Finish Line reported fourth-quarter earnings excluding charges came in well below guidance as “the overall retail environment in February became increasingly difficult” and markdowns were required to reduce inventory levels.
For the thirteen weeks ended February 25, 2017:
● Consolidated net sales were $557.5 million, a decrease of 0.4 percent from the prior year period.
● Finish Line comparable sales decreased 4.5 percent.
● Finish Line Macy’s sales increased 35 percent.
● On a GAAP basis, diluted earnings per share from continuing operations were 30 cents.
● Non-GAAP diluted earnings per share from continuing operations, which primarily excludes the impact from store impairment charges, were 50 cents.
When it reported third-quarter results on December 21, Finish Line said it expected 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.
For the fifty-two weeks ended February 25, 2017:
● Consolidated net sales were $1.84 billion, an increase of 2.5 percent over the prior year.
● Finish Line comparable sales increased 0.3 percent.
● Finish Line Macy’s sales increased nearly 30 percent.
● On a GAAP basis, diluted earnings per share from continuing operations were 85 cents.
● Non-GAAP diluted earnings per share from continuing operations, which primarily excludes the impact from store impairment charges and severance related charges, were $1.06.
Guidance had called for earnings on a non-GAPP basis between $1.24 and $1.30. Finish Line comparable store sales were projected to range between flat to up 1 percent.
“Our fourth quarter earnings performance represented a disappointing finish to a challenging year financially for our company,” said Sam Sato, chief executive officer of Finish Line. “As elements of our footwear offering did not resonate with our customers as we expected and the overall retail environment in February became increasingly difficult, we made the decision to get more aggressive on pricing to be competitive and clear slow moving product. While this allowed us to end fiscal 2017 with clean inventory levels, it put significant pressure on fourth quarter product margins. We know we must improve the execution of our merchandise strategies to drive increased full price selling and fuel sustained comparable sales growth. At the same time, we are confident that the numerous operational improvements we made throughout the past year have created a more efficient company with a stronger foundation to support enhanced profitability and increased shareholder value over the long-term.”
- As of February 25, 2017, consolidated merchandise inventories decreased 4.8 percent to $331.1 million compared to $348.0 million as of February 27, 2016. Merchandise inventories decreased high-single digits at Finish Line and increased high-single digits at Macy’s.
- The company repurchased 250,000 shares of common stock in the fourth quarter totaling $4.4 million. For the full year, Finish Line repurchased 2.5 million shares totaling $52.8 million. The company has 4.8 million shares remaining on its current Board authorized repurchase program.
- As of February 25, 2017, the company had no interest-bearing debt and $90.9 million in cash and cash equivalents, compared to $79.5 million as of February 27, 2016.
The fiscal year ending March 3, 2018 is a 53 week year. For the fiscal year ending March 3, 2018, Finish Line expects comparable sales to increase low-single digits and earnings per share to be in the range of $1.12 to $1.23 which is an increase of approximately 6 percent to 16 percent compared with the $1.06 Non-GAAP diluted earnings per share in this fiscal year ended February 25, 2017, which was a 52 week year. We estimate the additional week will contribute approximately $0.06 per share to our fourth quarter and full year fiscal 2018 results.
Photo courtesy Finish Line