The Finish Line, Inc. (NASDAQ: FINL) today reported results for
the thirteen weeks ended November 29, 2014.
For the thirteen weeks ended November 29,
2014:
- Consolidated net sales were $395.8
million, an increase of 8.6% over the prior year period.
- Finish Line comparable store sales
increased 4.5%.
- On a GAAP basis, diluted earnings per
share were $0.05.
- Non-GAAP diluted earnings per share,
which excludes the impact of impairment charges and store closing
costs, employee resignation costs and the recognition of a one-time
tax benefit were ($0.02).
“Third quarter comparable sales rebounded from second quarter
trends, however merchandise margin pressure kept us from achieving
our profitability plan,” said Glenn Lyon, Chairman and Chief
Executive Officer of Finish Line. “We remain confident in the
strategic course we have set for the company and we’ll continue to
invest in the omnichannel initiatives focused on delivering the
long-term financial goals we have previously outlined. That said,
we are adjusting our near-term capital spending plans and creating
a more flexible expense structure to protect profitability until
stronger full price selling trends reemerge.”
Balance SheetAs of November 29,
2014, consolidated merchandise inventories increased 10.6% to
$398.6 million compared to $360.5 million as of November 30,
2013.
The company repurchased 1.2 million shares of common stock
during the thirteen weeks ended November 29, 2014, totaling $29.9
million. The company has 1.9 million shares remaining on its
current Board authorized repurchase plan.
As of November 29, 2014, the company had no interest-bearing
debt and $85.4 million in cash and cash equivalents, compared to
$111.9 million as of November 30, 2013.
OutlookFor the fiscal year ending
February 28, 2015, Finish Line now expects non-GAAP diluted
earnings per share to be flat to fiscal year 2014 non-GAAP diluted
earnings per share of $1.67. The company expects Finish Line
comparable store sales to increase low to mid-single digits.
Q3 Fiscal 2015 Conference Call Today,
December 19, 2014 at 8:30 a.m.The company will host a
conference call for investors today, December 19, 2014, at 8:30
a.m. Eastern. To participate in the live conference call, dial
866-923-8645 (U.S. and Canada) or 660-422-4970 (International),
conference ID #45036075. The live conference call will also be
accessible online at www.finishline.com. A replay of the conference
call can be accessed approximately two hours following the
completion of the call by dialing 855-859-2056, conference ID
#45036075. This recording will be made available through Monday,
January 19, 2015. The replay will also be accessible online at
www.finishline.com.
Disclosure Regarding Non-GAAP
MeasuresThis report refers to certain financial measures
that are identified as non-GAAP. The company believes that these
non-GAAP measures, including gross profit, selling, general and
administrative expenses, operating income, income tax expense, net
income attributable to The Finish Line, Inc., and diluted earnings
per share attributable to The Finish Line, Inc. shareholders, are
helpful to investors because they allow for a more direct
comparison of the company’s year-over-year performance and are
useful in assessing the company’s progress in achieving its
long-term financial objectives. This supplemental information
should not be considered in isolation or as a substitute for the
related GAAP measures. A reconciliation of the non-GAAP measures to
the comparable GAAP measures can be found in the company’s Form 8-K
filed with the Securities and Exchange Commission with this
release.
About The Finish Line,
Inc.The Finish Line, Inc. is a premium retailer of
athletic shoes, apparel and accessories. Headquartered in
Indianapolis, Finish Line has approximately 1,040 Finish Line
branded locations primarily in U.S. malls and shops inside Macy’s
department stores and employs more than 14,000 sneakerologists who
help customers every day connect with their sport, their life and
their style. Online shopping is available at www.finishline.com and
www.macys.com. Mobile shopping is available at m.finishline.com.
Follow Finish Line on Twitter at Twitter.com/FinishLine and “like”
Finish Line on Facebook at Facebook.com/FinishLine. Track loyalty
points and find store and product information with the free Finish
Line app downloadable for iOS and Android customers.
