With Finish Line CEO Alan Cohen declaring that, “It’s all about the product”, the athletic specialty retailer seemed to put a positioning stake in the ground to “focus on superior product selection and presentation, instead of price”. FINL clearly expects to continue to capitalize on broader allocations of key marquee product to expand its brand in the mall.

The focus is paying off as FINL beat its guidance issued earlier in the month. For the fiscal fourth quarter ended March 1, 2003, the retailer saw adjusted net income jump 39% to $11.6 million, or 50 cents a share.

The Finish Line had raised its guidance to 47 cents to 49 cents EPS in early March after earlier forecast earnings of 35 cents to 37 cents per share.

The earnings results were adjusted to exclude some nonrecurring gains and charges. On a GAAP basis, FINL reported net income of $15.4 million, or $.66 per diluted share, versus $.36 per diluted share in Q4 LY, an increase of 83%. FINL realized a benefit in Q4 from a gain on a tornado insurance settlement. The company’s headquarters was hit by a tornado in September that took out a section of its distribution center, including product destined for new store openings.

As previously reported, Q4 net sales increased 16% to $234.4 million and comparable store net sales increased 10% on top of an 8% increase for Q4 LY. Key drivers to sales growth came from Licensed Apparel, especially retro jerseys; launch products, such as NKE Shox; and other Nike allocated styles.

The average selling price in Q4 was flat to LY — after starting down in December, ending up in February — stabilizing “many quarters of declining ASP”. Freshness of inventory remains a focus for FINL, with the retailer stating that 83% of footwear is less than 6 months old.
Inventories at year-end increased approximately 6% on a per square foot basis compared to one year ago.

Although Nike share increased in Q4, Nike was 54% of sales for the full year, down 200 basis points from LY. FINL said they were “trying to grow business with all vendors” and plans an increase with both Reebok and adidas in Fiscal 2004. FINL carries 600-800 styles of shoes per door.

Apparel was 20% of total sales for Fiscal ’03, up from 18% last year, and will grow 100-200 bps in Fiscal ‘04.
Looking ahead FINL reported March sales are “perform- ing slightly above Q4 reported comps” and “Margins are slightly above plan”.

Please refer to our full review of The Finish Line Q4 and Full Year sales results and projections in Week 0310.
FINL has increased diluted EPS guidance for Fiscal Q4 2004 to a range of 54 cents to 56 cents and full year Fiscal 2004 to a range of 99 cents to $1.03.

The company announced it has raised it’s projected new store opening plan from 45 to 50 resulting in a square footage increase of approximately 7% for Fiscal 2004. FINL will spend $47-49 million in CapEx in Fiscal 2004, including 50 new doors, and $20 million for corporate office expansion.


  • SG&A expenses up 60 bps
  • Occupancy costs down 40 bps
  • Product margins up 40 bps
  • Operated 477 stores at March 1, 2003, an increase of 6%
  • FINL opened 37 new stores in 2002, remodeled 13 existing stores and closed 9 stores
  • Total retail square footage increased 5% to 2,839,000 SF

>>> Finish Line is doing the best job right now with product, presentation and brand-building. And they are reaping the benefits. Aint it refreshing? Watch out for this company in 2003 as they leave everyone in their dust…