The Finish Line, Inc. (NASDAQ: FINL) today reported results for the thirteen weeks ended May 31, 2014.
For the thirteen weeks ended May 31, 2014:
- Consolidated net sales were $406.5 million, an increase of 15.8% over the prior year period.
- Finish Line comparable store sales increased 5.0%.
- On a GAAP basis, diluted earnings per share increased to $0.25 from $0.10 in the prior year.
- Non-GAAP diluted earnings per share, which excludes the impact of impairment charges in the current year and the impact of start-up costs related to the launch of the company’s operations in Macy’s in the prior year, increased 40.0% to $0.28 compared to $0.20 in the prior year.
“We are very pleased with the strong start to fiscal 2015 we delivered in the first quarter,” said Glenn Lyon, Chairman and Chief Executive Officer. “The integration of our store and digital operations is allowing us to deliver great product and service to consumers in a seamless fashion no matter what channel they choose to shop. At the same time, we are reaching new consumers and expanding market share through our growing relationship with Macy’s. We are confident that our multidivisional, omnichannel strategies will strengthen our market position and drive growth in sales and earnings, allowing us to return increased value to our shareholders in the years ahead.”
Balance Sheet
As of May 31, 2014,
consolidated merchandise inventories increased 0.8% to $295.0 million
compared to $292.6 million as of June 1, 2013.
The company repurchased 700,000 shares of its common stock in the first quarter, totaling $18.7 million. The company has 3.2 million shares remaining on its current Board authorized repurchase program.
As of May 31, 2014, the company had no interest-bearing debt and $196.6 million in cash and cash equivalents, compared to $195.9 million in the prior year.
Outlook
For the fiscal year ending
February 28, 2015, the company still expects Finish Line comparable
store sales to be up mid single digits and earnings per share to
increase in the high single to low double digit range over fiscal year
2014 non-GAAP diluted earnings per share of $1.66.
Q1 Fiscal 2015 Conference Call Today, June 27,
2014 at 8:30 a.m.
The company will host a conference call
for investors today, June 27, 2014, at 8:30 a.m. Eastern. To participate
in the live conference call, dial 866-923-8645 (U.S. and Canada) or
660-422-4970 (International), conference ID #59225560. The live
conference call will also be accessible online at www.finishline.com.
A replay of the conference call can be accessed approximately two hours
following the completion of the call by dialing 855-859-2056, conference
ID #59225560. This recording will be made available through Sunday, July
27, 2014. The replay will also be accessible online at www.finishline.com.
Disclosure Regarding Non-GAAP Measures
This
report refers to certain financial measures that are identified as
non-GAAP. The company believes that these non-GAAP measures, including
gross profit, selling, general and administrative expenses, operating
income, net income attributable to The Finish Line, Inc. and diluted
earnings per share attributable to The Finish Line, Inc. shareholders,
are helpful to investors because they allow for a more direct comparison
of the company’s year-over-year performance and are useful in assessing
the company’s progress in achieving its long-term financial objectives.
This supplemental information should not be considered in isolation or
as a substitute for the related GAAP measures. A reconciliation of the
non-GAAP measures to the comparable GAAP measures can be found in the
company’s Form 8-K filed with the Securities and Exchange Commission
with this release.
About The Finish Line, Inc.
The Finish
Line, Inc. is a premium retailer of athletic shoes, apparel and
accessories. Headquartered in Indianapolis, Finish Line has
approximately 900 stores including more than 260 shops in Macy’s in
malls across the U.S. and employs more than 14,000 sneakerologists who
help customers every day connect with their sport, their life and their
style. Online shopping is available at www.finishline.com
and www.macys.com.
Mobile shopping is available at m.finishline.com.
Follow Finish Line on Twitter at Twitter.com/FinishLine
and “like” Finish Line on Facebook at Facebook.com/FinishLine.
