The Finish Line, Inc. reported fourth-quarter sales increased 2.7% to $384.6 million from $374.5 million a year ago. Comps increased 4.0% on top of an increase of 10.0% for
the same period a year ago. Excluding special items, earnings from continuing operations for
the fourth quarter advanced 5.1% to $35.0 million, or 65 cents per share, from $33.3 million, or 61 cents, a year ago.

Reported income from continuing operations reached $34.3 million, or 63 cents per share, up from $30.8 million, or 56 cents, a year ago, representing a 12.5% EPS increase. These results
include a $1.2 million fourth-quarter pre-tax, non-cash charge related
to store asset impairments. The year-ago results included $2.6 million
of pre-tax income associated with a change in the estimate for gift card
forfeitures as well as a $6.8 million
pre-tax, non-cash charge related to store asset impairments.

Fourth Quarter Results

Merchandise inventories increased 1.4% to $193.5 million at the end of the quarter compared to $190.9 million a year ago. On a per-square-foot basis, inventories were up 2.1%.

At year-end, the company had no interest-bearing debt and $299.3 million in cash and cash equivalents, up from $234.5 million at the end of the fourth quarter a year ago. The company repurchased 0.4 million shares of its outstanding common stock in the fourth quarter, totaling $6.2 million. For the full year, Finish Line repurchased 1.6 million shares totaling $22.2 million.

Full Fiscal Year 2011 Results

For the 52 weeks ended February 26, 2011, net sales increased 4.8% to $1.23 billion compared to $1.17 billion last year. Comparable store net sales increased 6.3% compared to a 0.5% decrease last year.

For fiscal 2011, the company reported income from continuing operations of $68.9 million or $1.26 per diluted share compared to income from continuing operations of $50.8 million or $0.92 per diluted share for the same period a year ago, representing a 37.0% earnings per share increase. Fiscal 2011 results include a $1.2 million fourth-quarter pre-tax, non-cash charge related to store asset impairments. Prior-year results included the $2.6 million of pre-tax income for gift card forfeitures, the $6.8 million pre-tax, non-cash charge for store asset impairments and a one-time, third-quarter tax benefit of $6.5 million related to a terminated merger and related litigation. Excluding those items, fiscal 2011 non-GAAP income from continuing operations was $69.6 million or $1.28 per diluted share compared to $46.8 million or $0.85 per diluted share for the same period a year ago, representing a 50.6% earnings per share increase. A reconciliation of these GAAP to non-GAAP financial measures is found in the tables at the end of this news release.

“The fourth quarter was a strong finish to an outstanding year,” said Chairman and Chief Executive Officer Glenn Lyon. “Finish Line continues to deliver results that demonstrate we are well on our way to achieving our long-term financial objectives. Operating margins are now 9%, headed toward our goal for annual double-digit operating margins. We have achieved inventory turns of three times and expect to sustain that level. These results have been attained with sales per square foot in our stores that are well below our historical highs, clearly illustrating the opportunity we have to get more growth from our existing business. We plan to unlock that growth by driving the top line in our stores and by continuing to increase e-commerce sales with the goal of doubling online sales within three years. Our capital allocation strategy calls for significant investments this year to support our company's three strategic priorities – driving growth from our existing business, going outside of our existing business for long-term growth and being more aggressive in opportunistic share repurchases to drive returns for our shareholders.”

March Sales Update

Comparable store net sales on a month-to-date basis for the period of February 27, 2011 through March 20, 2011 increased 10.1% on top of a 15.4% increase for the same period a year ago.



 

The Finish Line, Inc.



Consolidated Statements of Income



(In thousands, except per share and store data)





 



 



 





Thirteen


Thirteen


Fifty-Two


Fifty-Two



Weeks Ended


Weeks Ended


Weeks Ended


Weeks Ended



February 26,


February 27,


February 26,


February 27,



2011



2010



2011



2010




(Unaudited)


(Unaudited)


(Unaudited)




Net sales


$

384,599




$

374,530




$

1,229,002




$

1,172,415



Cost of sales (including occupancy costs)


 

246,288

 



 

238,326

 



 

815,073

 



 

793,556

 


Gross profit



138,311





136,204





413,929





378,859















 

Selling, general and administrative expenses



82,883





78,558





302,718





297,323



Store closing costs



263





560





350





2,707



Impairment charges


 

1,228

 



 

6,771

 



 

1,228

 



 

6,771

 


Operating income



53,937





50,315





109,633





72,058















 

Interest income, net


 

138

 



 

44

 



 

508

 



 

322

 


Income from continuing operations before income taxes



54,075





50,359





110,141





72,380















 

Income tax expense


 

19,818

 



 

19,564

 



 

41,277

 



 

21,547

 


Income from continuing operations



34,257





30,795





68,864





50,833















 

Loss from discontinued operations, net of income taxes


 

(5

)



 

About The Author

Thomas J. Ryan

Thomas J. Ryan Senior Business Editor | SGB Media tryan@sgbonline.com | 917.375.4699

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