The Finish Line reported earnings tumbled 87.1 percent in its second quarter ended August 26 to $2.8 million, or 8 cents a share, as sales declined 3.3 percent. Results were in line with an update provided on August 28.
On August 28, Finish Line said it second-quarter earnings would fall well below analyst estimates while slashing its guidance for the year. The company on Friday maintained its updated guidance for the year.
For the thirteen weeks ended August 26, 2017:
• Consolidated net sales were $469.4 million, a decrease of 3.3 percent over the prior year period.
• Finish Line comparable store sales decreased 4.5 percent.
• Finish Line Macy’s sales increased 5.6 percent.
• 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.
On August 28, Finish Line said it expect earnings per share in the range of 8 to 12 cents a share. Wall Street on average had expected earnings of 38 cents a share.
“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 percent 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 percent to 5 percent versus its previous guidance for an increase in the low-single digit range. As updated on August 28, 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 percent to 5 percent 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 percent to 5 percent 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.
Photo courtesy Finish Line
