Finish Line Reports Second Quarter Fiscal Year 2016 Results
INDIANAPOLIS–(BUSINESS WIRE)–The Finish Line, Inc. (NASDAQ: FINL) today reported results for the
thirteen weeks ended August 29, 2015.
For the thirteen weeks ended August 29, 2015:
-
Consolidated net sales were $483.2 million, an increase of 3.5% over
the prior year period. - Finish Line comparable store sales increased 1.5%.
-
Diluted earnings per share increased to $0.57 from $0.54 in the prior
year.
“We are pleased with the bottom line performance we achieved on modest
sales growth,” said Glenn Lyon, Chairman and Chief Executive Officer of
Finish Line. “With our new supply chain system now live, we have
accomplished a critical milestone which elevates our customer service
levels even higher while driving efficiencies throughout our
organization. The combination of our enhanced infrastructure and strong
vendor partnerships has us well positioned to deliver the latest and
greatest merchandise assortments our customers will be looking for this
holiday season and beyond.”
Balance Sheet
As of August 29, 2015, consolidated merchandise inventories increased
11.0% to $366.3 million compared to $329.9 million as of August 30,
2014. The increase in inventories was driven primarily by higher
receipts to support projected sales gains in September which benefited
from the later Labor Day compared with last year.
The company repurchased approximately 167,000 shares of common stock in
the second quarter, totaling $4.6 million. The company has 4.8 million
shares remaining on its current Board authorized repurchase program.
As of August 29, 2015, the company had no interest-bearing debt and
$100.2 million in cash and cash equivalents.
Outlook
For the fiscal year ending February 27, 2016, the company still expects
comparable store sales to be up in the low single to mid single digit
range and earnings per share to increase in the low single to mid single
digit range over fiscal year 2015 non-GAAP diluted earnings per share of
$1.67.
Q2 Fiscal 2016 Conference Call Today, September
25, 2015 at 8:30 a.m.
The company will host a conference call for investors today, September
25, 2015, 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 #36575877. 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 #36575877. This recording will be made available through Monday,
October 26, 2015. 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
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 1,010 Finish Line branded locations primarily in U.S.
malls and shops inside Macy’s department stores 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
or Twitter.com/FinishLineNews
and “like” Finish Line on Facebook at Facebook.com/FinishLine.
Track loyalty points and find store and product information with the
free Finish Line app downloadable for iOS
and Android
customers.
Finish Line also operates the Running Specialty Group. This includes 76
specialty running stores in 17 states and the District of Columbia under
the JackRabbit, The Running Company, Run On!, Blue Mile, Boulder Running
Company, Roncker’s Running Spot, Running Fit, VA Runner, Capital
RunWalk, Richmond RoadRunner, Garry Gribble’s Running Sports, Run
Colorado, Raleigh Running Outfitters, Striders and Indiana Running
Company banners. More information is available at www.jackrabbit.com
or www.boulderrunningcompany.com.
Follow the latest about the brand on Twitter or Instagram via
@JackRabbitNYC.
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,” “future,” “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); cybersecurity risks, including
breach of customer data; a major failure of technology and information
systems 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 (Unaudited) | ||||||||||||||||||||
|
(In thousands, except per share and store/shop data) |
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| Thirteen Weeks Ended | Twenty-Six Weeks Ended | |||||||||||||||||||
| August 29, | August 30, | August 29, | August 30, | |||||||||||||||||
