The Finish Line Inc.
) recently raised its projected comparable store sales and earnings
for the first quarter of 2012. Now, Finish Line expects comparable
store sales to increase nearly 8.5% from the earlier projection in
the mid single-digit range. Diluted earnings per share are expected
between 22 cents and 23 cents versus the previously targeted level
of 21 cents.
This premium retailer of athletic shoes, apparel and accessories
is in a strong product cycle for athletic footwear. The uptrend in
comps is likely to bode well for the company. Finish Line also
provided an update for its long-term operating goal through 2016.
The company has projected consolidated net sales around 2.0
billion, operating income around $200 million, diluted earnings per
share of approximately $2.50 and return of invested capital of 25%.
Finish Line has so far been committed to close
under-performing stores, revamp old stores, renegotiate leases and
lower occupancy costs.
However, management embarked on a set of initiatives to spur
technology, stores and digital capabilities and has consequently
invested substantially. While all the efforts centering around the
ecommerce and specialty running business will pay off longer term,
increased investment will lead to steeper SG&A expenses
resulting in constrained operating margins in 2013 that could in
turn weigh on earnings per share. However, management expects
earnings to pick up beginning fiscal 2014, as the investments begin
to reap returns. The company's current fiscal year product pipeline
remains strong led by Nike, Jordan and Adidas. Further, a price
increase by vendors is also a positive catalyst at the current
Following the guidance raise, one out of seven analysts
increased the estimate over the last 7 days while the Zacks
Consensus Estimate remains unchanged at 22 cents. Finish
Line, which competes with
) currently, retains a Zacks #3 Rank (short-term Hold rating). For
the long term, we reiterate our Neutral recommendation on the
stock. The company is slated to release its first-quarter 2012
results on June 28 2012.
FINISH LINE-CLA (FINL): Free Stock Analysis
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