Finish Line Q3 Profit Rises, Cuts Outlook - Update

(RTTNews) - Athletic shoes and apparel retailer Finish Line, Inc. (FINL) Friday reported a rise in the third-quarter profit, reflecting higher sales, lower impairment charges and store closing costs, as well as a tax benefit. Earnings per share remained flat with last year.

The firm lowered its adjusted earnings and comparable-store sales outlook for the fiscal year. The shares are down about 13 percent in pre-market trading.

For the 13 weeks ended November 29, 2014, net income attributable to the company increased to $2.58 million from $2.32 million in the previous year. Earnings per share remained flat with last year at $0.05.

On a non-GAAP basis, the company posted a loss of $0.02 per share, that excluded the impact of impairment charges and store closing costs, employee resignation costs and recognition of a one-time tax benefit. For the prior-year quarter, non-GAAP earnings were $0.06 per share.

On average, 20 analysts polled by Thomson Reuters expected the company to report earnings of $0.01 per share for the quarter. Analysts' estimates typically exclude special items.

Impairment charges and store closing costs fell to $ 462 thousand from $1.01 million a year earlier. Income tax benefit totaled $6.13 million, compared to an expense of $1.16 million in the preceding year.

Net sales for the quarter grew 8.6 percent to $395.83 million from $364.46 million a year ago. Analysts expected sales of $390.95 million for the period. Finish Line comparable-store sales increased by 4.5 percent.

"Third quarter comparable sales rebounded from second quarter trends, however merchandise margin pressure kept us from achieving our profitability plan," said Glenn Lyon, chairman and chief executive officer.

For the fiscal year ending February 28, 2015, the company now expects non-GAAP earnings per share to be flat to fiscal year 2014 non-GAAP earnings per share of $1.67. Analysts project annual earnings per share of $1.79.

Earlier, the firm expected fiscal 2015 earnings per share to increase in the high single to low double digit range from prior year.

The company expects Finish Line comparable-store sales to increase low to mid-single digits, compared to the earlier forecast of an increase in mid single digits.

FINL closed Thursday's trading at $28.90. In the pre-market activity on Friday, the shares are down 12.63 percent.