| 2015 | 2014 | 2015 | 2014 | |||||||||||||||||
| Net sales | $ | 483,150 | $ | 466,880 | $ | 926,544 | $ | 873,411 | ||||||||||||
| Cost of sales (including occupancy costs) | 323,943 | 311,760 | 628,361 | 589,411 | ||||||||||||||||
| Gross profit | 159,207 | 155,120 | 298,183 | 284,000 | ||||||||||||||||
| Selling, general and administrative expenses | 117,604 | 111,882 | 234,061 | 220,778 | ||||||||||||||||
| Impairment charges and store closing costs | 160 | 379 | 328 | 2,693 | ||||||||||||||||
| Operating income | 41,443 | 42,859 | 63,794 | 60,529 | ||||||||||||||||
| Interest income (expense), net | 1 | (1 | ) | (1 | ) | 6 | ||||||||||||||
| Income before income taxes | 41,444 | 42,858 | 63,793 | 60,535 | ||||||||||||||||
| Income tax expense | 15,583 | 16,699 | 24,198 | 23,721 | ||||||||||||||||
| Net income | 25,861 | 26,159 | 39,595 | 36,814 | ||||||||||||||||
| Net loss (income) attributable to redeemable noncontrolling interest | 41 | (2 | ) | 96 | 1,778 | |||||||||||||||
| Net income attributable to The Finish Line, Inc. | $ | 25,902 | $ | 26,157 | $ | 39,691 | $ | 38,592 | ||||||||||||
|
Diluted earnings per share attributable to The Finish Line, Inc. shareholders |
$ | 0.57 | $ | 0.54 | $ | 0.86 | $ | 0.79 | ||||||||||||
| Diluted weighted average shares | 45,207 | 48,202 | 45,463 | 48,281 | ||||||||||||||||
| Dividends declared per share | $ | 0.09 | $ | 0.08 | $ | 0.18 | $ | 0.16 | ||||||||||||
| Finish Line store activity for the period: | ||||||||||||||||||||
| Beginning of period | 624 | 645 | 637 | 645 | ||||||||||||||||
| Opened | 3 | 4 | 5 | 7 | ||||||||||||||||
| Closed | (7 | ) | (2 | ) | (22 | ) | (5 | ) | ||||||||||||
| End of period | 620 | 647 | 620 | 647 | ||||||||||||||||
| Square feet at end of period | 3,395,611 | 3,523,755 | ||||||||||||||||||
| Average square feet per store | 5,477 | 5,446 | ||||||||||||||||||
| Branded shops within department stores activity for the period: | ||||||||||||||||||||
| Beginning of period | 395 | 262 | 395 | 185 | ||||||||||||||||
| Opened | — | 109 | — | 186 | ||||||||||||||||
| Closed | (1 | ) | (1 | ) | (1 | ) | (1 | ) | ||||||||||||
| End of period | 394 | 370 | 394 | 370 | ||||||||||||||||
| Square feet at end of period | 448,861 | 372,672 | ||||||||||||||||||
| Average square feet per shop | 1,139 | 1,007 | ||||||||||||||||||
| Running Specialty store activity for the period: | ||||||||||||||||||||
| Beginning of period | 76 | 58 | 71 | 48 | ||||||||||||||||
| Acquired | — | — | 4 | 8 | ||||||||||||||||
| Opened | — | — | 1 | 2 | ||||||||||||||||
| Closed | — | — | — | — | ||||||||||||||||
| End of period | 76 | 58 | 76 | 58 | ||||||||||||||||
| Square feet at end of period | 275,571 | 199,905 | ||||||||||||||||||
| Average square feet per store | 3,626 | 3,447 | ||||||||||||||||||
| Thirteen Weeks Ended | Twenty-Six Weeks Ended | |||||||||||||||
| August 29, | August 30, | August 29, | August 30, | |||||||||||||
| 2015 | 2014 | 2015 | 2014 | |||||||||||||
| Net sales | 100.0 | % | 100.0 | % | 100.0 | % | 100.0 | % | ||||||||
| Cost of sales (including occupancy costs) | 67.0 | 66.8 | 67.8 | 67.5 | ||||||||||||
| Gross profit | 33.0 | 33.2 | 32.2 | 32.5 | ||||||||||||
| Selling, general and administrative expenses | 24.4 | 24.0 | 25.3 | 25.3 | ||||||||||||
| Impairment charges and store closing costs | — | — | — | 0.3 | ||||||||||||
| Operating income | 8.6 | 9.2 | 6.9 | 6.9 | ||||||||||||
| Interest income (expense), net | — | — | — | — | ||||||||||||
| Income before income taxes | 8.6 | 9.2 | 6.9 | 6.9 | ||||||||||||
| Income tax expense | 3.2 | 3.6 | 2.6 | 2.7 | ||||||||||||
| Net income | 5.4 | 5.6 | 4.3 | 4.2 | ||||||||||||
| Net loss (income) attributable to redeemable noncontrolling interest | — | — | — | 0.2 | ||||||||||||
| Net income attributable to The Finish Line, Inc. | 5.4 | % | 5.6 | % | 4.3 | % | 4.4 | % | ||||||||
| Condensed Consolidated Balance Sheets | ||||||||||||||
| August 29, | August 30, | February 28, | ||||||||||||
| 2015 | 2014 | 2015 | ||||||||||||
