0

%

 

100.0

%

 

100.0

%

Cost of sales (including occupancy costs)   65.0     64.9     66.0     65.2  
Gross profit 35.0 35.1 34.0 34.8
 
Selling, general and administrative expenses 24.6 24.7 25.5 25.1
Store closing costs   0.1     0.2     0.1     0.1  
Operating income 10.3 10.2 8.4 9.6
 
Interest income, net   -     -     -     -  
Income before income taxes 10.3 10.2 8.4 9.6
 
Income tax expense   3.9     3.9     3.2     3.7  
 
Net income 6.4 6.3 5.2 5.9
Net loss attributable to redeemable noncontrolling interest   0.1     -     0.1     -  
Net income attributable to The Finish Line, Inc.  

6.5

%

 

 

6.3

%

 

 

5.3

%

 

 

5.9

%

 
 
 
 
Condensed Consolidated Balance Sheets
 
September 1, August 27, March 3,
2012 2011 2012
(Unaudited) (Unaudited)
ASSETS
Cash and cash equivalents $ 254,225 $ 289,625 $ 307,494
Merchandise inventories, net 250,634 229,836 220,405
Other current assets 25,742 12,830 24,849
Property and equipment, net 157,539 122,200 126,997
Other assets   33,273     31,941     31,751  
Total assets $ 721,413   $ 686,432   $ 711,496  
 
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities $ 138,814 $ 155,859 $ 138,683
Deferred credits from landlords 28,898 31,330 30,080
Other long-term liabilities 13,820 14,276 13,196
Redeemable noncontrolling interest 5,248 - -
Shareholders' equity   534,633     484,967     529,537  
Total liabilities and shareholders' equity $ 721,413   $ 686,432   $ 711,496  
 

Source: The Finish Line, Inc.

The Finish Line, Inc.
Media Contact:
Dianna Boyce, 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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