Ahead of the Bell: Finish Line
NEW YORK (AP) — An analyst for Stern Agee lowered his rating for Finish Line on Monday, saying the retailer faces tough competition and pressure from ongoing expenses.
Finish Line, based in Indianapolis, sells athletic shoes, clothing and accessories in stores across the U.S.
Sam Poser of Sterne, Agee & Leach said in a client note that Foot Locker Inc. is taking market share from Finish Line due to its better execution and product mix. The analyst said that basketball products, which are currently in demand, make up around 45 percent of Foot Locker's business but only about 35 percent of Finish Line's. Foot Locker also seems to be doing better business than Finish Line in the running category, he added.
Poser is also concerned about Finish Line shops that are opening in Macy's stores, saying that they will likely hurt Finish Line's image and will not give it the sales and earnings boost that management expected. The analyst said that he visited the first Finish Line shop that Macy's created at a mall in Jersey City, N.J., and thought that the product assortment didn't live up to Finish Line's historical standards.
The retailer is also contending with ongoing expenses, as it continues to sign long-term leases at malls, Poser said. The analyst explained that Finish Line will need to have mid-single-digit increases in revenue at stores open at least a year in order to deal with these leases, which he feels will be difficult at best to achieve.
Revenue at stores open at least a year is a key gauge of a retailer's health because it excludes results from stores recently opened or closed.
Finish Line is expected to report its fourth-quarter financial results on Thursday.
Poser cut the company's rating to "Underperform" from "Neutral."
Finish Line shares finished at $18.74 on Friday. They have traded in a 52-wek range of $16.87 to $26.16.