Company execs citied a decrease in sales, product-margin pressure resulting from a more promotional environment, and negative leverage on occupancy costs and selling, general and administrative expenses. The company noted that its violations of California wage and hour laws dented SG&A results by $1.5 million of 2 cents per share after taxes.
During the quarter, Finish Line's net sales increased 9% to $341.6 million from net sales of $312.2 million during the same period last year. Comparable store sales for the quarter fell 2% compared to an increase of 6% during the same period a year ago.
Year-to-date, net sales rang in at $632.9 million, an increase of 11% over net sales of $570.1 million reported last year, while comparable store net sales were flat compared to the 10% increase reported for the first half of last year.
"Although we started the quarter with sales on plan for most of June, sales from late June through the remainder of Q2 were disappointing," admitted chairman and CEO Alan Cohen in the company's second quarter earnings statement.
Due to the slowing of footwear and softgood sales and a continual increase in competition, the company also reduced its guidance for the reminder of the year. Finish Line execs now expect Q3 sales of $262 million and diluted earnings per share of negative 1 cent to negative 3 cents, compared to previous guidance of 5 cents to 7 cents.
Fourth quarter sales are now expected to ring in at $401 million with diluted earnings per share of 56 cents to 58 cents compared to previous guidance of 64 cents to 66 cents per diluted share. For the full fiscal year, sales are expected to approximate $1.3 billion with diluted earnings per share of $1.16 to $1.21. Last year the company reported full year diluted earnings per share of $1.24.
During Q2, the company opened 16 new Finish Line stores, remodeled seven existing stores and closed two stores. As of Aug. 27, the company operated 639 Finish Line stores totaling 3.6 million sf, compared to 564 stores and 3.24 million sf a year ago.
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