The Finish Line Inc.
) posted adjusted earnings per share of 24 cents in the first
quarter of fiscal 2013, beating the Zacks Consensus Estimate by a
penny. However, the quarterly earnings per share were 6 cents below
the year-ago results.
Indianapolis based Finish Line reported year-over-year net sales
growth of 6.5% in the quarter to $319.0 million backed by strong
comparable sales (comps). However, the sales figure slightly fell
short of the Zacks Consensus Estimate of $321.0 million. Comps
increased 8%, with store comps growing 6% and digital comps
By category, footwear comps, which accounted for 89% of the
first-quarter mix, were up 8.5%. In the footwear category, running
comps increased at low double digits. Average selling price at
Footwear increased 5.5%. Soft good's comps increased 4.6%. 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 1.4%
year over year to $104.7 million. Gross margin shrunk 150 basis
points year over year to 33.0%.
At quarter end, Finish Line had cash and cash equivalents of
$262.0 million, compared with $307.5 million in the year-ago
period. The company had no interest-bearing debt.
Finish Line bought back 1.5 million shares in the first quarter
for $32.4 million. The company has now 2.3 million shares left in
its authorization of 5 million shares.
Finish Line opened 9 stores during the quarter and closed 6. In
addition, the company relocated or refurbished 7 stores and ended
the quarter with 640 units.
Finish Line expects its earnings per share to grow 6-7% year
over year in fiscal 2013. The guidance takes an annual comparable
store sales growth of 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. However,
management set itself a target to achieve $2 billion in sales and
$2.50 in earnings per share by fiscal 2016.
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
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