The Finish Line, Inc. reversed the negative comps sales trend seen in the fiscal second quarter, posting a solid 4% increase in comps for the fiscal third quarter ended November 26 on top of an 8% comp sales improvement in the year-ago period. While footwear moved back into positive territory after a flat Q2, it was the fact that apparel & accessories posted flat comp sales that may be bigger news.

Total net sales for the quarter, which include the 49-store Man Alive chain acquired in January 2005, increased 16.4% to $274.0 million from net sales of $235.3 million for last year's third quarter. Internet sales jumped 35% for the quarter.

The 5% comp sales gain in footwear came on top of an 8% increase in the year-ago quarter. Kid’s footwear comps were up in double-digits and men’s comps were up in the mid-single-digit neighborhood. Women’s comps were down in low-singles for the quarter, but were positive in both October and November. On a category basis, FINL reported strength in the men’s running and athletic casual categories, but saw continued weakness in the men’s basketball business. Management said that the strength in the kid’s business, along with the weakness in basketball and the lower price-points in casual footwear, led to a 1% decline in average selling prices in footwear for the quarter.

Marquee basketball product from Nike, Brand Jordan, Converse, adidas, and Reebok all performed well, but the team basketball business performed below expectations. Management called out Puma, K-Swiss, adidas, and “classic white leather footwear” in the casual athletic business. They said that Puma continued to be a bigger player for them in footwear, which has led them to expand their store base with the brand into next year.

FINL hasn’t posted a non-negative quarter in softgoods since their fiscal Q1 2004 and the trend back to flat in Q3 was seen as a positive indicator moving into the Holiday selling season. They said the renewed strength in softgoods has been driven by significant gains in private label and increases in branded apparel. Licensed apparel comps were still down for the quarter, but not to the extent of more recent quarters. The retailer said they sold more apparel units, but a 15% decrease in ASP offset the unit gain.

The retailer raised its guidance for the third and fourth quarters and the year. Third quarter EPS is now seen in the one cent to three cents per diluted share range, a reversal from previous expectations of a loss in the same range. For Q4, FINL increased guidance by two cents, now estimating diluted EPS in the 58 cents to 60 cents range on a 1% to 2% comp sales gain for the period. Full fiscal year diluted EPS is now seen in the $1.22 to $1.26 per share range on a 1% comp sales gain and full year sales of $1.31 billion.

>>> Marquee product is still clearly driving the business in the mall, but it will be important to watch how successful the athletic specialty guys can be with fusion product…

The Finish Line Fiscal Third Quarter
Comparable Store Sales Results
Footwear 5% 5% 4% 5%
Apparel/Access. -5% -1% 5% flat
Total 3% 4% 4% 4%