Finish Line Inc. reported its loss in the third quarter widened to $40.4 million, or $1 a share, from a loss of $21.8 million, or 43 cents, a year ago. Revenues grew 3 percent to $371.7 million.
For the thirteen weeks ended November 26, 2016:
- Consolidated net sales were $371.7 million, an increase of 3 percent over the prior-year period.
- Finish Line comparable-store sales increased 0.7 percent.
- Finish Line Macy’s sales increased 33.2 percent.
- On a GAAP basis, diluted loss per share from continuing operations were a loss of 26 cents a share.
- Non-GAAP diluted loss per share from continuing operations, which primarily excludes severance-related charges, were a loss of 24 cents a share.
- As a result of the company’s process to explore strategic alternatives for the JackRabbit business, the results of JackRabbit have been reported within discontinued operations.
“We are disappointed that our third-quarter sales and earnings fell short of our expectations,” said Sam Sato, CEO of Finish Line. “Steep declines in apparel and accessories offset a high-single-digit footwear comp gain and a 33 percent sales increase in our Macy’s business. While we continue to work on narrowing our soft goods assortment and aligning our offering with customer demand, our primary focus remains on growing the cornerstones of the Company’s foundation – our Finish Line footwear business and our partnership with Macy’s – through enhanced customer engagement. At the same time, we are making progress developing a more efficient operating model that drives increased profitability and greater shareholder value over the long term. We are now fully benefitting from our enhanced supply chain and are just beginning to realize the $6 million in annualized savings from our actions aimed at streamlining our organizational structure. Despite our recent underperformance, we remain confident in the strategic course we have set for the Finish Line.”
Balance Sheet
As of November 26, 2016, consolidated merchandise inventories increased 4.6 percent to $401.5 million compared to $383.8 million as of November 28, 2015.
The company repurchased 250,000 shares of common stock in the third quarter, totaling $5.8 million. The company has 5 million shares remaining on its current board authorized repurchase program.
As of November 26, 2016, the company had $33.3 million in cash and cash equivalents and $17 million of interest-bearing debt.
Outlook
For the fiscal year ending February 25, 2017, the company now expects Finish Line comparable-store sales to range between flat to up 1 percent and non-GAAP diluted earnings per share from continuing operations between $1.24 and $1.30.
For the fourth quarter ending February 25, 2017, the company expects Finish Line comparable-store sales to be down between 3 percent to 5 percent and non-GAAP diluted earnings per share from continuing operations between 68 cents and 73 cents.
Included in this updated outlook is an expected tax refund delay shifting sales from the fourth quarter of fiscal year 2017 into the first quarter of fiscal year 2018. We anticipate this timing difference will reduce fourth-quarter Finish Line comparable-store sales by 2 percent to 3 percent, and earnings per share from continuing operations between 6 cents and 8 cents.
Photos courtesy Finish Line