Finish Line Reports Fourth Quarter and Full Fiscal Year 2016 Results
INDIANAPOLIS–(BUSINESS WIRE)–The Finish Line, Inc. (NASDAQ: FINL) today reported results for the
fourth quarter and fiscal year 2016, representing the thirteen and
fifty-two weeks ended February 27, 2016.
For the thirteen weeks ended February 27, 2016:
-
Consolidated net sales were $580.3 million, an increase of 5.2% over
the prior year period. - Finish Line comparable store sales increased 4.6%.
- On a GAAP basis, diluted earnings per share were $0.09.
-
Non-GAAP diluted earnings per share, which primarily excludes the
impact from the write-off of technology assets and store impairment
charges, were $0.83.
For the fifty-two weeks ended February 27, 2016:
-
Consolidated net sales were a record $1.89 billion, an increase of
3.8% over the prior year. - Finish Line comparable store sales increased 1.8%.
- On a GAAP basis, diluted earnings per share were $0.48.
-
Non-GAAP diluted earnings per share, which primarily excludes the
impact from the write-off of technology assets and store impairment
charges, were $1.21.
“We worked diligently to improve digital fulfillment rates and flow new
inventory to our stores during the fourth quarter which helped us
achieve a mid-single digit comparable sales increase and adjusted
earnings per share at the high-end of our guidance range,” said Sam
Sato, Chief Executive Officer of Finish Line. “In addition to achieving
optimal performance from our supply chain, our top priorities are
continuing to bolster our vendor relationships and fortifying the
foundational strengths of the company through new leadership and
improved processes. I am confident that elevating our execution across
the organization will result in an enhanced customer experience and
drive profitable growth and increased shareholder value over the
long-term.”
Balance Sheet
As of February 27, 2016, consolidated merchandise inventories increased
9.6% to $376.5 million compared to $343.4 million as of February 28,
2015. The increase was driven in part by a seasonal build in merchandise
inventories associated with an earlier Easter compared to the prior
year. On a segment basis, merchandise inventories increased double
digits at Macy’s and JackRabbit and mid-single digits at Finish Line.
The company repurchased 2.0 million shares of common stock in the fourth
quarter totaling $34.3 million. For the full year, Finish Line
repurchased 3.9 million shares totaling $79.9 million. The company has
2.3 million shares remaining on its current Board authorized repurchase
program.
As of February 27, 2016, the company had no interest-bearing debt and
$79.5 million in cash and cash equivalents, compared to $149.6 million
as of February 28, 2015.
Non-GAAP Adjustments
During the fourth quarter, the company recorded $52.8 million in
non-GAAP adjustments, of which $51.0 million was non-cash. These
adjustments primarily consisted of a $33.3 million write-off of
technology assets. The remaining $19.5 million was primarily related to
store impairment charges.
Outlook
For the fiscal year ending February 25, 2017, Finish Line expects
comparable store sales to increase in the 3% to 5% range and earnings
per share to be between $1.50 and $1.56.
Q4 Fiscal 2016 Conference Call Today, March 24,
2016 at 8:30 a.m.
The company will host a conference call for investors today, March 24,
2016, 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 #69202458. 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 #69202458. This recording will be made available through Sunday,
April 24, 2016. The replay will also be accessible online at www.finishline.com.
Annual Meeting July 14, 2016
The company’s Board of Directors has established July 14, 2016 as the
date of the 2016 annual meeting of shareholders, with May 13, 2016 as
the record date for this meeting.
