Finish Line Cuts Q1 Guidance on Launch Shifts, Weakness in Women’s Product Sales…

The Finish Line saw the shift of launch product affect their fiscal fourth quarter and will now apparently see a more painful shift in the first quarter as well. After seeing Nike move product launches from February to January, a similar issue will affect FINL in their fiscal first quarter as Nike decides to move the launch of the Retro Jordan IV from May to June, which will move sales into Finish Line’s second quarter. That issue, coupled with weaker women’s sales and difficult comparisons to the Retro Jordan XIII launch in March last year, has prompted the retailer to lower guidance for the fiscal first quarter through May.

First quarter revenue is now expected to be roughly $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. Diluted EPS is expected to be 18 cents to 20 cents per share compared to previously announced 23 cents to 25 cents per share. Losses expected from the launch of the new Paiva concept shops and the Man Alive integration also played a role in the guidance reduction.

Full year EPS estimates have been reduced by two cents a share, but that will depend on the retailer hitting new guidance of comps in the 2% to 4% range in the second, third, and fourth quarters, compared to previous guidance in the 1% to 3% range for those periods. The new EPS range for the year was set at $1.33 to $1.37 per share.

FINL reported that consolidated net sales increased 10.4% to $399.0 million for the fiscal fourth quarter ended February 25 from $361.4 million in Q4 last year, an increase at least partially attributed to the inclusion of sales from the acquired Man Alive stores.

Comparable store sales, which do not include the Man Alive business or stores open less than a year, were flat. Footwear comp sales were flat, with men’s and kid’s footwear comps up in low-single-digits for Q4, while the women’s business posted a high-single-digit decline, due primarily to a weaker running business. The men’s business was said to be strong in both running and athletic casual, but continued weakness in basketball offset much of the gains. The company said that while signature basketball product continued to perform well, the overall weakness in basketball and a shift to the lower price-points in the athletic specialty business led to a 4% decline in the ASP’s.

Finish Line management said they will continue to invest in the athletic casual category, particularly with Puma, K-Swiss, and adidas Originals. They also highlighted the launch of the Hurricane from 310 Motoring. They said they are expanding their base of stores carrying Pumal.

On the softgoods side, which includes apparel and accessories, a slight improvement for Q4 was attributed to “significant gains” in private label sales, along with branded product from Brand Jordan that performed well during the period. In licensed apparel, the retailer comped down in the quarter despite a successful holiday fleece program, due primarily to a decrease in the ASP in the licensed business. Private label made up 40% of apparel sales at year-end, while licensed represented 33% and branded apparel was 27% of the business.

Direct sales were up 40% for the year on top of 67% growth in 2005.

Net income was $28.1 million, or 58 cents per diluted share, in Q4, versus $28.2 million, or 57 cents per diluted share, in Q4 last year.

Inventories were flat on a per square foot basis at year-end, while aged inventory made up less that 1% of total inventory.