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This Company Is Ready to Run This Season

August 04, 2014 | About:
Suravi Thacker

Suravi Thacker

1 followers

Because of the effects of severe weather conditions, retailers were unable to witness increase growing traffic at its stores and register higher sales. However, things seem to become better after the cold weather faded away and spring season came in. This also boosted outdoor activities as people went out to play. Also, the FIFA World Cup was an important boost for people to shop.

This resulted in gains for retailer, especially the athletic retailers. With the World Cup fever all over the world, footwear retailers are in merriment as sales have been increasing. A typical example here is that of Finish Line (FINL) which posted a blockbuster quarter, surpassing the analysts’ expectations.

A well-performed quarter

Revenue surged 16% to $406.5 million, over last year’s quarter. The primary reasons for the increase were addition of new stores and same store sales growth of 5% which boosted Finish Line’s top line. The gain in comparable store sales was because of higher store traffic and more purchases.

Also, the company has been able to combat the problems of decreasing demand for running shoes by providing a variety of other products such as basketball gears. Basketball products have been much in vogue these days as people want more of such products. This was evident from Nike’s (NKE) latest quarterly results, which reported that basketball products were a bright spot on its performance.

The footwear retailer’s one of the key moves was its partnership with Macy’s (M). This enabled the company to launch its products in Macy’s stores, one of the leading grocery chains in the U.S. These shops were introduced jointly in April 2013 and are expected to benefit the company in future. This provided an opportunity to offer its products to a wider customer base and a greater exposure to the retailer.

Going down to the bottom line, earnings for the quarter jumped to $0.28 per share as compared to $0.10 per share last year. Further, despite an increase in input costs, gross margin expanded to 31.7% from 30.5% in the previous year. This highlights the fact that the retailer was able to manage its costs efficiently along with a growing top line.

A few points to consider

It is not only Finish Line that is witnessing higher demand for athletic products, but also peers such as Foot Locker (FL) are experiencing an increase in customer interests. In fact, Foot Locker registered a comparable store sales growth of 7.5% in its latest quarter, reported last month. Both Foot Locker and Finish Line benefitted from the new products launched by Nike, which attracted customers. Also, demand for products such as sports gear and sneakers increased rapidly.

Moreover, Finish Line enhanced its online shopping by expanding its presence in the online space. It has also strengthened its website and has integrated its stores to it. With the growing popularity of online shopping, this has helped the company to a large extent.

Final words

Finish Line has been doing remarkably well, which is clearly evident from its recent quarter. Further, its efforts on expanding its presence, through partnership with Macy’s and integrating stores to websites, should prove to be fruitful. Also, it has repurchased 700,000 shares during the quarter, which delighted its investors. Additionally, it reaffirmed its guidance for the year. These points together make Finish Line look like a promising bet.


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