UPDATE 2-Finish Line Q4 profit tops view; shares jump

Fri Mar 27, 2009 11:00am EDT

Related Topics

* Q4 adj EPS 36 cents tops Wall Street view by 2 cents

* Q4 sales down 4.9 pct to $364.1 mln

* Shares up 11 pct (Adds CEO comments, stock move, byline; changes headline)

By Martinne Geller

NEW YORK, March 27 (Reuters) - Finish Line Inc (FINL.O) reported a better-than-expected quarterly profit before special items on Friday, helped by lighter inventories and cost cuts, sending the retailer's shares up 11 percent.

The seller of athletic shoes and clothing also said sales for most of March were better than expected, fueling hope that consumer spending may be on the way to a rebound.

"We are cautiously optimistic about the trends that we have been seeing since the beginning of February," Chief Executive Glenn Lyon said on a conference call, saying the 3.7 percent decline in March sales so far was ahead of the company's plan.

"Some industry experts are speculating that consumers are starting to adjust to the economic downturn," he said. "That said, the consumer remains fickle from month to month, and we can't predict when this economy will turn positive."

On a net basis, the company's loss narrowed to $1.4 million, or 3 cents per share, in the fourth quarter ended Feb. 28, from $39.2 million, or 83 cents per share, a year earlier, when costs from a failed merger with Genesco Inc (GCO.N) hurt results.

Excluding such one-time items as $32.6 million in impairment charges, Finish Line earned 36 cents per share. That topped the analysts' average expectation of 34 cents, according to Reuters Estimates.

Net sales fell 4.9 percent to $364.1 million as same-store sales, a key measure of retail performance, dropped 3.9 percent.

Consolidated merchandise inventories per square foot were 8 percent lower at the end of the quarter compared with a year ago. Indianapolis-based Finish Line has been paring back inventory and cutting costs to offset a slump in consumer spending that has hurt mall-based chain stores.

Lyon said he expects mall traffic to be down at a mid-single-digit percentage rate this year.

The company operates 689 Finish Line stores in the United States that sells such footwear as Nike (NKE.N) and Adidas ADSG.DE as well as clothing and accessories. It also has a smaller chain called Man Alive, which sells hip-hop-inspired fashion, that has been struggling for some time.

Lyon said the company plans to close unprofitable Man Alive stores as leases expire, and change three of them to a new concept it calls Decibel, aimed at a wider audience.

Earlier this week, Finish Line named Ed Wilhelm as chief financial officer. He was previously CFO at bookseller Borders Group Inc BGP.N.

Finish Line shares were up 71 cents at $7.07 on the New York Stock Exchange.

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