×
By
Reuters
Published
Mar 26, 2010
Reading time
2 minutes
Share
Download
Download the article
Print
Click here to print
Text size
aA+ aA-

Finish Line beats Street, shares up 8 percent

By
Reuters
Published
Mar 26, 2010

By Alexandria Sage

SAN FRANCISCO (Reuters) - Finish Line Inc's (FINL.O) quarterly net profit sprinted past Wall Street estimates, propelled by strong sales of running and toning shoes at the retail chain's stores.

Finish Line

Shares of Finish Line raced 8 percent higher as investors cheered signs that consumers were spending on affordable luxuries again after a year of belt-tightening.

The company reported a rebound in overall sales during its fourth quarter and said more recent same-store sales -- February 28 to March 21 -- rose a robust 15.5 percent, boosted by demand for toning shoes, which have rocketed in popularity on claims that simply walking in them can reshape thighs and calves.

Still, Finish Line incurred negative traffic in the holiday quarter, signaling that overall consumer spending was far from robust.

"It's still a challenging environment out there," Chief Financial Officer Ed Wilhelm told Reuters. "We're planning our business with a cautious consumer in mind."

Finish Line posted net profit in its fourth quarter of $30.6 million, or 55 cents per share, compared with a year-ago net loss of $1.4 million, or 3 cents per share.

On an adjusted basis, the company earned 61 cents per share -- well above analysts' average expectation of 48 cents per share, according to Thomson Reuters I/B/E/S.

Revenue rose 8.9 percent to $374.5 million in the quarter, helped by a same-store sales jump of 10 percent. That compared with a 2.3 percent same-store sales decline in the year-ago period.

The athletic shoe market has been tough over the past year as shoppers cut back on discretionary purchases, but Finish Line, working to align inventory with consumers' preferences, invested in the fast-growing toning shoe category.

Recent results from footwear retailers point to an improving sales environment. Earlier this month, Finish Line's larger rival Foot Locker (FL.N) posted a 0.6 percent rise in revenue that was slightly above Wall Street expectations.

"The running piece (of the business) continues to grow at a rate we're pleased with and the addition of toning has helped the top line," said Chief Merchandising Officer Sam Sato.

Retailers like Finish Line have devoted more shelf space to toning shoes since last summer, selling them at about $100 a pair.

Finish Line, which operates 666 stores in the United States and also sells online, has been focused on augmenting shoe sales with add-ons from socks to apparel items.

Apparel currently accounts for 8 percent of the company's business.

Shares of Finish Line rose 8 percent to $15.80 after being halted after-hours. They closed up 1.8 percent at $14.66 on Nasdaq.

(Editing by Richard Chang, Gary Hill)

© Thomson Reuters 2022 All rights reserved.