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Finish Line Reports First Quarter Fiscal Year 2014 Results

INDIANAPOLIS--(BUSINESS WIRE)--Jun. 28, 2013-- The Finish Line, Inc. (NASDAQ: FINL) today reported results for the 13-week period ended June 1, 2013.

For the thirteen weeks ended June 1, 2013:

  • Consolidated net sales were $351.1 million, an increase of 10% over the prior year period.
  • Finish Line comparable store sales increased 2.4%.
  • On a GAAP basis, diluted earnings per share were $0.10.
  • Non-GAAP diluted earnings per share, which excludes the impact of start up costs related to the launch of Macy’s business, were $0.20.

“We are pleased with the start to Fiscal 2014 as improving trends in our Finish Line running business combined with continued strength in basketball and disciplined expense management drove our results,” said Chairman and Chief Executive Officer, Glenn Lyon. “Strategically, the quarter was marked by significant progress on our key growth initiatives including the well-received launch of our Macy’s business in stores and online and the expansion of the Running Specialty Group footprint with the acquisition of some very productive doors. We have clear vision and sound strategies in place to transform our Company into a premier, multi-divisional, omni-channel retailer and drive increased value for our shareholders,” Lyon added.

Balance Sheet

As of June 1, 2013, consolidated merchandise inventories increased 23.7% to $292.6 million compared to $236.5 million as of June 2, 2012. The increase resulted primarily from the start-up of Macy’s business. For Finish Line, merchandise inventories increased 2.6%.

The company repurchased 366,000 shares of its common stock in the first quarter, totaling $6.8 million. The company has 4.6 million shares remaining on its current Board authorized repurchase plan.

As of June 1, 2013, the company had no interest-bearing debt and $195.9 million in cash and cash equivalents, compared to $262.0 million a year ago.

Outlook

For the fiscal year ending March 1, 2014, the Company still expects Finish Line comparable store sales to be up slightly and earnings per share to increase mid-single digit percent over fiscal year 2013 Non-GAAP diluted earnings per share of $1.47.

Q1 Fiscal 2014 Conference Call Today, June 28, 2013 at 8:30 a.m.

The company will host a conference call for investors today, June 28, 2013, 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 #92717947. 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 #92717947. This recording will be made available through Friday, July 5, 2013. 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 gross profit, selling, general and administrative expenses, operating income, net income attributable to The Finish Line, Inc., and diluted earnings per share attributable to The Finish Line, Inc. shareholders, 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 of athletic shoes, apparel and accessories. Headquartered in Indianapolis, Finish Line has 652 stores in malls across the U.S., manages the athletic footwear inventory in 660 Macy’s stores, and employs 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 www.macys.com. 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/FinishLine.

Finish Line also operates, through a venture with Gart Capital Partners, the Running Specialty Group, including 38 specialty running shops in 11 states and the District of Columbia under The Running Company, Boulder Running Company, Blue Mile, Run On! and Road Runner banners. More information is available 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 “believe,” “expect,” “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 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 (Unaudited)

 

(In thousands, except per share and store/shop data)

 
Thirteen Weeks Ended
June 1, June 2,
2013 2012
 
 
Net sales $ 351,054 $ 319,049
Cost of sales (including occupancy costs)   244,059     214,390  
Gross profit 106,995 104,659
 
Selling, general and administrative expenses 99,356 84,846
Store closing costs   186     95  
Operating income 7,453 19,718
 
Interest income, net   15     71  
Income before income taxes 7,468 19,789
 
Income tax expense   2,953     7,708  
Net income 4,515 12,081
Net loss attributable to redeemable noncontrolling interest   561     197  
Net income attributable to The Finish Line, Inc. $ 5,076   $ 12,278  
 
Diluted earnings per share attributable to The Finish Line, Inc. shareholders $ 0.10   $ 0.24  
 
Diluted weighted average shares   48,732     51,403  
 
Dividends declared per share $ 0.07   $ 0.06  
 
Finish Line store activity for the period:
Beginning of period 645 637
Opened 10 9
Closed   (4 )   (6 )
End of period   651     640  
Square feet at end of period 3,531,314 3,457,170
Average square feet per store 5,424 5,402
 
Branded shops within department stores activity for the period:
Beginning of period 3 -
Opened 41 -
Closed   -     -  
End of period   44     -  
Square feet at end of period 41,995 -
Average square feet per shop 954 -
 
Running Company store activity for the period:
Beginning of period 27 19

Acquired

9 -
Opened 2 -
Closed   -     -  
End of period   38     19  
Square feet at end of period 117,614 57,302
Average square feet per store 3,095 3,016
 