Finish Line also operates the Running Specialty Group. This
includes 66 specialty running stores in 15 states and the District
of Columbia under The Running Company, Run On!, Blue Mile, Boulder
Running Company, Roncker’s Running Spot, Running Fit, VA Runner,
Capital RunWalk, Richmond RoadRunner, Garry Gribble’s Running
Sports and Run Colorado banners. More information is available at
www.run.com or www.boulderrunningcompany.com.
Forward-Looking
StatementsThis news release includes statements that are
or may be considered "forward-looking" within the meaning of
Section 27A of the Securities Act of 1933 and Section 21E of the
Securities Exchange Act of 1934. These forward-looking statements
generally can be identified by the use of words or phrases such as
"believe," "expect," "future," "anticipate," "intend," "plan,"
"foresee," "may," "should," "will," "estimates," "outlook,"
"potential," "optimistic," "confidence," "continue," "evolve,"
"expand," "growth" or words and phrases of similar meaning.
Statements that describe objectives, plans or goals also are
forward-looking statements.
All of these forward-looking statements are subject to risks,
management assumptions and uncertainties that could cause actual
results to differ materially from those contemplated by the
relevant forward-looking statements. The principal risk factors
that could cause actual performance and future actions to differ
materially from the forward-looking statements include, but are not
limited to, the company's reliance on a few key vendors for a
majority of its merchandise purchases (including a significant
portion from one key vendor); the availability and timely receipt
of products; the ability to timely fulfill and ship products to
customers; fluctuations in oil prices causing changes in gasoline
and energy prices, resulting in changes in consumer spending as
well as increases in utility, freight and product costs; product
demand and market acceptance risks; deterioration of macro-economic
and business conditions; the inability to locate and obtain or
retain acceptable lease terms for the company's stores; the effect
of competitive products and pricing; loss of key employees;
execution of strategic growth initiatives (including actual and
potential mergers and acquisitions and other components of the
company's capital allocation strategy); cybersecurity risks,
including breach of customer data; and the other risks detailed in
the company's Securities and Exchange Commission filings. Readers
are urged to consider these factors carefully in evaluating the
forward-looking statements. The forward-looking statements included
herein are made only as of the date of this report and Finish Line
undertakes no obligation to publicly update these forward-looking
statements to reflect subsequent events or circumstances.
The Finish Line, Inc.
Consolidated Statements of Income
(Unaudited)
(In thousands, except per share and
store/shop data)
Thirteen Weeks Ended Thirty-Nine Weeks Ended November
29, November 30, November 29, November 30, 2014 2013
2014 2013 Net sales $ 395,828 $ 364,455 $ 1,269,239 $
1,151,538 Cost of sales (including occupancy costs) 284,074
256,607 873,485 790,358 Gross profit 111,754
107,848 395,754 361,180 Selling, general and administrative
expenses 114,923 104,092 335,701 306,903 Impairment charges and
store closing costs 462 1,007 3,155 1,210
Operating (loss) income (3,631 ) 2,749 56,898 53,067
Interest income, net — 3 6 27 (Loss)
income before income taxes (3,631 ) 2,752 56,904 53,094 Income tax
(benefit) expense (6,126 ) 1,161 17,595 20,796
Net income 2,495 1,591 39,309 32,298 Net loss attributable to
redeemable noncontrolling interest 83 727 1,861
1,602 Net income attributable to The Finish Line,
Inc. $ 2,578 $ 2,318 $ 41,170 $ 33,900
Diluted earnings per share attributable to The Finish Line, Inc.
