Finish Line Inc. (NASDAQ:FINL) Q2 2018 Earnings Conference Call - Final Transcript

Sep 22, 2017 • 08:30 am ET

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Finish Line Inc. (NASDAQ:FINL) Q2 2018 Earnings Conference Call - Final Transcript

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Presentation
Operator
Operator

Good afternoon. My name is Dan and I will be your conference operator today. At this time, I would like to welcome everyone to the Second Quarter Fiscal 2018 Earnings Call. All lines have been placed on mute to prevent any background noise. After the speaker's remarks, there will be a question-and-answer session. [Operator Instructions] Thank you.

Ed Wilhelm, CFO, you may begin your conference.

Executive
Ed Wilhelm

Good morning everyone and thank you for joining us. On the call with me today is Chief Executive Officer, Sam Sato. Before I get started, I need to remind you that this call includes forward-looking statements involving risks, management assumptions and uncertainties that could cause actual results to differ materially from the statements expressed or implied. Such risks and uncertainties include, but are not limited to product demand and market acceptance risks, the effects of economic conditions, the effects of competitive products and pricing, the availability of products, management of growth and other risks detailed in our news release and SEC filings.

The forward-looking statements included in this call are made only as of the date of this report and the Company undertakes no obligation to update these forward-looking statements to reflect subsequent events or circumstances. In addition, we refer to certain non-GAAP adjusted metrics on this call. Explanation of these metrics and reconciliations to the most directly comparable GAAP metric can be found in the earnings release filed with the SEC earlier today, as well as on our website at finishline.com.

I will now turn the discussion over to Sam.

Executive
Sam Sato

Thanks, Ed and welcome everyone joining us today. As we previously announced, the second quarter was more challenging than we expected as the market plays for athletic footwear became much more promotional in July and August. This put pressure on sales and gross margins leading to earnings per share that were well below planned. We are obviously disappointed with our recent results and revised full year guidance. That said, we continue to be confident that the strategies we have in place are positioning the company for long-term success.

Ed will walk through the numbers in detail shortly, before that I'm going to review the drivers of our second quarter merchandise and category performances. I will also provide an update on the key growth initiatives we are executing during the second half of fiscal '18.

Beginning with footwear, comps were down mid-single digits with men's down low singles, women's down mid singles, and kids down high singles. For the quarter, running comps increased mid-singles, basketball was down mid-singles and lifestyle decreased mid-teens. While our footwear business in total underperformed versus our expectations, primarily driven by the slowdown in more mature platforms, there were a number of bright spots from our assortments that have us cautiously optimistic about the future.

Within running, several recent introductions performed extremely well across men's and women's. Nike VaporMax was a standout as weekly sell-through remained very strong. Similarly, NMD, AlphaBOUNCE, UltraBOOST, Swift Run, and our exclusive, PureBOOST from Adidas were on