Is another beat in the cards for Finish Line Inc.?
When the specialty athletic retailer last reported, its sales and profit — at $580 million and $41 million, respectively — handily topped analysts’ expectations for the fourth quarter.
Ahead of Friday’s Q1 earnings report, a few developments bode well for the retailer.
In May, UBS Investment Bank analyst Michael Binetti said he came away from meetings with Finish Line’s management feeling upbeat about the “refocused company with emerging sales tailwinds.”
“Our meetings with Finish Line suggest a more optimistic tone after a major holiday supply chain disruption that cost Finish Line 35 cents in [earnings per share in Q3],” Binetti wrote on May 3. “After announcing the supply chain issue — and plans to close 150 stores (25 percent of fleet) — Finish Line is now clearly more focused on fixing up operations and has been meeting with the brands frequently on strategic direction in its remaining stored.”
Binetti added that he believes “allocations of stronger product from key vendors” have improved while operations are also likely getting better.
Watch on FN
Similarly, in a review of May athletic footwear trends, Sterne Agee CRT analyst Sam Poser said Finish Line was among the companies that he viewed as “well positioned.”
Still, Poser remains on the fence, noting that he continues to place his big-money bets on competitor Foot Locker Inc.
“We still believe that Finish Line will cede market share to Foot Locker in the future,” Poser wrote on Thursday. “Finish Line is in the process of closing 25 percent of its store base, which should make the business more efficient. In addition, Finish Line is investing to remodel a significant portion of its store base. Remodels are necessary, but the time frame may be too aggressive.”
Poser said he expects the retailer to post EPS of 22 cents and a same-store sales improvement of 2.2 percent in Q1, although he noted that he would not be surprised if Finish Line surpasses his same-store sales estimate.
Consensus estimates peg Finish Line’s Q1 revenues at $450.84 million, a 1.7 percent gain over the prior year’s comparable period. Meanwhile, earnings per share are predicted to land at 22 cents per share, a 27 percent decline year over year.
