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Finish Line reports tough quarterly results, downsizes forecast

September 22, 2017

Shares in Indianapolis-based Finish Line Inc. bounced around Friday morning after the retailer reported poor results for its latest quarter and downgraded its outlook for its next fiscal year.

The company also announced changes to its board and executive office.

Finish Line slightly exceeded analyst expectations with its adjusted earnings and revenue in the second fiscal quarter ended Aug. 26, but investors received negative news about the company’s 2018 forecast and comparable store sales.

The stock dropped 12 percent in the first few minutes of trading Friday, then rebounded sharply. Shares were up about 8 percent, to $9.96 each, around 10:45 a.m.

Finish Line stock has been volatile in recent weeks after reports that it might be a takeover target of United Kingdom-based Sports Direct International.

Quarterly revenue dropped 3.3 percent from a year ago, to $469.4 million, but edged the forecast of $469.3 million by analysts surveyed by Zacks Investment Research.

Profit sank to $2.8 million, or 7 cents per share, in the quarter, down from $22 million, or 53 cents per share, in the same quarter a year ago.

Earnings adjusted for asset impairment costs and to account for discontinued operations came to 12 cents per share. That topped analyst predictions of 11 cents per share.

Comparable stores sales, which measure revenue from stores open more than a year, decreased 4.5 percent over the year-ago quarter.

Finish Line reaffirmed the guidance it provided Aug. 28 for comparable sales to decrease 3 percent to 5 percent in the fiscal third quarter ending Nov. 25. The retailer had previously predicted an increase.

The company expects an adjusted loss per share in the third quarter in the range of 32 cents to 40 cents, compared with an adjusted loss per share of 24 cents last year.

For the full fiscal year ending March 3, 2018, Finish Line now expects adjusted earnings per share in the range of 50 cents to 60 cents. That’s down sharply than the previous outlook in the range of $1.12 to $1.23.

“Our second quarter results were shaped by a very promotional marketplace for athletic footwear,” Finish Line CEO Sam Sato said in written comments. “With industry headwinds weighing on our sales and margin trends, we remain disciplined in managing our expenses and inventories. While we are planning for a challenging retail environment in the near-term, we are confident that the merchandise, digital, in-store and operational initiatives currently in place will allow us to achieve our current full-year outlook and best position the company to deliver increased shareholder value over the long-term.”

Personnel changes

Finish Line said in a separate regulatory filing that Imran Jooma, executive vice president and divisional president of Omnichannel Strategy, will resign Oct. 14 to pursue other business opportunities. The former Sears marketing executive joined Finish Line in February 2015.

The company also said its board of directors appointed Faisal Masud as a director effective Tuesday, increasing the board from seven to eight directors. Masud is chief technology officer for Staples Inc.

 

 

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