Finish Line Inc. (NASDAQ:FINL) Q3 2018 Earnings Conference Call Transcript

Dec 21, 2017 • 08:30 am ET

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Finish Line Inc. (NASDAQ:FINL) Q3 2018 Earnings Conference Call Transcript

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Presentation
Operator
Operator

Good afternoon. My name is Sherry and I will be your conference operator today. At this time, I would like to welcome everyone to Third 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, you may begin your conference.

Executive
Ed Wilhelm

Good morning, everyone and thank you for joining us. On the call with me today is our CEO, Sam Sato.

(Forward-Looking Cautionary Statements)

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. We are pleased that our third quarter results came in ahead of expectations. Following a challenging September due to the impact of multiple hurricanes, sales trends turned nicely positive in October and accelerated in November. As expected, the selling environment for athletic footwear was promotional during the quarter. In order to be competitive, we did respond to certain pricing actions in the marketplace, but delivered gross margin in line with forecasts. At the same time, we remain highly disciplined in our expense and inventory management.

For the quarter, comparable sales increased approximately 1% compared to guidance of down 3% to 5%, adjusted loss per share came in at $0.26 versus guidance in the range of $0.32 to $0.40. As I outlined on our last call, we have been working on several initiatives aimed at increasing traffic and conversion. As a reminder, they are bolstering our digital capabilities led by our mobile-first strategy, enhancing the in-store experience, building awareness for the Finish Line brand as the destination for the latest and greatest sneakers and strengthening our merchandise offer and go-to-market strategies.

I am encouraged by the progress we have made on each of these fronts, which contributed to our better-than-expected third quarter results. While we remain cautious in the near-term due to the heightened promotional environment for athletic footwear, I am confident that the work we are doing to position the company for long-term growth and enhanced profitability is gaining traction. Ed will walk through the numbers shortly. Before that, I am going to provide a detailed update on each of the initiatives beginning with digital.

During the third quarter, we experienced solid digital growth fueled by robust gains in mobile traffic along with higher conversion. Consumers have responded favorably to the latest iteration of the Finish Line app launched earlier this year and the subsequent upgrades we recently rolled out. We now have the ability to create opportunities in the app for customers to be informed of our latest and greatest sneakers, provide access to coveted products, deliver live content and better connect the in-store experience through digital content and push notifications