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Finish Line Reports Third Quarter Fiscal Year 2014 Results

Q3 comp store sales increased 7.1%; Q3 EPS of $0.05; Company Raises Full Year Outlook

INDIANAPOLIS--(BUSINESS WIRE)--Dec. 20, 2013-- The Finish Line, Inc. (NASDAQ: FINL) today reported results for the 13-weeks ended November 30, 2013.

For the thirteen weeks ended November 30, 2013:

  • Consolidated net sales were $364.5 million, an increase of 22.9% over the prior year period.
  • Finish Line comparable store sales increased 7.1%.
  • On a GAAP basis, diluted earnings per share were $0.05.
  • Non-GAAP diluted earnings per share, which excludes the impact of impairment charges, were $0.06.

“We are very pleased with the top and bottom line performance we delivered in the third quarter,” said Chairman and Chief Executive Officer, Glenn Lyon. “Our commitment to developing a premier omni-channel platform is strengthening both our customer relationships and our brand partnerships while also reinforcing our market leadership position. We are continually adapting and refining our strategies in this rapidly evolving retail landscape to ensure we meet the needs of today’s empowered consumer. Finish Line is on the right strategic course and is well-positioned to deliver on our near and longer term goals.”

Balance Sheet

As of November 30, 2013, consolidated merchandise inventories increased 19.5% to $360.5 million compared to $301.7 million as of December 1, 2012. The increase resulted primarily from the start-up of Macy’s business. For Finish Line, merchandise inventories increased 0.6%.

The company repurchased 200,000 shares of its common stock in the third quarter, totaling $5.2 million. The company has 4.1 million shares remaining on its current Board authorized repurchase plan.

As of November 30, 2013, the company had no interest-bearing debt and $111.9 million in cash and cash equivalents, compared to $168.2 million a year ago.

Outlook

For the fiscal year ending March 1, 2014, Finish Line now expects comparable store sales to increase approximately 3%-4% compared to its previous expectation for a low single digit increase. The Company now expects Non-GAAP earnings per share to increase 9% to 12% to $1.60-$1.65 from fiscal year 2013 Non-GAAP diluted earnings per share of $1.47. This compares to its previous expectation for a mid-single digit increase.

Q3 Fiscal 2014 Conference Call Today, December 20, 2013 at 8:30 a.m.

The Company will host a conference call for investors today, December 20, 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 #19771592. 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 #19771592. This recording will be made available through Monday, January 20, 2014. 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 658 stores in malls across the U.S., manages the athletic footwear inventory in 660 Macy’s stores including 198 branded or staffed shops, and employs more than 13,000 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 the Running Specialty Group through a venture with Gart Capital Partners. This includes 47 specialty running shops in 12 states and the District of Columbia under The Running Company, Run On!, Blue Mile, Boulder Running Company and Roncker’s Running Spot banners. More information, including the particular states in which stores are located, 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 Operations (Unaudited)
(In thousands, except per share and store/shop data)
 
 
Thirteen Weeks Ended Thirty-Nine Weeks Ended
November 30, December 1, November 30, December 1,
2013 2012 2013 2012
 
Net sales $ 364,455 $ 296,623 $ 1,151,538 $ 1,000,683
Cost of sales (including occupancy costs)   256,607   206,833   790,358   671,684
Gross profit 107,848 89,790 361,180 328,999
 
Selling, general and administrative expenses 104,092 91,447 306,903 271,004
Store closing costs 166 1 369 421
Impairment charges   841   -   841   -
Operating income (loss) 2,749 (1,658) 53,067 57,574
 
Interest income, net   3   38   27   167
Income (loss) before income taxes 2,752 (1,620) 53,094 57,741
 
Income tax expense (benefit)   1,161   (811)   20,796   22,033
Net income (loss) 1,591 (809) 32,298 35,708
Net loss attributable to redeemable noncontrolling interest   727   702   1,602   1,436
Net income (loss) attributable to The Finish Line, Inc. $ 2,318 $ (107) $ 33,900 $ 37,144
 
Diluted earnings per share attributable to The Finish Line, Inc. shareholders $ 0.05 $ - $ 0.69 $ 0.72
 
Diluted weighted average shares   48,709   49,949   48,733   50,977
 
Dividends declared per share $ 0.07 $ 0.06 $ 0.21 $ 0.18
 
Finish Line store activity for the period:
Beginning of period 659 638 645 637
Opened 3 14 22 27
Closed   (4)   (1)   (9)   (13)
End of period   658   651   658   651
Square feet at end of period 3,566,404 3,531,426
Average square feet per store 5,420 5,425
 
Branded shops within department stores activity for the period:
Beginning of period 133 - 3 -
Opened 48 - 178 -
Closed   -   -   -   -
End of period   181   -   181   -
Square feet at end of period 224,515 -
Average square feet per shop 1,240 -
 
Running Company store activity for the period:
Beginning of period 39 19 27 19
Acquired 4 5 13 5
Opened 4 1 7 1
Closed   -   -   -   -
End of period   47   25   47   25
Square feet at end of period 154,348 78,120
Average square feet per store 3,284 3,125
 
 
 
Thirteen Weeks Ended Thirty-Nine Weeks Ended
November 30, December 1, November 30, December 1,
2013 2012 2013 2012
Net sales 100.0 % 100.0 % 100.0 % 100.0 %
Cost of sales (including occupancy costs)   70.4   69.7   68.6   67.1
Gross profit 29.6 30.3 31.4 32.9
 