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
selling, general, and administrative expenses, operating income, income
tax expense, 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 980 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 JackRabbit (previously referred to by the
company as Running Specialty Group), which includes 72 specialty running
stores in 16 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 at Twitter.com/JackRabbit
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 macroeconomic 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 | ||||||||||||||||||||
(In thousands, except per share and store/shop data) | ||||||||||||||||||||
Thirteen Weeks Ended | Fifty-Two Weeks Ended | |||||||||||||||||||
February 27, | February 28, | February 27, | February 28, | |||||||||||||||||
2016 | 2015 | 2016 | 2015 | |||||||||||||||||
(Unaudited) | (Unaudited) | (Unaudited) | ||||||||||||||||||
Net sales | $ | 580,254 | $ | 551,347 | $ | 1,888,888 | $ | 1,820,586 | ||||||||||||
Cost of sales (including occupancy costs) | 383,961 | 363,298 | 1,305,896 | 1,236,783 | ||||||||||||||||
Gross profit | 196,293 | 188,049 | 582,992 | 583,803 | ||||||||||||||||
Selling, general, and administrative expenses | 144,580 | 123,754 | 503,660 | 459,455 | ||||||||||||||||
Impairment charges and store closing costs | 48,183 | 763 | 48,692 | 3,918 | ||||||||||||||||
Operating income | 3,530 | 63,532 | 30,640 | 120,430 | ||||||||||||||||
Interest expense, net | 61 | 21 | 65 | 15 | ||||||||||||||||
Income before income taxes | 3,469 | 63,511 | 30,575 | 120,415 | ||||||||||||||||
Income tax (benefit) expense | (567 | ) | 23,078 | 8,779 | 40,673 | |||||||||||||||
Net income | 4,036 | 40,433 | 21,796 | 79,742 | ||||||||||||||||
Net loss attributable to redeemable noncontrolling interest | — | 390 | 96 | 2,251 | ||||||||||||||||
Net income attributable to The Finish Line, Inc. | $ | 4,036 | $ | 40,823 | $ | 21,892 | $ | 81,993 | ||||||||||||
Diluted earnings per share attributable to The Finish Line, Inc. shareholders |
$ | 0.09 | $ | 0.87 | $ | 0.48 | $ | 1.70 | ||||||||||||
Diluted weighted average shares | 43,513 | 46,593 | 44,787 | 47,658 | ||||||||||||||||
Dividends declared per share | $ | 0.10 | $ | 0.09 | $ | 0.37 | $ | 0.33 | ||||||||||||
Finish Line store activity for the period: | ||||||||||||||||||||
Beginning of period | 617 | 642 | 637 | 645 | ||||||||||||||||
Opened | — | 1 | 8 | 10 | ||||||||||||||||
Closed | (26 | ) | (6 | ) | (54 | ) | (18 | ) | ||||||||||||
End of period | 591 | 637 | 591 | 637 | ||||||||||||||||
Square feet at end of period | 3,278,039 | 3,471,448 | ||||||||||||||||||
Average square feet per store | 5,547 | 5,450 | ||||||||||||||||||
Branded shops within department stores activity for the period: | ||||||||||||||||||||
Beginning of period | 394 | 397 | 395 | 185 | ||||||||||||||||
Opened | — | — | 1 | 213 | ||||||||||||||||
Closed | (2 | ) | (2 | ) | (4 | ) | (3 | ) | ||||||||||||
End of period | 392 | 395 | 392 | 395 | ||||||||||||||||
Square feet at end of period | 476,533 | 404,521 | ||||||||||||||||||
Average square feet per shop | 1,216 | 1,024 | ||||||||||||||||||
JackRabbit store activity for the period: | ||||||||||||||||||||
Beginning of period | 74 | 66 | 71 | 48 | ||||||||||||||||
Acquired | — | 5 | 4 | 20 | ||||||||||||||||
Opened | — | — | 1 | 3 | ||||||||||||||||
Closed | (2 | ) | — | (4 | ) | — | ||||||||||||||
End of period | 72 | 71 | 72 | 71 | ||||||||||||||||
Square feet at end of period | 262,761 | 262,148 | ||||||||||||||||||
Average square feet per store | 3,649 | 3,692 | ||||||||||||||||||
Thirteen Weeks Ended | Fifty-Two Weeks Ended | |||||||||||||||
