Photo Credit: Mike Mozart

Finish Line, Inc. (FINL) Consumer Discretionary - Specialty Retail | Reports March 24, Before Market Opens

Key Takeaways

• The Estimize consensus is looking for earnings per share of 23 cents on $451.45 million, 1 cent higher than Wall Street on the bottom line and right in line on the top
• Finish Line is struggling to gain traction in this volatile retail environment
• One way Finish Line intends to spark YoY earnings growth is by closing 150 of its least profitable stores over the next 4 years
• What are you expecting for FINL? Get your estimate in here!

Retail footwear chain, Finish Line, is scheduled to report first quarter earnings tomorrow, before the opening bell. Investors are hoping the retailer can replicate the success they had during the holiday season, but realistically, expectations have been tepid. The Estimize consensus is looking for earnings per share of 23 cents on $451.45 million, 1 cent higher than Wall Street on the bottom line and right in line on the top. Compared to a year earlier this reflects a 21% decline in earnings with sales expected to rise by 2%. Per share and revenue estimates have dropped since its last report reflecting analyst’s pessimism towards the company. Besides downward trending earnings, the stock has suffered as well. In the past 12 months, shares of Finish Line have dropped 35% and the stock typically falls even further during earnings season. 

Despite exceeding expectations last quarter, estimates for Q1 remain rather muted. Last quarter featured increases in key financial metrics including net sales and comparable store sales. Digital channels continue to be the fastest growing and most reliable driver of earnings. The first quarter will likely be negatively affected by a tough retail environment. Additionally, Nike and Under Armour’s efforts to expand their direct to consumer models have hurt sales. Consumers now just need to visit Nike’s website to purchase their workout gear rather than visit a local Finish Line store. Also its store-in-store business with Macy’s has struggled to gain traction. One way the company intends to improve profitability is by shutting the doors on 150 of its worst performing stores, or 25% of its store base, in the next 4 years. On the competitive front, Sports Authority’s recent bankruptcy creates some customer acquisition opportunities for Finish Line, but Foot Locker still remains the biggest threat.