Finish Line Inc. (FINL) filed Quarterly Report for the period ended 2009-08-29.
The Finish Line Inc. together with its wholly owned subsidiary Spike'sHolding Inc. is one of the largest mall based specialty retailers of brand name athletic outdoor and casual footwear activewear and accessories in the United States. Their store generally carries a large selection of men's women's and children's athletic and casual shoes as well as a broad assortment of activewear and accessories. Brand names offered by them include Nike adidas Reebok And 1 K-Swiss New Balance Asics Fila and Skechers. Finish Line Inc. has a market cap of $557.6 million; its shares were traded at around $10.15 with a P/E ratio of 24.8 and P/S ratio of 10.2. The dividend yield of Finish Line Inc. stocks is 1.2%. Finish Line Inc. had an annual average earning growth of 10.7% over the past 10 years.
Highlight of Business Operations:
Loss from discontinued operations, net of income taxes was $12.6 million for the thirteen weeks ended August 29, 2009 (4.2% of net sales) compared to $1.8 million for the thirteen weeks ended August 28, 2008 (0.5% of net sales). For the thirteen weeks ended August 29, 2009, the loss from discontinued operations of Man Alive included operating losses of $1.7 million as well as $18.4 million related to the loss on the sale of Man Alive. This $18.4 million loss was made up of the $7.7 million Purchase Price Rebate, $7.6 million inventory write-off, $6.7 million property and equipment write-off, and $2.3 million in other charges, partially offset by the reversal of “Deferred credits from landlords” of $5.9 million. The $20.1 million of loss from discontinued operations was offset partially by an income tax benefit of $7.5 million. For the thirteen weeks ended August 30, 2008, the $1.8 million loss from discontinued operations, net of income taxes represented operating losses. See Note 3 to the Company’s unaudited financial statements in this document for a further discussion of the Company’s discontinued operations.
Net sales decreased 8.6% ($52.2 million) to $557.8 million for the twenty-six weeks ended August 29, 2009 from $610.0 million for the twenty-six weeks ended August 30, 2008. The decrease was attributable to a comparable store net sales decrease of 7.2% for the twenty-six weeks ended August 29, 2009 and reduced sales of $11.2 million from 20 closed stores along with down time and reduced square footage related to remodeled/relocated stores, partially offset by a $1.5 million increase from 4 new stores opened subsequent to August 30, 2008 and a $1.5 million increase in net sales from existing stores that were open only part of the twenty-six weeks ended August 30, 2008. Comparable footwear net sales for the twenty-six weeks ended August 29, 2009 decreased 6.9% while comparable softgoods net sales decreased 9.7% for the comparable period. The 7.2% comparable store net sales decrease was due to continued decreased levels of consumer spending and traffic due to the macroeconomic environment along with tough comparisons as the Company believes there was a lift in sales related to stimulus checks provided by the U.S. government during a portion of the twenty-six weeks last year.
Loss from discontinued operations, net of income taxes was $15.0 million for the twenty-six weeks ended August 29, 2009 (2.7% of net sales) compared to $3.2 million for the twenty-six weeks ended August 28, 2008 (0.5% of net sales). For the twenty-six weeks ended August 29, 2009, the loss from discontinued operations of Man Alive included operating losses of $5.6 million as well as $18.4 million related to the loss on the sale of Man Alive. This $18.4 million loss was made up of the $7.7 million Purchase Price Rebate, $7.6 million inventory write-off, $6.7 million property and equipment write-off, and $2.3 million in other charges, partially offset by the reversal of “Deferred credits from landlords” of $5.9 million. The $24.0 million of loss from discontinued operations was offset partially by an income tax benefit of $9.0 million. For the twenty-six weeks ended August 30, 2008, the $3.2 million loss from discontinued operations, net of income taxes represented operating losses. See Note 3 to the Company’s unaudited financial statements included in this document for further discussion of the Company’s discontinued operations.
The Company had net cash of $41.4 million provided by its operating activities during the twenty-six weeks ended August 29, 2009 as compared to $0.5 million net cash provided by operating activities during the twenty-six weeks ended August 30, 2008. Included in the $0.5 million for the twenty-six weeks ended August 30, 2008 was $39.0 million paid for the cash portion of the Settlement Agreement (see Note 2 to the Consolidated Financial Statements). At August 29, 2009, the Company had cash and cash equivalents of $142.9 million and no interest bearing debt. Cash equivalents are invested in short-term money market funds invested primarily in high-quality tax-exempt municipal instruments with daily liquidity.
Consolidated merchandise inventories were $221.4 million at August 29, 2009 compared to $239.4 million at February 28, 2009 and $269.9 million at August 30, 2008. Consolidated merchandise inventories at February 28, 2009 and August 30, 2008 contained Man Alive inventory of $6.0 million and $14.3 million, respectively. On a comparable per square foot basis, Finish Line merchandise inventories decreased 10.1% at August 29, 2009 compared to August 30, 2008. The 10.1% decrease per square foot compared to August 30, 2008 is a result of management’s plan to reduce inventory levels and increase inventory turns.
The Company had net cash provided by investing activities of $3.0 million for the twenty-six weeks ended August 29, 2009 compared to net cash used in investing activities of $8.6 million for the twenty-six weeks ended August 30, 2008. The $3.0 million provided in the twenty-six weeks ended August 29, 2009 was from $14.9 million in proceeds from the sale of marketable securities, partially offset by $7.6 million in payments related to the sale of Man Alive and $4.4 million of capital expenditures.
FINL is in the portfolios of Lee Ainslie of Maverick Capital.
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