shareholders $ 0.05 $ 0.05 $ 0.85 $ 0.69
Diluted weighted average shares 47,478 48,709
48,013 48,733 Dividends declared per share $ 0.08
$ 0.07 $ 0.24 $ 0.21 Finish Line
store activity for the period: Beginning of period 647 659 645 645
Opened 2 3 9 22 Closed (7 ) (4 ) (12 ) (9 ) End of period 642
658 642 658 Square feet at end of
period 3,492,050 3,566,404 Average square feet per store 5,439
5,420 Branded shops within department stores activity for the
period: Beginning of period 370 133 185 3 Opened 27 48 213 178
Closed — — (1 ) — End of period 397 181
397 181 Square feet at end of period 406,063
224,515 Average square feet per shop 1,023 1,240 Running Specialty
store activity for the period: Beginning of period 58 39 48 27
Acquired 7 4 15 13 Opened 1 4 3 7 Closed — — —
— End of period 66 47 66 47
Square feet at end of period 234,162 154,348 Average square feet
per store 3,548 3,284 Thirteen Weeks
Ended Thirty-Nine Weeks Ended November 29, November 30,
November 29, November 30, 2014 2013 2014 2013 Net sales
100.0 % 100.0 % 100.0 % 100.0 % Cost of sales (including occupancy
costs) 71.8 70.4 68.8 68.6 Gross profit
28.2 29.6 31.2 31.4 Selling, general and administrative expenses
29.0 28.6 26.5 26.7 Impairment charges and store closing costs 0.1
0.2 0.2 0.1 Operating (loss) income
(0.9 ) 0.8 4.5 4.6 Interest income, net — — —
— (Loss) income before income taxes (0.9 ) 0.8 4.5 4.6
Income tax (benefit) expense (1.5 ) 0.4 1.4 1.8
Net income 0.6 0.4 3.1 2.8 Net loss attributable to
redeemable noncontrolling interest 0.1 0.2 0.1
0.1 Net income attributable to The Finish Line, Inc. 0.7 %
0.6 % 3.2 % 2.9 % Condensed Consolidated
Balance Sheets November 29, November 30, March 1,
2014 2013 2014 (Unaudited) (Unaudited)
ASSETS
Cash and cash equivalents $ 85,426 $ 111,916 $ 229,079 Merchandise
inventories, net 398,615 360,463 304,209 Other current assets
44,384 49,783 33,675 Property and equipment, net 256,262 213,188
223,182 Goodwill 32,902 24,035 25,608 Other assets, net 9,017
14,185 9,192 Total assets $ 826,606 $ 773,570
$ 824,945
LIABILITIES AND SHAREHOLDERS’
EQUITY
Current liabilities $ 209,049 $ 180,756 $ 193,670 Deferred credits
from landlords 29,507 28,639 27,658 Other long-term liabilities
20,625 17,465 19,659 Redeemable noncontrolling interest, net 480
2,034 1,774 Shareholders’ equity 566,945 544,676
582,184 Total liabilities and shareholders’ equity $ 826,606
$ 773,570 $ 824,945 The Finish Line, Inc.
Reconciliation of Gross Profit, GAAP to Gross Profit, Non-GAAP
(Unaudited) (In thousands) Thirteen Weeks
Ended Thirty-Nine Weeks Ended November 29, 2014 November 30,
2013 November 29, 2014 November 30, 2013 Gross profit, GAAP
$ 111,754 28.2 % $ 107,848 29.6 % $
395,754 31.2 % $ 361,180 31.4 %
Start-up costs — — — — — —
5,758 0.5 Gross profit, Non-GAAP $ 111,754
28.2 % $ 107,848 29.6 % $ 395,754 31.2 % $
366,938 31.9 % Reconciliation of Selling,
General and Administrative Expenses, GAAP to Selling, General and
Administrative Expenses, Non-GAAP (Unaudited) (In thousands)
Thirteen Weeks Ended Thirty-Nine Weeks Ended November
29, 2014 November 30, 2013 November 29, 2014 November
30, 2013 Selling, general and administrative expenses, GAAP $
114,923 29.0 % $ 104,092 28.6 % $ 335,701
26.5 % $ 306,903 26.7 % Employee resignation costs
(842 ) (0.2 ) — — (842 ) (0.1 ) — — Start-up costs — —
— — — — (2,202 ) (0.2 ) Selling,
general and administrative expenses, Non-GAAP $ 114,081 28.8