Selling, general and administrative expenses 28.6 30.8 26.7 27.1
Store closing costs - - - -
Impairment charges   0.2   -   0.1   -
Operating income (loss) 0.8 (0.5) 4.6 5.8
 
Interest income, net   -   -   -   -
Income (loss) before income taxes 0.8 (0.5) 4.6 5.8
 
Income tax expense (benefit)   0.4   (0.3)   1.8   2.2
 
Net income (loss) 0.4 (0.2) 2.8 3.6
Net loss attributable to redeemable noncontrolling interest   0.2   0.2   0.1   0.1
Net income (loss) attributable to The Finish Line, Inc.   0.6 %   0.0 %   2.9 %   3.7 %
 
 
 
 
Condensed Consolidated Balance Sheets
 
November 30, December 1, March 2,
2013 2012 2013
(Unaudited) (Unaudited)
ASSETS
Cash and cash equivalents $ 111,916 $ 168,154 $ 226,982
Merchandise inventories, net 360,463 301,654 243,770
Other current assets 49,783 30,904 20,942
Property and equipment, net 213,188 167,970 180,601
Goodwill and other intangible assets 24,585 15,313 14,438
Other assets   13,635   25,790   19,689
Total assets $ 773,570 $ 709,785 $ 706,422
 
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities $ 180,756 $ 145,609 $ 134,037
Deferred credits from landlords 28,639 28,138 27,215
Other long-term liabilities 17,465 18,463 16,638
Redeemable noncontrolling interest 2,034 4,535 3,669
Shareholders' equity   544,676   513,040   524,863
Total liabilities and shareholders' equity $ 773,570 $ 709,785 $ 706,422
 
                                   
 
 
The Finish Line, Inc.
Reconciliation of Gross Profit, GAAP to Gross Profit, Non-GAAP (unaudited)
(In thousands)
 
 
Thirteen Weeks Ended Thirty-Nine Weeks Ended

November 30,

2013

December 1,

2012

November 30,

2013

December 1,

2012

 
Gross profit, GAAP $ 107,848 29.6 % $ 89,790 30.3 % $ 361,180 31.4 % $ 328,999 32.9 %
Start up costs   - -   - -   5,758 0.5   - -
Gross profit, Non-GAAP $ 107,848 29.6 % $ 89,790 30.3 % $ 366,938 31.9 % $ 328,999 32.9 %
 
 
 
Reconciliation of Selling, General and Administrative Expenses, GAAP to
Selling, General and Administrative Expenses, Non-GAAP (unaudited)
(In thousands)
 
 
Thirteen Weeks Ended Thirty-Nine Weeks Ended

November 30,

2013

December 1,

2012

November 30,

2013

December 1,

2012

 
Selling, general and administrative expenses, GAAP $ 104,092 28.6 % $ 91,447 30.8 % $ 306,903 26.7 % $ 271,004 27.1 %
Start up costs   - -   - -   (2,202) (0.2)   - -
Selling, general and administrative expenses, Non-GAAP $ 104,092 28.6 % $ 91,447 30.8 % $ 304,701 26.5 % $ 271,004 27.1 %
 
 
 
Reconciliation of Operating Income (Loss), GAAP to Operating Income (Loss), Non-GAAP (unaudited)
(In thousands)
 
 
Thirteen Weeks Ended Thirty-Nine Weeks Ended

November 30,
2013

December 1,
2012

November 30,
2013

December 1,
2012

 
Operating income (loss), GAAP $ 2,749 0.8 % $ (1,658) (0.5) % $ 53,067 4.6 % $ 57,574 5.8 %
Impairment charges 841 0.2 - - 841 0.1 - -
Start up costs   - -   - -   7,960 0.7   - -
Operating income (loss), Non-GAAP $ 3,590 1.0 % $ (1,658) (0.5) % $ 61,868 5.4 % $ 57,574 5.8 %
 
 
 
Reconciliation of Net Income (Loss) Attributable to The Finish Line, Inc., GAAP to
Net Income (Loss) Attributable to The Finish Line, Inc., Non-GAAP (unaudited)
(In thousands)
 
 
Thirteen Weeks Ended Thirty-Nine Weeks Ended

November 30,
2013

December 1,
2012

November 30,
2013

December 1,
2012

 
Net income (loss) attributable to The Finish Line, Inc., GAAP $ 2,318 0.6 % $ (107) 0.0 % $ 33,900 2.9 % $ 37,144 3.7 %
Impairment charges 841 0.2 - - 841 0.1 - -
Start up costs - - - - 7,960 0.7 - -
Tax effect of impairment charges and start up costs   (327) (0.1)   - -   (3,436) (0.3)   - -
Net income (loss) attributable to The Finish Line, Inc., Non-GAAP $ 2,832 0.7 % $ (107) 0.0 % $ 39,265 3.4 % $ 37,144 3.7 %
 
 
 
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 Thirty-Nine Weeks Ended

November 30,
2013

December 1,
2012

November 30,
2013

December 1,
2012

 
Diluted earnings per share attributable to The Finish Line, Inc. shareholders, GAAP $ 0.05 $ - $ 0.69 $ 0.72
Impairment charges, net of income taxes 0.01 - 0.01 -
Start up costs, net of income taxes   -   -   0.10 -
Diluted earnings per share attributable to The Finish Line, Inc. shareholders, Non-GAAP $ 0.06 $ - $ 0.80 $ 0.72
 

* See Non-GAAP Financial Measures Disclosure Above

 

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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