February 27, | February 28, | February 27, | February 28, | |||||||||||||
2016 | 2015 | 2016 | 2015 | |||||||||||||
Net sales | 100.0 | % | 100.0 | % | 100.0 | % | 100.0 | % | ||||||||
Cost of sales (including occupancy costs) | 66.2 | 65.9 | 69.1 | 67.9 | ||||||||||||
Gross profit | 33.8 | 34.1 | 30.9 | 32.1 | ||||||||||||
Selling, general, and administrative expenses | 24.9 | 22.4 | 26.7 | 25.3 | ||||||||||||
Impairment charges and store closing costs |
8.3 | 0.1 | 2.6 | 0.2 | ||||||||||||
Operating income | 0.6 | 11.6 | 1.6 | 6.6 | ||||||||||||
Interest expense, net | — | — | — | — | ||||||||||||
Income before income taxes | 0.6 | 11.6 | 1.6 | 6.6 | ||||||||||||
Income tax (benefit) expense | (0.1 | ) | 4.2 | 0.4 | 2.2 | |||||||||||
Net income | 0.7 | 7.4 | 1.2 | 4.4 | ||||||||||||
Net loss attributable to redeemable noncontrolling interest | — | — | — | 0.1 | ||||||||||||
Net income attributable to The Finish Line, Inc. | 0.7 | % | 7.4 | % | 1.2 | % | 4.5 | % | ||||||||
Condensed Consolidated | |||||||||
Balance Sheets | |||||||||
February 27, | February 28, | ||||||||
2016 | 2015 | ||||||||
(Unaudited) | |||||||||
ASSETS | |||||||||
Cash and cash equivalents | $ | 79,495 | $ | 149,569 | |||||
Merchandise inventories, net | 376,506 | 343,403 | |||||||
Other current assets | 65,352 | 37,685 | |||||||
Property and equipment, net | 243,393 | 274,360 | |||||||
Goodwill | 44,029 | 34,719 | |||||||
Other assets, net | 8,773 | 10,119 | |||||||
Total assets | $ | 817,548 | $ | 849,855 | |||||
LIABILITIES AND SHAREHOLDERS’ EQUITY | |||||||||
Current liabilities | $ | 221,187 | $ | 191,282 | |||||
Deferred credits from landlords | 32,327 | 29,143 | |||||||
Other long-term liabilities | 36,390 | 39,696 | |||||||
Redeemable noncontrolling interest, net | — | 90 | |||||||
Shareholders’ equity | 527,644 | 589,644 | |||||||
Total liabilities and shareholders’ equity | $ | 817,548 | $ | 849,855 | |||||
The Finish Line, Inc. | ||||||||||||||||||||||||||||||||||||
Reconciliation of Selling, General, and Administrative Expenses, GAAP to |
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Selling, General, and Administrative Expenses, Non-GAAP (Unaudited) | ||||||||||||||||||||||||||||||||||||
(In thousands) | ||||||||||||||||||||||||||||||||||||
Thirteen Weeks Ended | Fifty-Two Weeks Ended | |||||||||||||||||||||||||||||||||||
February 27, 2016 | February 28, 2015 | February 27, 2016 | February 28, 2015 | |||||||||||||||||||||||||||||||||
Selling, general, and administrative expenses, GAAP | $ | 144,580 | 24.9 | % | $ | 123,754 | 22.4 | % | $ | 503,660 | 26.7 | % | $ | 459,455 | 25.3 | % | ||||||||||||||||||||
Employee severance, retirement, and other costs | (4,586 | ) | (0.8 | ) | — | — | (4,586 | ) | (0.2 | ) | (842 | ) | (0.1 | ) | ||||||||||||||||||||||
Selling, general, and administrative expenses, Non-GAAP | $ | 139,994 | 24.1 | % | $ | 123,754 | 22.4 | % | $ | 499,074 | 26.5 | % | $ | 458,613 | 25.2 | % | ||||||||||||||||||||
Reconciliation of Operating Income, GAAP to Operating Income, Non-GAAP (Unaudited) |
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(In thousands) | ||||||||||||||||||||||||||||||||||||
Thirteen Weeks Ended | Fifty-Two Weeks Ended | |||||||||||||||||||||||||||||||||||
February 27, 2016 | February 28, 2015 | February 27, 2016 | February 28, 2015 | |||||||||||||||||||||||||||||||||
Operating income, GAAP | $ | 3,530 | 0.6 | % | $ | 63,532 | 11.6 | % | $ | 30,640 | 1.6 | % | $ | 120,430 | 6.6 | % | ||||||||||||||||||||
Employee severance, retirement, and other costs | 4,586 | 0.8 | — | — | 4,586 | 0.2 | 842 | 0.1 | ||||||||||||||||||||||||||||
Impairment charges and store closing costs | 48,183 | 8.3 | 763 | 0.1 | 48,692 | 2.6 | 3,918 | 0.2 | ||||||||||||||||||||||||||||
