The Finish Line, Inc. reported sales increased 8.9% in its fourth quarter ended Feb 27, to $374.5 million from $344.1 million a year ago. Comps increased 10.0% compared to a 2.3% increase a year ago. For the period, the company reported income from continuing operations of $30.8 million, or 56 cents a share compared to $19.7 million or 36 cents, a year ago.
Fiscal fourth quarter 2010 results included $2.6 million of pre-tax income associated with a change in the estimate for gift card forfeitures (which is included in net sales but not in the comparable store net sales), as well as a $6.8 million pre-tax, non-cash charge related to store asset impairments. Prior year fourth quarter results included a pre-tax, non-cash charge of $6.1 million for store asset impairments and pre-tax income of $2.1 million related to the terminated merger. Excluding these items, non-GAAP income from continuing operations for the current period was $33.3 million or $0.61 per diluted share compared to $22.1 million or $0.41 per diluted share for the same period a year ago, representing a 48.8% earnings per share increase. A reconciliation of these GAAP to non-GAAP financial measures is found in the tables at the end of this news release.
Consolidated merchandise inventories decreased 20.3% to $190.9 million as of February 27, 2010 compared to $239.4 million a year ago. Finish Line inventory declined 18.2% overall and 14.7% on a per-square-foot basis.
At year-end, the company had no interest-bearing debt and $234.5 million in cash and cash equivalents, up from $115.9 million at the end of the fourth quarter a year ago. The company repurchased 1.4 million shares of its outstanding common stock in the fourth quarter totaling $15.9 million.
Full Fiscal Year 2010 Results
For the 52 weeks ended February 27, 2010, net sales declined 1.9% to $1.17 billion compared to $1.19 billion last year. For the fiscal year, comparable store net sales decreased 0.5% compared to a 0.3% increase last year.
For fiscal 2010, the company reported income from continuing operations of $50.8 million or $0.92 per diluted share compared to income from continuing operations of $30.4 million or $0.55 per diluted share for the same period a year ago, a 67.3% earnings per share increase. Fiscal 2010 full year results included the $2.6 million of pre-tax income for gift card forfeitures, the $6.8 million pre-tax, non-cash store asset impairment charge and the previously announced third quarter one-time tax benefit of $6.5 million related to the terminated merger and related litigation. Prior year results included a pre-tax non-cash charge of $6.1 million for store asset impairments and pre-tax income of $2.0 million related to the terminated merger. Excluding these items, fiscal 2010 non-GAAP income from continuing operations for the current period was $46.8 million or $0.85 per diluted share compared to $32.9 million or $0.60 per diluted share for the same period a year ago, representing a 41.7% earnings per share increase. A reconciliation of these GAAP to non-GAAP financial measures is found in the tables at the end of this news release.
“Im proud of the excellent work our team did to achieve improved results in virtually all facets of our business,” said Finish Line Chief Executive Officer Glenn Lyon. “We successfully executed our strategy to drive increased sales and margin improvement while strategically managing inventory and controlling costs. Were pleased that customers continue to respond to our premium positioning as well as our cross-channel strategy, which is always evolving to stay in-step with the lifestyles of our core customers. It is our view that shoppers will likely remain cautious, yet we are encouraged by our results and will stay on-strategy as we continue to focus on delivering value to our shareholders.”
March Sales Update
Comparable store net sales on a month-to-date basis for the period of February 28 through March 21 increased 15.5% compared to a 1.2% decline for the same period one year ago.
The Finish Line, Inc.
Consolidated Statements of Operations
(In thousands, except per share and store data)
Thirteen Thirteen Fifty-Two Fifty-Two
Weeks Ended Weeks Ended Weeks Ended Weeks Ended
February 27, February 28, February 27, February 28,
2010 2009 2010 2009
---- ---- ---- ----
(Unaudited) (Unaudited) (Unaudited)
Net sales $374,530 $344,067 $1,172,415 $1,194,657
Cost of sales
(including
occupancy costs) 238,326 229,855 793,556 828,139
------- ------- ------- -------
Gross profit 136,204 114,212 378,859 366,518
Selling, general and
administrative
expenses 78,559 77,778 297,323 312,011
Store closing costs 560 242 2,707 492
Terminated merger-
related income, net - (2,075) - (1,969)
Impairment charges 6,771 6,118 6,771 6,118
----- ----- ----- -----
Operating income 50,314 32,149 72,058 49,866
Interest income, net 45 127 322 814
-- --- --- ---
Income from continuing
operations before
income taxes 50,359 32,276 72,380 50,680
Income tax expense 19,564 12,624 21,547 20,278
------ ------ ------ ------
Income from continuing
operations 30,795 19,652 50,833 30,402
Loss from discontinued
operations, net of
income taxes (234) (21,013) (15,161) (26,644)
---- ------- ------- -------
Net income (loss) $30,561 $(1,361) $35,672 $3,758
======= ======= ======= ======
Income (loss) per
diluted share:
Income from
continuing
operations $0.56 $0.36 $0.92 $0.55
Loss from
discontinued
operations (0.01) (0.39) (0.28) (0.48)
----- ----- ----- -----
Net income (loss) $0.55 $(0.03) $0.64 $0.07
===== ====== ===== =====
Diluted weighted
average shares
outstanding 54,541 54,125 54,597 54,108
====== ====== ====== ======
Dividends declared
per share $0.04 $0.03 $0.13 $0.09
===== ===== ===== =====
Store activity for the
period (Finish Line
only):
Beginning of period 681 699 689 697
Opened - - 5 9
Closed (15) (10) (28) (17)
--- --- --- ---
End of period 666 689 666 689
=== === === ===
Square feet at
end of period 3,590,780 3,746,413
Average square feet
per store 5,392 5,437
Thirteen Weeks Ended Fifty-Two Weeks Ended
-------------------- ---------------------
February 27, February 28, February 27, February 28,
2010 2009 2010 2009
---- ---- ---- ----
Net sales 100.0% 100.0% 100.0% 100.0%
Cost of sales
(including
occupancy costs) 63.6 66.8 67.7 69.3
---- ---- ---- ----
Gross profit 36.4 33.2 32.3 30.7
Selling, general and
administrative
expenses 21.0 22.6 25.4 26.1
Store closing costs 0.2 0.1 0.2 0.1
Terminated merger-
related income, net - (0.6) - (0.2)
Impairment charges 1.8 1.8 0.6 0.5
--- --- --- ---
Operating income 13.4 9.3 6.1 4.2
Interest income, net - - - -
--- --- --- ---
Income from continuing
operations before
income taxes 13.4 9.3 6.1 4.2
Income tax expense 5.2 3.6 1.8 1.7
--- --- --- ---
Income from continuing
operations 8.2 5.7 4.3 2.5
Loss from discontinued
operations, net of
income taxes - (6.1) (1.3) (2.2)
---- ---- ---- ----
Net income (loss) 8.2% (0.4)% 3.0% 0.3%
==== ===== ==== ====
