Finish Line shares surge after jump in profit

Shares of The Finish Line Inc. vaulted nearly 9 percent Friday morning after the Indianapolis-based retailer reported a 6.1-percent jump in earnings for its fiscal second quarter on a 13.3-percent increase in sales.

The firm’s shares hit $24.35 just before noon, a 8.75-percent increase from their previous close.

For the quarter ended Aug. 31, Finish Line reported a profit of $26.5 million, or 54 cents a share, up from $25 million, or 49 cents a share, in the same quarter of 2012. Sales rose to $436 million.

The performance exceeded projections of analysts polled by Thomson Reuters, who predicted a per-share profit of 45 cents per share and revenue of $426 million.

Sales at stores open for more than a year were up almost 1 percent.

In a conference call with analysts Friday morning, CEO Glenn Lyons enthused about new products from apparel makers such as Nike, Adidas and Asics.

“It is clear that innovation is generating excitement in the marketplace and driving improved results in our business,” Lyons said.

He pointed to new Nike shoe brands such as its Flyknit Lunar and Flyknit Free, as well as Adidas’ Springblade, “which launched in early August is selling extremely well with a $180 price point.”

Sales of basketball shoes remained strong, with Nike's Jordan Brand and Signature series helping lead the way.

Nike, coincidentally, reported its latest quarterly numbers on Thursday. The Beaverton, Ore.-based company said its fiscal first-quarter net income totaled $780 million, or 86 cents per share, compared to $567 million, or 63 cents a share, in the same period a year ago. Revenue rose 8 percent, to $6.97 billion, from $6.47 billion in the same quarter last year.

Nike’s shares were up 5 percent in trading on Friday morning.

Finish Line has 658 stores in malls across the United States and manages the athletic footwear inventory in 660 Macy’s stores. The company also operates, through a venture with Gart Capital Partners, 39 specialty running shops in 11 states.

On Friday morning, Lyons also provided an update on the firm’s strategy to open branded shops within the shoe departments of Macy’s stores. He told analysts that the company expected to have 180 shops in operation by the end of October and ready for the holiday shopping season.

“We’re very pleased with the initial results and very excited about this strategic growth initiative,” Lyons said.

For the second half of the year, Finish Line will focus on licensed and branded fleece products, branded apparel for kids, and its expanded assortment of backpacks, Lyons said.

However, “our optimism for the back half of the year is somewhat tempered by the still-challenging retail environment,” he said.