Operating income, Non-GAAP | $ | 56,299 | 9.7 | % | $ | 64,295 | 11.7 | % | $ | 83,918 | 4.4 | % | $ | 125,190 | 6.9 | % | ||||||||||||||||||||
Reconciliation of Income Tax (Benefit) Expense, GAAP to Income Tax Expense, Non-GAAP (Unaudited) |
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(In thousands) | ||||||||||||||||||||||||||||||||||||
Thirteen Weeks Ended | Fifty-Two Weeks Ended | |||||||||||||||||||||||||||||||||||
February 27, 2016 | February 28, 2015 | February 27, 2016 | February 28, 2015 | |||||||||||||||||||||||||||||||||
Income tax (benefit) expense, GAAP | $ | (567 | ) | (0.1 | )% | $ | 23,078 | 4.2 | % | $ | 8,779 | 0.4 | % | $ | 40,673 | 2.2 | % | |||||||||||||||||||
Tax affect of: | ||||||||||||||||||||||||||||||||||||
Employee severance, retirement, and other costs | 1,766 | 0.3 | — | — | 1,766 | 0.1 | 324 | — | ||||||||||||||||||||||||||||
Impairment charges and store closing costs | 18,551 | 3.2 | 293 | — | 18,747 | 1.0 | 1,508 | 0.1 | ||||||||||||||||||||||||||||
One-time tax benefit | — | — | — | — | — | — | 4,313 | 0.3 | ||||||||||||||||||||||||||||
Income tax expense, Non-GAAP | $ | 19,750 | 3.4 | % | $ | 23,371 | 4.2 | % | $ | 29,292 | 1.5 | % | $ | 46,818 | 2.6 | % | ||||||||||||||||||||
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) |
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(In thousands) | ||||||||||||||||||||||||||||||||||||
Thirteen Weeks Ended | Fifty-Two Weeks Ended | |||||||||||||||||||||||||||||||||||
February 27, 2016 | February 28, 2015 | February 27, 2016 | February 28, 2015 | |||||||||||||||||||||||||||||||||
Net income attributable to The Finish Line, Inc., GAAP | $ | 4,036 | 0.7 | % | $ | 40,823 | 7.4 | % | $ | 21,892 | 1.2 | % | $ | 81,993 | 4.5 | % | ||||||||||||||||||||
Employee severance, retirement, and other costs, net of income taxes | 2,820 | 0.5 | — | — | 2,820 | 0.1 | 518 | — | ||||||||||||||||||||||||||||
Impairment charges and store closing costs, net of income taxes* | 29,632 | 5.1 | 470 | 0.1 | 29,945 | 1.6 | 2,354 | 0.2 | ||||||||||||||||||||||||||||
One-time tax benefit | — | — | — | — | — | — | (4,313 | ) | (0.3 | ) | ||||||||||||||||||||||||||
Net income attributable to The Finish Line, Inc., Non-GAAP | $ | 36,488 | 6.3 | % | $ | 41,293 | 7.5 | % | $ | 54,657 | 2.9 | % | $ | 80,552 | 4.4 | % | ||||||||||||||||||||
* Net of decrease to net loss attributable to redeemable |
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Reconciliation of Diluted Earnings Per Share Attributable to The |
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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 | Fifty-Two Weeks Ended | |||||||||||||||||||
February 27, | February 28, | February 27, | February 28, | |||||||||||||||||
2016 | 2015 | 2016 | 2015 | |||||||||||||||||
Diluted earnings per share attributable to The Finish Line, Inc. shareholders, GAAP |
$ | 0.09 | $ | 0.87 | $ | 0.48 | $ | 1.70 | ||||||||||||
Employee severance, retirement, and other costs, net of income taxes | 0.07 | — | 0.07 | 0.01 | ||||||||||||||||
Impairment charges and store closing costs, net of income taxes and redeemable noncontrolling interest |
0.67 | 0.01 | 0.66 | 0.05 | ||||||||||||||||
One-time tax benefit | — | — | — | (0.09 | ) | |||||||||||||||
Diluted earnings per share attributable to The Finish Line, Inc. shareholders, Non-GAAP |
$ | 0.83 | $ | 0.88 | $ | 1.21 | $ | 1.67 | ||||||||||||
Note: See Disclosure Regarding Non-GAAP Measures above. |
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Contacts
The Finish Line, Inc.
Media:
Dianna Boyce
Corporate
Communications
317-613-6577
or
Investors:
Ed
Wilhelm
Chief Financial Officer
317-613-6914