Original Source: FD (FAIR DISCLOSURE) WIRE
. Kevin Wampler, Finish Line, CFO . Steve Schneider, Finish Line, COO . Alan Cohen, Finish Line, Chairman, CEO . Jeff Van Sinderen, B. Riley, Analyst . Elizabeth Tuck, Merrill Lynch, Analyst . Bernard Sosnick, Analyst . Chris Svezia, Susquehanna Financial, Analyst
Co. reported 2008 consolidated net sales from continuing operations of $1.277b, loss from continuing operations of $48.1m and loss per diluted share from continuing operations of $1.02. For 4Q08, consolidated net sales from continuing operations were $382.8m, loss from continuing operations was $38.6m and loss per diluted share from continuing operations was $0.82.
A. Key Data From Call 1. 2008 consolidated net sales from continuing operations = $1.277b. 2. 4Q08 consolidated net sales from continuing operations = $382.8m. 3. 2008 loss from continuing operations = $48.1m. 4. 4Q08 loss from continuing operations = $38.6m. 5. 2008 loss per diluted share from continuing operations = $1.02. 6. 2008 non-GAAP diluted EPS from continuing operations = $0.37. 7. 4Q08 loss per diluted share from continuing operations = $0.82. 8. 4Q08 non-GAAP diluted EPS from continuing operations = $0.45. 9. 2008 CapEx = $29.3m. 10. 4Q08 CapEx = $4m. 11. Consolidated merchandise inventories at 03/01/08 = $268.3m. 12. Cash and cash equivalents at FY08-end = $72.9m.
S1. Financial Review (S.S.) 1. 4Q08 ended 03/01/08 Results: 1. Consolidated net sales from continuing operations were $382.8m
vs. $425.7m last year. 2. Total Co. comp store sales decreased 6%. 1. By concept, Finish Line comp sales decreased 5.4% and Man Alive comp sales decreased 14.2% vs. same 13-week period last year. 2. Comp store sales by month for Finish Line stores were: 1. Dec., down 5.4%. 2. Jan., down 10.6%. 3. Feb., down 0.7%.
3. Comp store footwear sales decreased 2.1%. 4. Soft goods decreased 18.1%. 5. Man Alive Stores: 1. Dec. comps decreased 15.9%. 2. Jan. decreased 20.3%. 3. Feb. decreased 6.5%. 3. Loss from continuing operations of $38.6m or $0.82 per diluted share vs. income from continuing operations of $25.8m or $0.54 per diluted share for 4Q07. 4. Non-GAAP income from continuing operations per diluted share of $0.45 vs. $0.51 for last year. 1. Excludes: 1. A pretax charge of $81.5m or $1.20 per diluted share for expenses incurred in connection with Genesco merger litigation settlement. 2. $0.07 per diluted share for non-cash impairment charge to write done long-lived assets for 26 stores pursuant to SFAS 144. 2. $81.5m in cost is comprised of: 1. Cash settlement of $39m. 2. Issuance cost of 6.5m shares of $27.7m. 3. Legal, experts and consultant costs of $14.8m. 3. Believes, this represents substantially all costs related to Genesco matter. 1. Doesn't expect FY09 to be materially affected by any additional cost related to the terminated transaction. 5. Gross profit percentage increased 20 BP vs. 4Q07 to 32.2% of sales. 1. This consisted of 120 BP increase in product margins that were mostly offset by 100 BP increase in occupancy cost. 2. De-leveraging of occupancy cost is primarily related to: 1. 6%, 4Q08 negative comp sales. 2. Last year benefiting from additional sales for 14th week. 3. Although 4Q08 occupancy costs de-levered, they actually decreased 1.4% in dollars. 4. Increase in product margins was primarily result of improved margins at Finish Line division especially in Co.'s soft goods business, which were partially offset by clearing
goods at Man Alive, as the division makes merchandising changes to improve inventory mix and quality. 6. SG&A expenses excluding settlement and asset impairment costs decreased 2.9% in dollars.
1. Increased as a percent of sales to 23.2%, 170 BP increase
vs. 21.5% in 4Q07. 1. Increase was primarily related to de-leveraging expenses based on negative comparable store sales and last year
benefiting from additional sales in 14th week. 7. Interest income was $457,000 vs. $157,000 for 4Q07. 1. Increase primarily reflects higher invested balances YoverY. 8. Diluted weighted avg. shares outstanding were 47.3m for 4Q08 and 47.6m for 4Q07. 2. 2008 Results: 1. Consolidated net sales from continuing operations decreased 4.1% to $1.277b vs. $1.332b for FY07. 2. Comp sales decreased 4.7%. 3. Loss from continuing operations of $48.1m or $1.02 per diluted share vs. income from continuing operations of $40.3m or $0.84 per diluted share for last year. 4. Non-GAAP income from continuing operations per diluted share was $0.37.
1. Excludes: 1. $1.32 per diluted share for acquisition, merger litigation and settlement cost in connection with Genesco terminated
merger. 2. $0.07 per diluted share for non-cash impairment charge to write down long-lived assets for aforementioned 26 stores. 3. Store Opening/Remodeling/Closing: 1. During 4Q08, Co. did not open any Finish Line stores while remodeling three existing stores and closing four stores. 1. As of 03/01/08, operated 697 Finish Line stores vs. 690, one year ago, up 1%. 2. Finish Line store square footage increased 0.5% to 3,855,000 sq. ft. vs. 3,834,000 sq. ft. at 4Q07-end. 3. Did not open or remodel any Man Alive stores during 4Q08. 1. Closed two stores. 4. As of 03/01/08, Man Alive operated 94 stores vs. 86 stores last year, up 9%. 5. Man Alive stores square footage increased 11% to 326,000 sq. ft. vs. 295,000 sq. ft. one year ago. 6. For full year, Co. opened 18 Finish Line stores, remodeled 21 stores, and closed 11 stores. 1. Man Alive: 1. Opened 11 stores. 2. Remodeled two stores. 3. Closed three stores. 4. Balance Sheet: 1. Consolidated merchandise inventories declined to $268.3m at 03/01/08 vs. $287.3m one year ago. 1. On a per sq. ft. basis, consolidated inventories decreased 7%. 2. Finish Line store merchandise inventories decreased 4% vs. one year ago. 2. 4Q08 CapEx was $4m. 1. $29.3m for the year. 3. 4Q08 amount of depreciation and amortization expensed was $10.1m. 1. $41.2m for full year. 4. Believes: 1. CapEx will approximate $18-22m in FY09.
2. Depreciation expense will approximate $38-40m. 5. Aforementioned CapEx estimates include: 1. Maintenance and technology costs for the corporate office. 2. Cost to build out 10-15 Finish Line stores and remodel 15-20 stores. 1. Does not plan to open any Man Alive stores in FY09. 6. Ended FY with $72.9m in cash and cash equivalents and no interest bearing debt. 7. On 03/07/08, paid the cash settlement of $39m to Genesco. 1. As of 03/28/08, has paid all other expenses related to settlement …