Finish Line Sprints to Win

The Finish Line Inc. (NASDAQ: FINL) reported fiscal second-quarter 2013 diluted earnings per share (EPS) of $0.39 on revenue of $385 million. In the same period a year ago, the athletic gear retailer reported diluted EPS of $1.36 on revenue of $331.5 million. Second-quarter results compare to the Thomson Reuters consensus estimates for EPS of $0.44 and $358.3 million in revenue.

The company also said same-store sales for the quarter rose 12.3% year-over-year, higher than the 11% in 2011 compared with 2010.

Finish Line’s chairman and CEO said:

Second quarter sales were driven by market share gains in running and basketball as we have been able to capitalize on recent trends in each category enabled by our strong relationships with both vendors and consumers. Importantly, we translated a 16% top-line increase into 26% earnings growth even as we make the necessary investments in order to successfully execute our omni-channel vision.

The company guided full-year EPS to a range of 6% to 9% higher than last year’s total of $1.53. That translates to a range of $1.62 to $1.68. The consensus estimate calls for EPS of $1.66. The company also expects full-year same store sales to rise by 6% to 8%.

Another highlight for the quarter was the jump in comparable sales for Finish Line’s online store. Comparable online sales rose 29.6%. Gross margins came in at 35%, slightly below the 35.1% gross margin posted a year ago.

The company has no long-term debt and more than $250 million in cash and equivalents. If there is one cautionary note in today’s report, it is that inventory is up 9% compared with the same period of last year.

Finish Line’s shares are up about 4% in premarket trading, at $23.76. The 52-week range is $17.87 to $26.16. Thomson Reuters had a consensus analyst price target of $25.82 before today’s report.

Paul Ausick