Business news : The Finish Line Lowers Guidance on Weak Q3

The Finish Line, Inc. reported a small loss of $107,000, or less than 1 cent a share, in its third quarter ended Dec. 1. Consolidated net sales increased 5.2 percent to $296.6 million in its third quarter with same-store sales increasing 3.6 percent.

Digital sales, which are included in the comparable store sales results, were up 25.0 percent.

The break-even earnings were short of Wall Street's consensus estimate of 10 cents a share. In the year-ago quarter, Finish Line earned $5.5 million, or 11 cents a share.

“The third quarter was clearly more challenging than we anticipated,” said Chairman and Chief Executive Officer Glenn Lyon. “Sales came in below plan due primarily to a shift within athletic footwear trends and a less than favorable consumer response to the new e-commerce site we launched in mid November. Our top-line performance forced us to get more promotional to improve the composition of our inventory ahead of the important Holiday season. At the same time, we did not adjust our cost structure quickly enough in response to slowing sales trends.”
“Following our recent challenges,” Lyon continued, “we have taken immediate actions to improve near-term results. This includes reverting back to our previous e-commerce site, implementing cost controls that allow us to better manage expenses, and elevating the assortment of key basketball products in our stores and online. Looking ahead, we remain committed to developing a premier omni-channel business. We’ll also continue to evaluate the speed of our transformation to ensure that we are best positioned to achieve both our near- and long-term goals.”

Balance Sheet

As of Dec. 1, 2012, consolidated merchandise inventories increased 7.6 percent to $301.7 million compared to $280.4 million as of November 26, 2011. For Finish Line, merchandise inventories increased by 6.3 percent.

As of Dec. 1, 2012, the company had no interest-bearing debt and $168.2 million in cash and cash equivalents, compared to $216.6 million a year ago.

Share Repurchase Program
The company repurchased 1.0 million shares of its outstanding common stock in the third quarter, totaling $21.2 million. Year-to-date, Finish Line repurchased 2.5 million shares totaling $53.6 million. As of Dec. 1, 2012, the company had 1.3 million shares remaining on its current 5 million share authorization. On Jan. 3, 2013, the company’s Board of Directors amended the current repurchase program to increase the authorization by 5 million shares. This amendment also extends the authorization to repurchase shares through Dec. 31, 2017.

Outlook
For the fourth quarter ending March 2, 2013, the company expects earnings per share to be between 74 and 78 cents, compared to 74 cents in the fourth quarter of fiscal 2012, which excludes the 7 cents impact from the 53rd week. This guidance assumes fourth quarter comparable store sales increase in the low single digit range.

For the fiscal year ending March 2, 2013, the company now expects earnings per share to be between $1.47 and $1.51, which is down from $1.60 a share in the prior year. This compares to its previous guidance for an increase of 6 to 9 percent over the $1.53 in fiscal 2012, which excludes the 7 cents a share impact from the 53rd week.

( SportsOneSource Media )