The Finish Line, Inc. saw net sales increase 10% to $399.2 million for the fourth quarter compared to $361.4 million during the same period last year. Comparable store net sales were flat for the quarter after an 8% increase last year.
Net income for Q4 was $28.1 million or 58 cents per diluted share versus $28.2 million or 57 cents per diluted share for Q4 LY. Included in Q4 is a pre-tax charge of $2.5 million (3 cents per diluted share) for the impairment of assets of twelve underperforming Finish Line stores. Also, the company's effective tax rate was adjusted in Q4 resulting in a year-to-date effective tax rate of 38.9%. The increase in the effective rate resulted from an increase in the company's expected state income taxes. As a result, the company's effective tax rate for Q4 was 40.4% as compared to 37.5% for Q4 LY. This change in effective tax rate resulted in additional tax expense in Q4 of $1.4 million (2 cents per diluted share). Diluted weighted average shares outstanding were 48,704,000 for the thirteen weeks ended February 25, 2006, versus 49,601,000 shares outstanding for the thirteen weeks ended February 26, 2005.
During a conference call with analysts and the media, Finish Line management reduced fiscal 2007 guidance by two cents to $1.33 to $1.37 per share. First quarter guidance was also reduced due to the change in the launch date of the Nike Air Jordan Retro product, losses expected in the new Paiva concept shops, and the Man Alive integration. Q1 revenue is now expected to be $312 million versus the previously expected $323 million with comps down in the 1% to 3% range versus the previously expected 1% to 3% comp sales gains. Q1 EPS is expected to be 18 cents to 20 cents compared to previously expected 23 cents to 25 cents.
FISCAL YEAR RESULTS:
Net sales increased 12% to $1.306 billion for the fifty- two weeks ended February 25, 2006 compared to $1.167 billion for the fifty-two weeks ended February 26, 2005. Comparable store net sales increased 1% for Fiscal 2006 on top of a 9% increase for Fiscal 2005.
Net income for Fiscal 2006 was $60.5 million or $1.23 per diluted share versus $61.3 million or $1.24 per diluted share for Fiscal 2005. The income tax charge outlined above for Q4 had the effect of increasing the effective tax rate for the year to 38.9% as compared to 37.5% for Fiscal 2005. Diluted weighted average shares outstanding were 49,381,000 for Fiscal 2006, versus 49,377,000 shares outstanding for Fiscal 2005.
Alan H. Cohen, Chief Executive Officer of The Finish Line, Inc. stated, “Fiscal 2006 was a year of investment for Finish Line as we integrated and began to expand the Man Alive chain and prepared for the launch of our new women's concept Paiva in April of 2006. The rollout of these two concepts along with continued expansion of the Finish Line brand is positioning the Company for sustained long-term growth. The Company remains financially strong with over $96 million in cash and marketable securities with no interest-bearing debt. This positions the Company to aggressively expand with 100 new stores planned between the three concepts in Fiscal 07.”
The company's Board of Directors has established July 20, 2006 as the 2006 Annual Meeting date and May 26, 2006 as the record date for such Annual Meeting.
INVENTORY AND STORE INFORMATION:
Merchandise inventories on a consolidated basis were $268.6 million at February 25, 2006. Finish Line store merchandise inventories were $260.6 million at fiscal year end compared to $237.5 million at February 26, 2005. On a per square foot basis Finish Line store merchandise inventories at fiscal year end increased approximately 1% compared to one year ago.
Finish Line operated 657 stores at February 25, 2006, an increase of 10% over the 598 stores operated one year ago. For the year, Finish Line opened 66 new stores, remodeled 24 existing stores and closed 7 stores with retail square footage increasing 9% to 3,706,000 at February 25, 2006 versus 3,414,000 at February 26, 2005.
The company opened 14 Man Alive stores during the year and as of February 25, 2006, Man Alive operated 51 stores totaling 159,000 square feet compared to 37 stores totaling 105,000 square feet one year ago.
The Finish Line, Inc.
Consolidated Statements of Income (Unaudited)
(In thousands, except per share and store data)
Thirteen Weeks Ended Fifty-two Weeks Ended
February 25, February 26, February 25, February 26,
2006 2005 2006 2005
------------ ------------ ------------ ------------
Net Sales $399,225 $361,386 $1,306,045 $1,166,767
Cost of Sales
(including
occupancy expenses) 265,150 242,046 892,624 798,033
------------ ------------ ------------ ------------
Gross profit 134,075 119,340 413,421 368,734
Selling, general, and
administrative
expenses 87,622 74,586 316,416 271,787
Interest income - net 602 363 2,008 1,076
------------ ------------ ------------ ------------
Income before income
taxes 47,055 45,117 99,013 98,023
Income taxes 18,995 16,920 38,480 36,760
------------ ------------ ------------ ------------
Net income $28,060 $28,197 $60,533 $61,263
============ ============ ============ ============
Diluted weighted
average
shares outstanding 48,704 49,601 49,381 49,377
============ ============ ============ ============
Diluted net income per
share $0.58 $0.57 $1.23 $1.24
============ ============ ============ ============
Dividends declared per
share $0.025 $0.025 $0.100 $0.075
============ ============ ============ ============
Number of stores open
at end of period:
Finish Line 657 598
Man Alive 51 37