Finish Line also operates the Running Specialty Group. This includes 58 specialty running shops in 12 states and the District of Columbia under The Running Company, Run On!, Blue Mile, Boulder Running Company, Roncker’s Running Spot, Running Fit and VA Runner banners. More information, including the particular states in which stores are located, is available at www.run.com.
Forward-Looking Statements
This news
release includes statements that are or may be considered
“forward-looking” within the meaning of Section 27A of the Securities
Act of 1933 and Section 21E of the Securities Exchange Act of 1934.
These forward-looking statements generally can be identified by the use
of words or phrases such as “believe,” “expect,” “anticipate,” “intend,”
“plan,” “foresee,” “may,” “should,” “will,” “estimates,” “outlook,”
“potential,” “optimistic,” “confidence,” “continue,” “evolve,” “expand,”
“growth” or words and phrases of similar meaning. Statements that
describe objectives, plans or goals also are forward-looking statements.
All of these forward-looking statements are subject to risks, management assumptions and uncertainties that could cause actual results to differ materially from those contemplated by the relevant forward-looking statements. The principal risk factors that could cause actual performance and future actions to differ materially from the forward-looking statements include, but are not limited to, the company’s reliance on a few key vendors for a majority of its merchandise purchases (including a significant portion from one key vendor); the availability and timely receipt of products; the ability to timely fulfill and ship products to customers; fluctuations in oil prices causing changes in gasoline and energy prices, resulting in changes in consumer spending as well as increases in utility, freight and product costs; product demand and market acceptance risks; deterioration of macro-economic and business conditions; the inability to locate and obtain or retain acceptable lease terms for the company’s stores; the effect of competitive products and pricing; loss of key employees; execution of strategic growth initiatives (including actual and potential mergers and acquisitions and other components of the company’s capital allocation strategy); and the other risks detailed in the company’s Securities and Exchange Commission filings. Readers are urged to consider these factors carefully in evaluating the forward-looking statements. The forward-looking statements included herein are made only as of the date of this report and Finish Line undertakes no obligation to publicly update these forward-looking statements to reflect subsequent events or circumstances.
| The Finish Line, Inc. | ||||||||||
Consolidated Statements of Income | ||||||||||
(In thousands, except per share and | ||||||||||
store/shop data) | ||||||||||
| Thirteen Weeks Ended | ||||||||||
| May 31, | June 1, | |||||||||
| 2014 | 2013 | |||||||||
| (Unaudited) | (Unaudited) | |||||||||
| Net sales | $ | 406,531 | $ | 351,053 | ||||||
| Cost of sales (including occupancy costs) | 277,651 | 244,058 | ||||||||
| Gross profit | 128,880 | 106,995 | ||||||||
| Selling, general and administrative expenses | 108,896 | 99,356 | ||||||||
| Store closing costs | 246 | 186 | ||||||||
| Impairment charges | 2,068 | — | ||||||||
| Operating income | 17,670 | 7,453 | ||||||||
| Interest income, net | 7 | 14 | ||||||||
