Inventory issues plague Finish Line in 3Q loss, shares slump
INDIANAPOLIS (AP) – Finish Line slashed its 2015 profit outlook Thursday after inventory problems led to a bigger-than-expected third-quarter loss and the retailer said that CEO Glenn Lyon will be succeeded by President Sam Sato.
Shares tumbled more than 15 percent in premarket trading.
Finish Line Inc. now foresees a full-year profit in a range of $1.18 to $1.23 per share, a sizeable cutback from its prior guidance of $1.67, and far from Wall Street’s expectations of $1.74 per share, according to a poll by FactSet.
Lyon said in a written statement that sales were severely impacted after it implemented a new warehouse and order management system. Finish Line had difficulty in October getting new inventory into its stores and fulfilling online orders. Lyon said that the company has worked quickly to address the issue and that sales trends have improved in recent weeks as the quantity and quality of its inventory has improved.
The Indianapolis company also said Thursday that anticipates full-year sales at stores open at least a year to be up low-single digits, also a retreat from earlier projections of a rise between the low-single to mid-single digit range.
For the current quarter, Finish Line anticipates a profit between 78 and 83 cents per share, gain below analyst expectations for 91 cents per share.
For the period ended Nov. 28, Finish Line lost $21.8 million, or 49 cents per share. That compares with a profit of $2.6 million, or 5 cents per share a year earlier.
Revenue slipped to $382.1 million from $395.8 million. Sales at stores open at least a year, a key indicator of a retailer’s health, dropped 5.8 percent. This figure excludes results from stores recently opened or closed.
Analysts surveyed by Zacks Investment Research were looking for a loss of 3 cents per share on revenue of $408.9 million.
Soto will become CEO on Feb. 28. Lyon will continue to serve as executive chairman until Dec. 31 and will become non-executive chairman at the start of the new year.
Shares of Finish Line slid $2.81 to $15.69 before the market opened.