The Finish Line Inc.
) posted earnings of 49 cents per share in the second quarter of
fiscal 2013. The quarterly earnings per share beat the Zacks
Consensus Estimate of 44 cents and were ahead of the year-ago
results of 39 cents.
Indianapolis-based Finish Line reported year-over-year net sales
growth of 16.1% in the quarter to $385.0 million backed by strong
comparable sales (comps). Comps increased 12.3% versus 11% growth
recorded in the year-ago period. Sales in the quarter under review
were buoyed by market share gains in running and basketball
By category, Footwear comps were up 13.5%. Average selling price
at Footwear increased 10.4%. Soft good's comps increased 3.6%. The
company's decision to leave the private label business marred soft
goods' sales to some extent.
During the quarter, Finish Line's gross profit nudged up 15.7%
year over year to $134.6 million. Gross margin shrunk 10 basis
points year over year to 35.0%.
At quarter end, Finish Line had cash and cash equivalents of
$254.2 million. The company had no interest-bearing debt.
Finish Line did not repurchase any shares during the quarter.
The company has now 2.3 million shares left in its authorization of
5 million shares.
Finish Line opened four stores during the quarter and closed
six. In addition, the company relocated or refurbished 15 stores
and ended the quarter with 638 units. At quarter-end, the company
had 19 Running Company stores.
Finish Line expects its earnings per share to grow 6-9% year
over year (previous range was 6-7%) in fiscal 2013. The guidance
takes an annual comparable store sales growth of 6-8% (previous
range was 5-6%) into account.
This premium retailer of athletic shoes, apparel and accessories
is in a strong product cycle for athletic footwear. The uptrend in
comps will continue to bode well for the company.
However, management embarked on a set of initiatives to spur
technology, stores and digital capabilities and consequently
invested substantially. This will lead to increased SG&A
expenses and constrained operating margins in 2013.
In the upcoming third and fourth quarters, management expects to
witness deleverage in store occupancy. Beginning fiscal 2014,
management expects to leverage the same.
Finish Line, which competes with
), currently, retains a Zacks #2 Rank (short-term Buy rating). For
the long term, we reiterate our Neutral recommendation on the
FINISH LINE-CLA (FINL): Free Stock Analysis
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