| Income before income taxes | 17,677 | 7,467 | ||||||||
| Income tax expense | 7,022 | 2,953 | ||||||||
| Net income | 10,655 | 4,514 | ||||||||
| Net loss attributable to redeemable noncontrolling interest | 1,780 | 561 | ||||||||
| Net income attributable to The Finish Line, Inc. | $ | 12,435 | $ | 5,075 | ||||||
| Diluted earnings per share attributable to The Finish Line, Inc. shareholders | $ | 0.25 | $ | 0.10 | ||||||
| Diluted weighted average shares | 48,360 | 48,732 | ||||||||
| Dividends declared per share | $ | 0.08 | $ | 0.07 | ||||||
| Finish Line store activity for the period: | ||||||||||
| Beginning of period | 645 | 645 | ||||||||
| Opened | 3 | 10 | ||||||||
| Closed | (3 | ) | (4 | ) | ||||||
| End of period | 645 | 651 | ||||||||
| Square feet at end of period | 3,512,190 | 3,531,314 | ||||||||
| Average square feet per store | 5,445 | 5,424 | ||||||||
| Branded shops within department stores activity for the period: | ||||||||||
| Beginning of period | 185 | 3 | ||||||||
| Opened | 77 | 41 | ||||||||
| Closed | — | — | ||||||||
| End of period | 262 | 44 | ||||||||
| Square feet at end of period | 294,978 | 41,995 | ||||||||
| Average square feet per shop | 1,126 | 954 | ||||||||
| Running Specialty store activity for the period: | ||||||||||
| Beginning of period | 48 | 27 | ||||||||
| Acquired | 8 | 9 | ||||||||
| Opened | 2 | 2 | ||||||||
| Closed | — | — | ||||||||
| End of period | 58 | 38 | ||||||||
| Square feet at end of period | 199,905 | 117,614 | ||||||||
| Average square feet per store | 3,447 | 3,095 | ||||||||
| Thirteen Weeks Ended | ||||||||
| May 31, | June 1, | |||||||
| 2014 | 2013 | |||||||
| Net sales | 100.0 | % | 100.0 | % | ||||
| Cost of sales (including occupancy costs) | 68.3 | 69.5 | ||||||
| Gross profit | 31.7 | 30.5 | ||||||
| Selling, general and administrative expenses | 26.8 | 28.3 | ||||||
| Store closing costs | 0.1 | 0.1 | ||||||
| Impairment charges | 0.5 | — | ||||||
| Operating income | 4.3 | 2.1 | ||||||
| Interest income, net | — | — | ||||||
| Income before income taxes | 4.3 | 2.1 | ||||||
| Income tax expense | 1.7 | 0.8 | ||||||
| Net income | 2.6 | 1.3 | ||||||
| Net loss attributable to redeemable noncontrolling interest | 0.5 | 0.1 | ||||||
| Net income attributable to The Finish Line, Inc. | 3.1 | % | 1.4 | % | ||||
| Condensed Consolidated Balance Sheets | ||||||||||||
| May 31, | June 1, | March 1, | ||||||||||
| 2014 | 2013 | 2014 | ||||||||||
| (Unaudited) | (Unaudited) | |||||||||||
| ASSETS | ||||||||||||
| Cash and cash equivalents | $ | 196,583 | $ | 195,906 | $ | 229,079 | ||||||
| Merchandise inventories, net | 294,990 | 292,551 | 304,209 | |||||||||
| Other current assets | 26,526 | 19,574 | 33,675 | |||||||||
| Property and equipment, net | 228,722 | 183,593 | 223,182 | |||||||||
| Goodwill | 29,458 | 21,544 | 25,608 | |||||||||
| Other assets, net | 8,422 | 22,070 | 9,192 | |||||||||
| Total assets | $ | 784,701 | $ | 735,238 | $ | 824,945 | ||||||
| LIABILITIES AND SHAREHOLDERS' EQUITY | ||||||||||||
| Current liabilities | $ | 162,361 | $ | 162,662 | $ | 193,670 | ||||||
| Deferred credits from landlords | 28,674 | 27,618 | 27,658 | |||||||||
| Other long-term liabilities | 21,632 | 17,441 | 19,659 | |||||||||
| Redeemable noncontrolling interest, net | 561 | 3,097 | 1,774 | |||||||||
| Shareholders' equity | 571,473 | 524,420 | 582,184 | |||||||||
| Total liabilities and shareholders' equity | $ | 784,701 | $ | 735,238 | $ | 824,945 | ||||||