 
 
Thirteen Weeks Ended
June 1, June 2,
2013 2012
Net sales 100.0 % 100.0 %
Cost of sales (including occupancy costs)   69.5     67.2  
Gross profit 30.5 32.8
 
Selling, general and administrative expenses 28.3 26.6
Store closing costs   0.1     -  
Operating income 2.1 6.2
 
Interest income, net   -     -  
Income before income taxes 2.1 6.2
 
Income tax expense   0.8     2.4  
 
Net income 1.3 3.8
Net loss attributable to redeemable noncontrolling interest   0.1     0.1  
Net income attributable to The Finish Line, Inc.   1.4   %   3.9   %
 
 
 
Condensed Consolidated Balance Sheets
 
June 1, June 2, March 2,
2013 2012 2013
(Unaudited) (Unaudited)
ASSETS
Cash and cash equivalents $ 195,906 $ 261,958 $

226,982

 

Merchandise inventories, net 292,551 236,545 243,770
Other current assets 19,574 24,130 20,942
Property and equipment, net 183,593 137,749 180,601
Goodwill 21,544 8,503 13,888
Other assets   22,070     23,165     20,239  
Total assets $ 735,238   $ 692,050   $ 706,422  
 
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities $ 162,662 $ 132,402 $ 134,037
Deferred credits from landlords 27,618 27,906 27,215
Other long-term liabilities 17,441 15,827 16,638
Redeemable noncontrolling interest 3,097 5,795 3,669
Shareholders' equity   524,420     510,120     524,863  
Total liabilities and shareholders' equity $ 735,238   $ 692,050   $ 706,422  
       
 
The Finish Line, Inc.
Reconciliation of Gross Profit, GAAP to Gross Profit, Non-GAAP (unaudited)
(In thousands)
 
Thirteen Weeks Ended
June 1, 2013 June 2, 2012
 
 
Gross profit, GAAP $ 106,995 30.5 % $ 104,659 32.8 %
Start up costs   5,758   1.6     - -  
Gross profit, Non-GAAP $ 112,753   32.1 % $ 104,659 32.8 %
 
 
 
Reconciliation of Selling, General and Administrative Expenses, GAAP to
Selling, General and Administrative Expenses, Non-GAAP (unaudited)
(In thousands)
 
Thirteen Weeks Ended
June 1, 2013 June 2, 2012
 
 
Selling, general and administrative expenses, GAAP $ 99,356 28.3 % $ 84,846 26.6 %
Start up costs   (2,202 ) (0.6 )   - -  
Selling, general and administrative expenses, Non-GAAP $ 97,154   27.7 % $ 84,846 26.6 %
 
 
 
 
Reconciliation of Operating Income, GAAP to Operating Income, Non-GAAP (unaudited)
(In thousands)
 
Thirteen Weeks Ended
June 1, 2013 June 2, 2012
 
 
Operating income, GAAP $ 7,453 2.1 % $ 19,718 6.2 %
Start up costs   7,960   2.3     - -  
Operating income, Non-GAAP $ 15,413   4.4 % $ 19,718 6.2 %
 
 
 
 
Reconciliation of Net Income Attributable to The Finish Line, Inc., GAAP to
Net Income Attributable to The Finish Line, Inc., Non-GAAP (unaudited)
(In thousands)
 
 

Thirteen Weeks Ended

June 1, 2013 June 2, 2012
 
 
Net income attributable to The Finish Line, Inc., GAAP $ 5,076 1.4 % $ 12,278 3.9 %
Start up costs 7,960 2.3 - -
Tax effect of start up costs   (3,109 ) (0.9 )   - -  
Net income attributable to The Finish Line, Inc., Non-GAAP $ 9,927   2.8 % $ 12,278 3.9 %
 
 
 
 
Reconciliation of Diluted Earnings Per Share Attributable to The Finish Line, Inc. Shareholders, GAAP to
Diluted Earnings Per Share Attributable to The Finish Line, Inc. Shareholders, Non-GAAP (unaudited)
 
Thirteen Weeks Ended
 
June 1, 2013 June 2, 2012
 
Diluted earnings per share attributable to The Finish Line, Inc. shareholders, GAAP $ 0.10 $ 0.24
Start up costs, net of income taxes   0.10   -  
Diluted earnings per share attributable to The Finish Line, Inc. shareholders, Non-GAAP $ 0.20   $ 0.24  
 

Note: See Non-GAAP Financial Measures Disclosure Above

Source: The Finish Line, Inc.

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

"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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