Indianapolis—Finish Line reported Friday that its first quarter profit fell nearly 60% due to costs associated with open its shops inside Macy’s store. However, sales at the athletic footwear and accessories retailer increased more than expected thanks to the additional Macy’s boutiques.
For the quarter ended June 1, Finish Line posted a net profit of $5.1 million, or 10 cents a share compared to a $12.3 million profit, or 24 cents a share, a year earlier. The company said that excluding costs from the launch of its Macy’s business, adjusted earnings would be 20 cents a share—that’s enough to beat analysts’ average estimate for earnings of 16 cents a share.
Total net sales were up 10% to $351.1 million, handily beating analysts’ expectations for $344 million in sales. Comparable store sales were up 2.4%.
Noting improving trends in its running merchandise and continued strength in basketball products, Glenn Lyon, chairman/ceo, said, “Strategically, the quarter was marked by significant progress on our key growth initiatives including the well-received launch of our Macy’s business in stores and online and the expansion of the Running Specialty Group footprint with the acquisition of some very productive doors.”
Last September, Finish Line announced it had inked a deal with Macy’s to install Finish Line shops in more than 450 Macy’s doors. So far 60 Finish Line shops are open in Macy’s with another 11 opening just last week. About 180 others should be open at Macy’s by the end of Finish Line’s fiscal year.
Women’s Sales Rise in Macy’s Shops
Lyon told analysts on a conference call that sales at its Macy’s shops were strong for both men’s and women’s, but that women’s represented more than half the mix.
“This helps validate what we view as one of the most compelling attributes of this partnership, which is access to the predominantly female customer at Macy’s, a customer who has not traditionally shopped our Finish Line stores,” Lyon said.
“We were excited to see the Macy’s customer respond to our premium offering from a broad range of brands, including Nike, New Balance, Puma, Converse and Skechers. These branded shops pull together a tailored assortment under the Finish Line banner, with dedicated Finish Line employees delivering a premium service experience to the customer and the customers responded.”
For its fiscal year ending March 1, 2014, Finish Line reiterated its forecast for comparable store sales to be “up slightly and earnings per share to increase to the mid-single digit percent” over last year.
In other news, the company announced that Steve Schneider, president/chief operating officer will move to the role of executive vice president of strategic initiatives, effective today.
Schneider, who has been chief operating officer since 2001 and president since 2008, said the new position would allow him to spend more than with his family and work on community and philanthropic projects. His replacement has yet to be named.