Shares of Finish Line Inc. (FINL, Financial) fell more than 20% in Tuesday trading after the company reported preliminary second-quarter results. Revenue of $469.4 million was down 3.3% year over year with a 4.6% decrease in comparable sales. The company expects to report EPS in the range of 8 to 12 cents.
CEO Sam Sato said, “The marketplace for athletic footwear became much more promotional as our second quarter progressed, resulting in challenging sales and gross margin trends. Despite these headwinds, we remained disciplined in managing our inventories and expect to end the quarter with inventory levels down approximately 7% to 8% compared with a year ago.”
The company now expects comparable sales to decrease about 3% to 5% versus its previous positive guidance. Adjusted earnings per share are now expected to be between 50 and 60 cents for the 53-week fiscal year ending March 3, 2018, versus the previous guidance of $1.12 to $1.23 and compared with adjusted earnings per share of $1.06 for the fiscal year ended Feb. 25, which was a 52-week year. One week more will contribute approximately 6 cents per share to fourth-quarter and full-year fiscal 2018 results.
For the third quarter, comparable sales are expected to decrease 3% to 5% and adjusted loss per share to be in the range of 32 to 40 cents, higher than the adjusted loss per share of 24 cents for the quarter of the previous year.
For the fourth quarter, Finish Line expects comparable sales also to decrease 3% to 5% and adjusted earnings per share to be in the range of 50 to 58 cents compared with earnings per share of 50 cents for the same quarter of the previous year.
Disclosure: The author holds no position in the stock mentioned.
