Finish Line, Inc. Posts Worse-Than-Expected Q4 Earnings & Weak Outlook For Current Year - Shares Plunge
Finish Line Inc. (NASDAQ:FINL) early Friday [Mar 24, 2017 | 7:15am] posted much worse than expected fourth quarter earnings results and offered a very weak outlook for the current year, sending its shares plunging in morning trading.
Written by StockNews.com
The Indianapolis-based athletic footwear and apparel retailer reported adjusted Q4 earnings per share (EPS) of $0.50, which was a whopping $0.20 worse than the Wall Street consensus estimate of $0.70.
Revenues plunged 0.4% from last year to $557.5 million, but actually topped analysts’ view of $544.88 million.
Finish Line noted its comparable sales (“comps”) fell 4.5% in the latest period, slightly worse than expected. Comps are considered a key indicator of a retailer’s health, since they measure the year-over-year performance of stores open at least 12 months.
On perhaps the only positive note in the report, Finish Line Macy’s sales increased 35% from last year. The company has a “store within a store” presence at many Macy’s retail locations, offering the latest athletic footwear to customers.
Looking ahead, Finish Line’s 2018 guidance was nothing short of disastrous. FINL expects full-year EPS of just $1.12 to $1.23, while analysts are looking for $1.44 per share for the year. Comps are expected to rise in the low single digits, which is roughly in-line with Wall Street’s view.
The company commented on its weak results via press release:
“Our fourth quarter earnings performance represented a disappointing finish to a challenging year financially for our company,” said Sam Sato, Chief Executive Officer of Finish Line. “As elements of our footwear offering did not resonate with our customers as we expected and the overall retail environment in February became increasingly difficult, we made the decision to get more aggressive on pricing to be competitive and clear slow moving product. While this allowed us to end fiscal 2017 with clean inventory levels, it put significant pressure on fourth quarter product margins. We know we must improve the execution of our merchandise strategies to drive increased full price selling and fuel sustained comparable sales growth. At the same time, we are confident that the numerous operational improvements we made throughout the past year have created a more efficient company with a stronger foundation to support enhanced profitability and increased shareholder value over the long-term.”
Investors swarmed for the exits following the weaker than expected earnings and guidance, with Finish Line shares falling $2.44 (-15.19%) in premarket trading Friday. Year-to-date, FINL had already declined -14.08% prior to today’s report, versus a +4.70% rise in the benchmark S&P 500 index during the same period.
FINL currently has a StockNews.com POWR Rating of D (Sell), and is ranked #29 of 33 stocks in the Athletics & Recreation category.
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