Lightweight shoes to boost Finish Line margins
Posted By Admin on September 26, 2011
n>(Reuters) – Athletic footwear retailer Finish Line (FINL.O) expects online sales and strong demand for lightweight running shoes to continue to boost its margins in the current quarter.
Athletic shoe makers have been seeing strong demand even as consumers cut back on discretionary spending amid an uncertain economic environment.
Finish Lines market-topping numbers follow stellar results from its largest supplier Nike (NKE.N), which topped Wall Street estimates as it staved off margin pressures with strong sales and price increases.
Lightweight products from Nike, Adidas ADSG.DE and Reebok are expected to contribute to margin expansion in the next quarter, Chief Financial Officer Ed Wilhelm told Reuters.
He said sales at the companys strongest segments — basketball shoes and running shoes — were up in the double-digits in the second quarter, while its e-commerce business was up 61 percent.
Wilhelm added that supply chain issues that hurt the company last year had been resolved and it was very comfortable with inventory levels both in terms of quality and quantity.
Merchandise inventories rose 5.9 percent to $229.8 million at the end of the quarter ending August 27, 2011.
Last month, rival Foot Locker Inc (FL.N) posted better-than-expected second-quarter earnings, helped by continued demand for its running shoes and improved gross margins.
Like Foot Locker, Finish Line too sells footwear brands such as Nike, Converse, Puma and Adidas.
Sales rose 10.1 percent to $331.5 million, while quarterly same store sales rose 11 percent.
Finish Lines second-quarter net income rose to $20.9 million, or 39 cents a share, compared with $16.8 million, or 31 cents a share, a year ago.
Analysts, on average, were expecting the company to earn 38 cents a share on sales of $321.9 million, according to Thomson Reuters I/B/E/S.
Shares of the Indianapolis-based Finish Line rose 5 percent to $19.40 after the bell. They closed at $18.43 on Nasdaq on Thursday.
(Reporting by Chris Jonathan Peters in Bangalore; Editing by Saumyadeb Chakrabarty)
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