Finish Line shares rise despite quarterly loss

September 25, 2009

Shares in locally based athletic retailer The Finish Line Inc. jumped Friday morning after the company reported a narrow loss for the second fiscal quarter, mostly because of the large cost of unloading its unsuccessful Man Alive stores in July.

The company took an $18.4 million charge on its disposal of the 75-store chain, transforming a profit of 21 cents per share into a loss of 2 cents per share, or $874,000, for the quarter ended Aug. 29. Absent the charge, the results met Wall Street expectations.

Shares were up about 12 percent in morning trading, to $10.43 each.

Finish Line CEO Glenn Lyon said on a conference call with Wall Street analysts that the company is encouraged by signs the recession is ending, but he cautioned that consumer spending could be a lagging indicator.

“Therefore, we maintain our conservative view,” Lyon said. “A strong balance sheet is a significant competitive advantage in today’s retail environment that we can leverage to grow sales and profits.”

The company’s balance sheet provides a good measure of protection: The chain has $143 million in cash and no debt.

And while Finish Line reported a 9.9-percent drop in sales at stores open at least a year—a key retail measure—the numbers have been headed in a positive direction. Sales in June were down 15.4 percent, sales in August fell 9.2 percent and, so far in September, have been down only about 6 percent.

Ridding itself of Man Alive heartened investors. Finish Line paid about $12 million for the chain four years ago and in July had to pay Brooklyn-based Jimmy Jazz about $7 million just to take the chain off its hands.

Finish Line said it reduced administrative expenses by 9 percent, or $7.5 million, in the most recent quarter. And it continues to save money by renegotiating leases with landlords; 300 leases are coming up for renewal in the next 18 months.


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