% $ 104,092 28.6 % $ 334,859 26.4 % $ 304,701
26.5 % Reconciliation of Operating (Loss) Income,
GAAP to Operating (Loss) Income, Non-GAAP (Unaudited) (In
thousands) Thirteen Weeks Ended Thirty-Nine
Weeks Ended November 29, 2014 November 30, 2013 November 29,
2014 November 30, 2013 Operating (loss) income, GAAP $
(3,631 ) (0.9 )% $ 2,749 0.8 % $ 56,898
4.5 % $ 53,067 4.6 % Impairment charges and
store closing costs 462 0.1 1,007 0.2 3,155 0.2 1,210 0.1 Employee
resignation costs 842 0.2 — — 842 0.1 — — Start-up costs — —
— — — — 7,960 0.7
Operating (loss) income, Non-GAAP $ (2,327 ) (0.6 )% $ 3,756
1.0 % $ 60,895 4.8 % $ 62,237 5.4 %
Reconciliation of Income Tax (Benefit)
Expense, GAAP to Income Tax (Benefit) Expense, Non-GAAP
(Unaudited)
(In thousands) Thirteen Weeks Ended
Thirty-Nine Weeks Ended November 29, 2014 November 30, 2013
November 29, 2014 November 30, 2013 Income tax (benefit)
expense, GAAP $ (6,126 ) (1.5 )% $ 1,161 0.4 %
$ 17,595 1.4 % $ 20,796 1.8 % Tax
affect of: Impairment charges and store closing costs 178 — 393 —
1,215 0.1 473 — Employee resignation costs 324 0.1 — — 324 — — —
Start-up costs — — — — — — 3,109 0.3 One-time tax benefit 4,313
1.1 — — 4,313 0.3 —
— Income tax (benefit) expense, Non-GAAP $ (1,311 )
(0.3 )% $ 1,554 0.4 % $ 23,447 1.8 % $ 24,378
2.1 % Reconciliation of Net Income Attributable to
The Finish Line, Inc., GAAP to Net (Loss) Income Attributable to
The Finish Line, Inc., Non-GAAP (Unaudited) (In thousands)
Thirteen Weeks Ended Thirty-Nine Weeks Ended November
29, 2014 November 30, 2013 November 29, 2014 November
30, 2013 Net income attributable to The Finish Line, Inc., GAAP $
2,578 0.7 % $ 2,318 0.6 % $ 41,170 3.2
% $ 33,900 2.9 % Impairment charges and store closing
costs, net of income taxes* 284 0.1 614 0.2 1,884 0.1 737 0.1
Employee resignation costs, net of income taxes 518 0.1 — — 518 0.1
— — Start-up costs, net of income taxes — — — — — — 4,851 0.4
One-time tax benefit (4,313 ) (1.1 ) — — (4,313 )
(0.3 ) — — Net (loss) income attributable to The
Finish Line, Inc., Non-GAAP $ (933 ) (0.2 )% $ 2,932 0.8 % $
39,259 3.1 % $ 39,488 3.4 %
* Net of decrease to net loss attributable to redeemable
noncontrolling interest for the thirty-nine weeks ended November
29, 2014 related to impairment charges of $56.
Reconciliation of Diluted Earnings Per Share Attributable to
The Finish Line, Inc. Shareholders, GAAP to Diluted (Loss) Earnings
Per Share Attributable to The Finish Line, Inc. Shareholders,
Non-GAAP (unaudited) Thirteen Weeks Ended
Thirty-Nine Weeks Ended November 29, November 30, November
29,
November 30,
2014 2013 2014
2013
Diluted earnings per share attributable to The Finish Line, Inc.
shareholders, GAAP $ 0.05 $ 0.05 $ 0.85 $ 0.69 Impairment charges
and store closing costs, net of income taxes and redeemable
noncontrolling interest 0.01 0.01 0.04 0.01 Employee resignation
costs, net of income taxes 0.01 — 0.01 — Start-up costs, net of
income taxes — — — 0.10 One-time tax benefit (0.09 ) — (0.09
) — Diluted (loss) earnings per share attributable to The Finish
Line, Inc. shareholders, Non-GAAP $ (0.02 ) $ 0.06 $ 0.81
$ 0.80
Note: See Disclosure Regarding Non-GAAP Measures above.
The Finish Line, Inc.Media Contact:Dianna Boyce,
Corporate Communications, 317-613-6577orInvestor Contact:Ed
Wilhelm, Chief Financial Officer, 317-613-6914
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