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.
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
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.