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)

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)
(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
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
Diluted Earnings Per Share Attributable to The Finish Line, Inc. Shareholders, Non-GAAP (Unaudited)
 
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.