The Finish Line Inc. reported sales, inclusive of Finish Line and The Running Company, increased 18.6 percent in its fourth quarter ended March 3, to $456.3 million. Finish Line comparable store sales increased 10.8 percent. Earnings rose 22.4 percent to $41.9 million, or 80 cents a share.
On a non-GAAP basis, which excludes the impact of impairment charges, earnings were up 21.4 percent to $42.5 million, or 81 cents a share.
Digital sales, which are included in the comparable store sales results, were up 38.3 percent.
For the fiscal year ended March 3, 2012:
- Consolidated net sales, inclusive of Finish Line and The Running Company, increased 11.4 percent to $1.37 billion.
- Finish Line comparable store sales increased 9.2 percent.
- Digital sales, which are included in the comparable store sales result, were up 49.5 percent.
- Non-GAAP diluted earnings per share, which excludes the impact of impairment charges, increased 25.0 percent to $1.60.
- On a GAAP basis, diluted earnings per share increased 26.2 percent to $1.59.
The 53rd week of fiscal 2012 contributed $30.5 million of consolidated net sales and approximately $0.07 per diluted share to the fourth quarter and fiscal year.
“We ended the fiscal year with another strong quarter and positive momentum across our business,” said Chairman and Chief Executive Officer Glenn Lyon. “Our fourth quarter and full year results are a positive indication that the sales and merchandising strategies we are deploying across our multiple channels are resonating with consumers and influencing how they shop. As the retail landscape continues to rapidly evolve, we are committed to further distinguishing the Finish Line brand from the competition and building a sustainable multi-division, omni-channel business for the future. In the near-term, this will involve additional investments in technology, personnel, marketing and store upgrades that we believe will drive increased productivity and greater efficiency through our supply chain and lead to greater earnings power in the years ahead. We are confident we have the right strategic plan in place and we look forward to building on our consistent track record of creating value for our shareholders over the long term.”
Balance Sheet
As of March 3, 2012, consolidated merchandise inventories increased 13.9 percent to $220.4 million compared to $193.5 million as of February 26, 2011. For Finish Line, merchandise inventories increased by 11.9 percent.
The company repurchased 300,000 shares of its outstanding common stock in the fourth quarter, totaling $5.9 million. For the full year, Finish Line repurchased 2.9 million shares totaling $60.4 million. The company has 3.8 million shares remaining on its 5-million-share authorization.
At fiscal year-end, the company had no interest-bearing debt and $307.5 million in cash and cash equivalents, compared to $299.3 million at the end of fiscal 2011.
March Sales Update
Finish Line comparable store sales on a month-to-date basis for the period of Mar. 4, 2012 through Mar. 25, 2012 increased 10.0 percent on top of an 8.0 percent increase for the same period a year ago.
Outlook
The company is introducing guidance for the fiscal year ending March 2, 2013. Based on strategic investments in technology, stores and digital capabilities required to execute its omni-channel strategy, management expects to generate earnings per share growth in the mid-single digits in fiscal 2013 with comparable store sales expected in the mid-single digits as well. As the investments begin to drive returns, management expects earnings per share growth to accelerate into the low- to mid-teens beginning in fiscal 2014.
For the first quarter, the company expects comparable store sales to be up in the mid-single digit range. Based on the planned level of strategic investments, combined with lower product margins due to a shift in the promotional calendar, and occupancy cost deleverage, the company expects first quarter earnings per share to be down approximately 30 percent.
The Finish Line, Inc.
Reconciliation of GAAP to Non-GAAP Consolidated Statements of Income
(Unaudited)
Fourteen Weeks Ended March 3, 2012 and Thirteen Weeks Ended February
26, 2011
(In thousands, except per share data)
Fourteen Weeks Ended Thirteen Weeks Ended
March 3, 2012 February 26, 2011
GAAP Adjustments Non-GAAP GAAP Adjustments Non-GAAP
-------------- -------------- -------------- -------------- --------------- --------------
Net sales $ 456,260 $ - $ 456,260 $ 384,599 $ - $ 384,599
Cost of sales (including occupancy costs) 286,737 - 286,737 246,288 - 246,288
------- ----- ------- ------- ------ -------
Gross profit 169,523 - 169,523 138,311 - 138,311
Selling, general and administrative expenses 101,811 - 101,811 82,883 - 82,883
Store closing costs 226 - 226 263 - 263
Impairment charges (1) 974 (974) - 1,228 (1,228) -
------- ----- - ------- ------- ------ --- -------
Operating income 66,512 974 67,486 53,937 1,228 55,165
Interest income, net 57 - 57 138 - 138
------- ----- ------- ------- ------ -------
Income from continuing operations before income taxes 66,569 974 67,543 54,075 1,228 55,303
Income tax expense (2) 24,649 371 25,020 19,818 463 20,281
------- ----- ------- ------- ------ -------
Income from continuing operations 41,920 603 42,523 34,257 765 35,022
Loss from discontinued operations, net of income taxes - - - (5) - (5)
------- ----- ------- ------- -- ------ ------- --
Net income $ 41,920 $ 603 $ 42,523 $ 34,252 $ 765 $ 35,017
===== ======= ===== ===== ===== ======= == ======= === ====== == =======
Income per diluted share:
Income from continuing operations $ 0.80 $ 0.01 $ 0.81 $ 0.63 $ 0.02 $ 0.65
Loss from discontinued operations - - - - - -
------- ----- ------- ------- ------ -------
Net income $ 0.80 $ 0.01 $ 0.81 $ 0.63 $ 0.02 $ 0.65
===== ======= ===== ===== ===== ======= == ======= === ====== == =======
Diluted weighted average shares outstanding 52,041 - 52,041 53,467 - 53,467
======= ===== ======= ======= ====== =======
Fourteen Weeks Ended Thirteen Weeks Ended
March 3, 2012 February 26, 2011
GAAP Adjustments Non-GAAP GAAP Adjustments Non-GAAP
-------------- -------------- -------------- -------------- --------------- --------------
Net sales 100.0 % - % 100.0 % 100.0 % - % 100.0 %
Cost of sales (including occupancy costs) 62.8 - 62.8 64.0 - 64.0
------- ----- ------- ------- ------ -------
Gross profit 37.2 - 37.2 36.0 - 36.0
Selling, general and administrative expenses 22.3 - 22.3 21.6 - 21.6
Store closing costs 0.1 - 0.1 0.1 - 0.1
Impairment charges (1) 0.2 (0.2) - 0.3 (0.3) -
------- ----- - ------- ------- ------ --- -------
Operating income 14.6 0.2 14.8 14.0 0.3 14.3
Interest income, net - - - - - -
------- ----- ------- ------- ------ -------
Income from continuing operations before income taxes 14.6 0.2 14.8 14.0 0.3 14.3
Income tax expense (2) 5.4 0.1 5.5 5.1 0.1 5.2
------- ----- ------- ------- ------ -------
Income from continuing operations 9.2 0.1 9.3 8.9 0.2 9.1
Loss from discontinued operations, net of income taxes - - - - - -
------- ----- ------- ------- ------ -------
Net income 9.2 % 0.1 % 9.3 % 8.9 % 0.2 % 9.1 %
======= ===== ======= ======= ====== =======
Footnotes to explain adjustments
------------------------------------------------------
(1) Fiscal 2012 and 2011 amounts reflect charges to write down
long-lived assets of the Company.
(2) Fiscal 2012 and 2011 amounts reflect the income tax effect of
the pre-tax adjustments noted above.