| (Unaudited) | (Unaudited) | |||||||||||||
| ASSETS | ||||||||||||||
| Cash and cash equivalents | $ | 100,234 | $ | 190,583 | $ | 149,569 | ||||||||
| Merchandise inventories, net | 366,335 | 329,924 | 343,403 | |||||||||||
| Other current assets | 44,263 | 27,104 | 37,685 | |||||||||||
| Property and equipment, net | 278,405 | 246,674 | 274,360 | |||||||||||
| Goodwill | 44,507 | 29,458 | 34,719 | |||||||||||
| Other assets, net | 9,101 | 9,013 | 10,119 | |||||||||||
| Total assets | $ | 842,845 | $ | 832,756 | $ | 849,855 | ||||||||
| LIABILITIES AND SHAREHOLDERS’ EQUITY | ||||||||||||||
| Current liabilities | $ | 188,383 | $ | 186,282 | $ | 197,497 | ||||||||
| Deferred credits from landlords | 31,503 | 29,856 | 29,143 | |||||||||||
| Other long-term liabilities | 32,280 | 21,273 | 33,481 | |||||||||||
| Redeemable noncontrolling interest, net | — | 563 | 90 | |||||||||||
| Shareholders’ equity | 590,679 | 594,782 | 589,644 | |||||||||||
| Total liabilities and shareholders’ equity | $ | 842,845 | $ | 832,756 | $ | 849,855 | ||||||||
|
Reconciliation of Operating Income, GAAP to Operating Income, Non-GAAP (Unaudited) |
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| (In thousands) | ||||||||||||||||||||||||||||||||||||
| Thirteen Weeks Ended | Twenty-Six Weeks Ended | |||||||||||||||||||||||||||||||||||
| August 29, 2015 | August 30, 2014 | August 29, 2015 | August 30, 2014 | |||||||||||||||||||||||||||||||||
| Operating income, GAAP | $ | 41,443 | 8.6 | % | $ | 42,859 | 9.2 | % | $ | 63,794 | 6.9 | % | $ | 60,529 | 6.9 | % | ||||||||||||||||||||
| Impairment charges and store closing costs | 160 | — | 379 | — | 328 | — | 2,693 | 0.3 | ||||||||||||||||||||||||||||
| Operating income, Non-GAAP | $ | 41,603 | 8.6 | % | $ | 43,238 | 9.2 | % | $ | 64,122 | 6.9 | % | $ | 63,222 | 7.2 | % | ||||||||||||||||||||
|
Reconciliation of Net Income Attributable to The Finish Line, Inc., GAAP to |
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|
Net Income Attributable to The Finish Line, Inc., Non-GAAP (Unaudited) |
||||||||||||||||||||||||||||||||||||
| (In thousands) | ||||||||||||||||||||||||||||||||||||
| Thirteen Weeks Ended | Twenty-Six Weeks Ended | |||||||||||||||||||||||||||||||||||
| August 29, 2015 | August 30, 2014 | August 29, 2015 | August 30, 2014 | |||||||||||||||||||||||||||||||||
| Net income attributable to The Finish Line, Inc., GAAP | $ | 25,902 | 5.4 | % | $ | 26,157 | 5.6 | % | $ | 39,691 | 4.3 | % | $ | 38,592 | 4.4 | % | ||||||||||||||||||||
|
Impairment charges and store closing costs, net of income taxes and redeemable noncontrolling interest |
98 | — | 233 | — | 202 | — | 1,600 | 0.2 | ||||||||||||||||||||||||||||
| Net income attributable to The Finish Line, Inc., Non-GAAP | $ | 26,000 | 5.4 | % | $ | 26,390 | 5.6 | % | $ | 39,893 | 4.3 | % | $ | 40,192 | 4.6 | % | ||||||||||||||||||||
|
Reconciliation of Diluted Earnings Per Share Attributable to The Finish Line, Inc. Shareholders, GAAP to |
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|
Diluted Earnings Per Share Attributable to The Finish Line, Inc. Shareholders, Non-GAAP (Unaudited) |
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| Thirteen Weeks Ended | Twenty-Six Weeks Ended | ||||||||||||||||||
| August 29, | August 30, | August 29, | August 30, | ||||||||||||||||
| 2015 | 2014 | 2015 | 2014 | ||||||||||||||||
|
Diluted earnings per share attributable to The Finish Line, Inc. shareholders, GAAP |
$ | 0.57 | $ | 0.54 | $ | 0.86 | $ | 0.79 | |||||||||||
|
Impairment charges and store closing costs, net of income taxes and redeemable noncontrolling interest |
— | — | 0.01 | 0.03 | |||||||||||||||
|
Diluted earnings per share attributable to The Finish Line, Inc. shareholders, Non-GAAP |
$ | 0.57 | $ | 0.54 | $ | 0.87 | $ | 0.82 | |||||||||||
Note: See Disclosure Regarding Non-GAAP Measures above.
Contacts
The Finish Line, Inc.
Media:
Dianna Boyce, 317-613-6577
Corporate
Communications
or
Investors:
Ed Wilhelm,
317-613-6914
Chief Financial Officer