The Finish Line, Inc. | ||||||||||||||||||
Reconciliation of Gross Profit, GAAP to Gross Profit, Non-GAAP (unaudited) | ||||||||||||||||||
(In thousands) | ||||||||||||||||||
| Thirteen Weeks Ended | ||||||||||||||||||
| May 31, 2014 | June 1, 2013 | |||||||||||||||||
| Gross profit, GAAP | $ | 128,880 | 31.7 | % | $ | 106,995 | 30.5 | % | ||||||||||
| Start-up costs | — | — | 5,758 | 1.6 | ||||||||||||||
| Gross profit, Non-GAAP | $ | 128,880 | 31.7 | % | $ | 112,753 | 32.1 | % | ||||||||||
Reconciliation of Selling, General and Administrative Expenses, GAAP to | ||||||||||||||||||
Selling, General and Administrative Expenses, Non-GAAP (unaudited) | ||||||||||||||||||
(In thousands) | ||||||||||||||||||
| Thirteen Weeks Ended | ||||||||||||||||||
| May 31, 2014 | June 1, 2013 | |||||||||||||||||
| Selling, general and administrative expenses, GAAP | $ | 108,896 | 26.8 | % | $ | 99,356 | 28.3 | % | ||||||||||
| Start-up costs | — | — | (2,202 | ) | (0.6 | ) | ||||||||||||
| Selling, general and administrative expenses, Non-GAAP | $ | 108,896 | 26.8 | % | $ | 97,154 | 27.7 | % | ||||||||||
Reconciliation of Operating Income, GAAP to Operating Income, Non-GAAP (unaudited) | ||||||||||||||||||
(In thousands) | ||||||||||||||||||
| Thirteen Weeks Ended | ||||||||||||||||||
| May 31, 2014 | June 1, 2013 | |||||||||||||||||
| Operating income, GAAP | $ | 17,670 | 4.3 | % | $ | 7,453 | 2.1 | % | ||||||||||
| Impairment charges | 2,068 | 0.5 | — | — | ||||||||||||||
| Start-up costs | — | — | 7,960 | 2.3 | ||||||||||||||
| Operating income, Non-GAAP | $ | 19,738 | 4.8 | % | $ | 15,413 | 4.4 | % | ||||||||||
Reconciliation of Net Income Attributable to The Finish Line, Inc., GAAP to | ||||||||||||||||||
Net Income Attributable to The Finish Line, Inc., Non-GAAP (unaudited) | ||||||||||||||||||
(In thousands) | ||||||||||||||||||
| Thirteen Weeks Ended | ||||||||||||||||||
| May 31, 2014 | June 1, 2013 | |||||||||||||||||
| Net income attributable to The Finish Line, Inc., GAAP | $ | 12,435 | 3.1 | % | $ | 5,075 | 1.4 | % | ||||||||||
| Impairment charges* | 1,977 | 0.5 | — | — | ||||||||||||||
| Start-up costs | — | — | 7,960 | 2.3 | ||||||||||||||
| Decrease in income tax expense | (761 | ) | (0.2 | ) | (3,109 | ) | (0.9 | ) | ||||||||||
| Net income attributable to The Finish Line, Inc., Non-GAAP | $ | 13,651 | 3.4 | % | $ | 9,926 | 2.8 | % | ||||||||||
* Net of decrease to net loss attributable to redeemable noncontrolling interest related to impairment charges of $91. | ||||||||||||||||||
Reconciliation of Diluted Earnings Per Share Attributable to The Finish Line, Inc. Shareholders, GAAP to | |||||||||
Diluted Earnings Per Share Attributable to The Finish Line, Inc. Shareholders, Non-GAAP (unaudited) | |||||||||
| Thirteen Weeks Ended | |||||||||
| May 31, 2014 | June 1, 2013 | ||||||||
| Diluted earnings per share attributable to The Finish Line, Inc. shareholders, GAAP | $ | 0.25 | $ | 0.10 | |||||
| Impairment charges, net of income taxes and redeemable noncontrolling interest | 0.03 | — | |||||||
| Start-up costs, net of income taxes | — | 0.10 | |||||||
| Diluted earnings per share attributable to The Finish Line, Inc. shareholders, Non-GAAP | $ | 0.28 | $ | 0.20 | |||||
Note: See Disclosure Regarding Non-GAAP Measures above. | |||||||||
Contacts:
Media Contact:
Dianna L. Boyce,
Corporate Communications, 317-613-6577
or
Investor Contact:
Ed
Wilhelm, Chief Financial Officer, 317-613-6914
