The Finish Line Inc. reported earnings slid 15.4 percent in its first quarter ended May 27, to $8.14 million, or 20 cents a share. Earnings adjusted for special items were in line with Wall Street targets and the retailer maintained its guidance for the year.

For the thirteen weeks ended May 27, 2017:

  • Consolidated net sales were $429.8 million, a decrease of 0.1 percent over the prior year period.
  • Finish Line comparable store sales decreased 1.1 percent.
  • Finish Line Macy’s sales increased 13.6 percent.
  • On a GAAP basis, diluted earnings per share from continuing operations were 20 cents a share.
  • Non-GAAP diluted earnings per share from continuing operations, which primarily excludes the impact from store impairment charges, were 23 cents a share.

Wall Street’s consensus estimate had been 23 cents on sales of $431.6 million.

Gross margins eroded to 29.6 percent from 31.0 percent. SG&A expenses were reduced 4.3 percent to $112.4 million, or 26.2 percent of sales, from $117.5 million, or 27.3 percent, a year ago.

“We delivered earnings in-line with our expectations despite some unanticipated headwinds late in the quarter,” said Sam Sato, chief executive officer of Finish Line. “Following low-single digit comparable sales growth for the combined March/April period, weak traffic trends, and a difficult product launch comparison in May resulted in comps coming in below plan. We offset pressure on our top-line and protected profitability with disciplined expense management resulting from the work we’ve done creating a more nimble and efficient organization. While the retail environment remains challenging, we continue to be confident that our merchandising, digital, in-store, and operational initiatives underway will help fuel profitable growth beginning in the back half of this fiscal year, better positioning the company to deliver increased shareholder value over the long-term.”

Balance Sheet

As of May 27, 2017, consolidated merchandise inventories increased 5.1 percent to $341.4 million compared to $324.7 million as of May 28, 2016.

The company repurchased 250,000 shares of common stock in the first quarter, totaling $3.8 million. The company has 4.5 million shares remaining on its current Board authorized repurchase program.

As of May 27, 2017, the company had no interest-bearing debt and $76.0 million in cash and cash equivalents.

Outlook

For the 53 week fiscal year ending March 3, 2018, the company still expects Finish Line comparable store sales to increase in the low-single digits range and adjusted earnings per share to be between $1.12 and $1.23. For the second quarter ending August 26, 2017, we expect Finish Line comparable store sales to decrease in the low-single digits range.

Photo courtesy Finish Line