The Finish Line, Inc. reported recently net sales for the third quarter ended Nov. 28 slipped 0.2% to $240.1 million versus net sales of $240.6 million a year ago. As previously disclosed, the company exited the Man Alive business effective July 4, 2009. Therefore, all financial results of the Man Alive operations are included in discontinued operations for all periods presented.
Comparable store net sales increased 1.7% in the third quarter compared to a 3.3% comparable store net sales decline the prior year.
Due to a favorable agreement entered into with the Internal Revenue Service (IRS) regarding the tax treatment of the terminated Genesco merger and related litigation, Finish Line recorded a one-time tax benefit of $6.5 million in the third quarter. With this tax benefit, the company reported third quarter income from continuing operations of $6.5 million, or 12 cents per diluted share, compared to a loss from continuing operations of $6.5 million, or 12 cents per diluted share, in the third quarter last year. Without the tax benefit, third quarter non-GAAP income from continuing operations was $16,000, or 0 cents (flat) per diluted share compared to the 12 cents per diluted share loss a year ago.
Consolidated merchandise inventories decreased 19.0% to $237.5 million as of November 28, 2009 compared to $293.2 million a year ago. Finish Line inventory declined 14.4% overall and 11.0% on a per-square-foot basis.
At quarter end, the company had no interest-bearing debt and $149.2 million in cash and cash equivalents, up from $55.1 million at the end of the third quarter a year ago.
“We continue to display an ability to perform well and improve our business in what remains a cautious consumer environment,” said Finish Line Chief Executive Officer Glenn Lyon. “In the third quarter, we effectively controlled expenses, managed inventories and improved store execution. We also continued to work productively with our vendor partners to stress innovation in product, consistent with our ongoing premium positioning. We are doing a good job of leveraging our strengths and continue to seek paths for profitable growth while we remain in a challenging consumer environment.”
Net sales declined 6.2% to $797.9 million, compared to $850.6 million a year ago. Year-to-date comparable store net sales decreased 4.7% versus a 1.4% increase last year.
For the 39 weeks ended November 28, Finish Line reported income from continuing operations of $20.0 million, or 36 cents per diluted share with the one-time $6.5 million tax benefit, versus income from continuing operations of $10.8 million, or 20 cents per diluted share for the same period a year ago. Without the tax benefit, the year-to-date non-GAAP income from continuing operations was $13.5 million, or 24 cents per diluted share. This compares to the 20 cents per diluted share for the same period the prior year, which is a 20% increase year over year. A reconciliation of income from continuing operations per diluted share on a GAAP basis to income from continuing operations per diluted share excluding the tax benefit, a non-GAAP financial measure, is found in the table at the end of the release.
Comparable store net sales on a month-to-date basis for the period of Nov. 29 through Dec. 20 increased 4.9% compared to a 22.1% decline for the same period one year ago.