Finish Line says negative same-store sales continuing in Q2
On a Friday morning conference call, executives of shoe and apparel retailer The Finish Line, Inc. (Nasdaq: FINL) said the company is focusing on popular, high-margin products to get the company back on track. The company’s negative same-store sales trend, however, is continuing into the second quarter, CEO Alan Cohen said on the call. During the first quarter ended June 2, Finish Line’s same-store sales dipped 4% from the first quarter of 2006.
Looking forward, The Finish Line will increase concentration on its high-margin website and catalog business, Cohen said. The company plans to increase marketing, circulation and personnel for website and catalog segments, he said.
“Our plan is to maximize sales in this profitable and growing segment,” he said. “Growth continues to be double-digit on a comparable basis.”
The Finish Line is also looking forward to new shoe releases this summer. Adidas will be releasing a new shoe with its Microbounce technology. Additionally, Puma is launching a performance running shoe priced at $100 in July. In August, New Balance is introducing a shoe with its shock-absorbing Zip technology and will promote the shoe through television advertisements. The company is also increasing the percentage of basketball products that will carry the Michael Jordan brand.
Cohen said the company is dedicating more store floor space to footwear because it hasn’t been finding “tremendous success” in apparel. He said footwear accounts for the majority of the retailer’s sales, while apparel makes up only about 17% of total revenue. During the first quarter, Cohen said the company experienced disappointing headwear and socks sales.
Some clothing brands have been selling well, though. The Finish Line is going to expand its apparel offerings of the Lacoste and Under Armor brands. The Indianapolis, Ind.-based company plans to sell Under Armor products in half of its approximately 700 stores by the holiday shopping season. Unlike other apparel brands that have struggled, Cohen said the company is “excited about the growth opportunity” with Under Armor.
Man Alive, the company’s urban fashion chain, was impacted by a difficult environment that urban fashion is experiencing nationwide, Cohen said. Finish Line opened seven new Man Alive stores during the first quarter. Four more Man Alive stores are planned for the remainder of the year.
“No more Man Alive locations are planned until we see improved momentum in the street fashion industry,” Cohen said. “After one year of operating the chain, we have experienced mixed results.”
After Thursday’s closing bell, The Finish Line reported a $3.9 million loss, or $0.08 per share, for the first quarter, compared with a $4.4 million profit, or $0.09 per share, in the same period of 2006. The company beat Wall Street expectations of a $0.10 loss per share. The company recorded first-quarter revenue of $288.3 million, compared with $289 million during the year-ago period.
“Our sales and financial performance in the first quarter was disappointing, due to the negative comparable stores sales which dropped approximately 4%,” Cohen said. “The Finish Line business is not great and we know that and we’re doing anything and everything we possibly can to bring that business back to the levels that we know we need to perform. We’re focusing on getting the Finish Line business back on track.”
In midday trading, shares of The Finish Line are down $0.54, or 5.6%, at $9.09.
