The Finish Line, Inc. reported that net income, on a GAAP basis, third quarter ended November 27, 2004 was $2.3 million, or five cents per diluted share, a 25% increase versus four cents per diluted share (as adjusted for the 2 for 1 stock split in November 2004) reported for the year-ago quarter.
In fiscal Q3 last year, FINL realized a benefit from a gain on a tornado insurance settlement of a penny per diluted share. Excluding this item, non-GAAP adjusted diluted earnings per share would have been three cents per diluted share in Q3 LY.
Net sales increased 16% to $235.3 million for Q3 compared to $202.0 million reported for Q3 LY. Comparable store net sales increased 8% for Q3 on top of an increase of 25%reported for Q3 LY.
Mr. Cohen stated, “We are pleased with our third quarter operating results. We continue to capture market share and improve operating profit as gross profit margin increased 70 basis points from Q3 LY (product margins increasing 30 basis points, occupancy costs improving 30 basis points and shrink expense improving 10 basis points). The gross profit margin improvement was partially offset by SG&A expenses increasing 50 basis points versus Q3 LY, driven by increased marketing expenditures in our continued effort to build Finish Line’s brand awareness and increased freight costs related to elevated fuel surcharges.
“Our sales for the important holiday season were very strong and exceeded plan. Comparable store sales for the five-week period ended January 1, 2005 increased 9% on top of a 22% gain for the same period last year.”
With December sales results exceeding plan, the Company announced it has increased diluted earnings per share guidance for the 4th quarter to a range of 52 cents to 54 cents from prior guidance of 50 cents to 52 cents per share.
Merchandise inventories were $263.7 million at November 27, 2004 compared to $230.0 million at November 29, 2003. On a per square foot basis, merchandise inventories at the end of Q3 increased approximately 4% compared to one year ago.
The Company operated 592 stores at November 27, 2004, an increase of 11% over the 532 stores operated one year ago. The Company has opened 65 new stores through November 27, 2004 (of the planned 71 new stores), remodeled 26 existing stores and closed 4 stores. Total retail square footage increased 10% (ten percent) to 3,389,000 at November 27, 2004 versus 3,085,000 square feet at the end of Q3 LY.
The Finish Line, Inc.
Consolidated Statements of Income (Unaudited)
(In thousands, except per share and store data)
Thirteen Thirteen Thirty-nine Thirty-nine
Weeks Ended Weeks Ended Weeks Ended Weeks Ended
November 27, November 29, November 27, November 29,
2004 2003 2004 2003
=========== =========== =========== ===========
Net sales $235,253 $202,035 $805,381 $680,629
Cost of sales (including
occupancy expenses) 170,662 147,976 559,793 479,449
=========== =========== =========== ===========
Gross profit 64,591 54,059 245,588 201,180
Selling, general, and
administrative expenses 61,520 51,960 192,337 160,588
Insurance income - tornado -- (1,228) -- (1,228)
Interest income(net) 255 143 713 473
=========== =========== =========== ===========
Income before income taxes 3,326 3,470 53,964 42,293
Income taxes 994 1,319 20,237 16,072
----------- ----------- ----------- -----------
Net income $2,332 $2,151 $33,727 $26,221
=========== =========== =========== ===========
Diluted net income per
share (1) $0.05 $0.04 $0.68 $0.55
