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Finish Line Craters After Cutting Forecast In Half

Courtesy of ZeroHedge. View original post here.

Ten days after Foot Locker stock cratered on terrible guidance and dreadful commentary on the state of the retail industry, today its peer Finish Line cratered after hours, plunging more than 20% after it pre-released Q2 results while slashing full year EPS guidance by 50%.

For Q2, FINL reported net sales of $469.4 million, down 3.3% Y/Y driven by a 4.6% drop in Finish Line comparable sales. Based on the decline in sales and pressure on gross margin from increased markdowns, the company now expects to report second quarter earnings per share in the range of $0.08 to $0.12.

The marketplace for athletic footwear became much more promotional as our second quarter progressed resulting in challenging sales and gross margin trends,” said Sam Sato, Chief Executive Officer of Finish Line.

But far more troubling than its Q2 results, which will be reported in their entirety on September 22, was the company's abysmal guidance.

The company now expects Finish Line comparable sales to decrease 3% to 5% versus its previous guidance for an increase in the low-single digit range, an unprecedented collapse in the sector in just one quarter. Adjusted EPS guidance was slashed by over 50%, and the company now expect EPS between $0.50 to $0.60 for the 53-week fiscal year ending March 3, 2018, versus the previous guidance range of $1.12 to $1.23, and compared with adjusted earnings per share of $1.06 for the fiscal year ended February 25, 2017, which was a 52-week year.

For Q3 the company expects Finish Line comparable sales to decrease 3% to 5% and adjusted loss per share to be in the range of ($0.32) to ($0.40), compared with an adjusted loss per share of ($0.24) for the same period last year.

For Q4 ending March 3, 2018, the company expects Finish Line comparable sales to decrease 3% to 5% and adjusted EPS to be in the range of $0.50 to $0.58.

Needless to say, the commentary was grave in every sense of the word, despite being full of meaningless buzzwords: “We believe it is prudent to adjust our outlook as we expect the environment to remain highly competitive and promotional throughout the remainder of the year. In light of our disappointing second quarter results and revised projections for fiscal 2018, we will remain very disciplined in managing our expenses and inventories throughout the remainder of the year. Looking ahead, we are optimistic that the work we are doing with our vendor partners to enhance our merchandise assortments will start benefiting our top-line results early next year. At the same time, we continue to focus on building our omnichannel capabilities to strengthen our customer connections, improve our service levels and further capitalize on the shift toward digital commerce. We are also making good progress rightsizing the business to better compete in the current environment. In the past 12-months, we’ve made a number of changes that have created a more nimble organization and generated approximately $6 million in annualized savings, and over the past 2 years we’ve closed approximately 80 underperforming stores. We remain steadfastly focused on executing our strategic plan to drive increased shareholder value over the longer term.”

Unfortunately for Sato, the market ignore all his attempts to spin the dreadful quarter and abysmal guidance and sent his stock crashing 23%  after hours, and has now caught up, or rather down, to Foot Locker.


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