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Finish Line (FINL) Posts Breakeven Earnings In 3Q, Updates FY View

 January 04, 2013 07:56 AM

(By Balachander) Finish Line Inc. (NASDAQ: FINL) posted breakeven earnings per share for the third quarter as margins contracted and expenses rose and the retailer of athletic apparel updated its forecast for the full year.

Shares retreated 6.41 percent in premarket trading on Friday.

For the quarter ended Dec. 1, the company lost $809,000 versus a profit of $5.55 million in the same period a year ago. Earnings per share were breakeven.

Net sales rose 5.2 percent to $297 million, surrounding market consensus of a growth of 5 percent. Comparable store sales advanced 3.6 percent as Digital comparable sales surged nearly 25 percent.

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Gross margin contracted to 30.3 percent from 32.3 percent in the year-ago quarter.

"The third quarter was clearly more challenging than we anticipated," commented CEO Glenn Lyon. "Sales came in below plan due primarily to a shift within athletic footwear trends and a less than favorable consumer response to the new ecommerce site we launched in mid November."

"At the same time, we did not adjust our cost structure quickly enough in response to slowing sales trends," Lyon added.

Selling, general and administrative expenses increased 10 percent.

Looking ahead for the fourth quarter, Finish Line forecasts earnings per share between 74 cents and 87 cents on comparable store sales growth in the low single digit range. Analysts expect earnings of 82 cents per share.

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For the year ending March 2, 2013, the company now expects EPS between $1.47 and $1.51, from the growth range of 6 percent to 9 percent projected earlier. Analysts expect EPS of $1.64 on sales of $1.46 billion.

The Indianapolis, Indiana-based company offers athletic casual footwear, apparel, and accessories for men, women, and kids. The company also sells merchandise through its Web-site, finishline.com.

For the second quarter, Finish Line earned 49 cents on sales of $385 million and gross margin of 35.0 percent.

The stock, which has been trading between $17.41 and $26.16 over the past 52 weeks, ended Thursday's regular trading at $19.04.

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