Shares of Finish Line were down 10 percent during Wednesday afternoon trading on disappointing news from the company’s third quarter earnings report.
The athletic footwear retailer reported lower-than-expected revenue and widening net losses. Revenue in Q3 totaled $371.7 million, up 3 percent over 2015, but this was far below analysts’ expectations of $411.3 million. Finish Line’s net losses totaled $40.4 million (26 cents per share), up from $21.8 million (44 cents per share) last year.
The company also struggled to kickstart same-store sales, which recorded a huge miss for the quarter, up just 0.7% against expectations of an 8.3 percent gain.
Finish Line CEO Sam Sato admitted the quarter was disappointing, citing “steep declines” in apparel and accessories which offset a high-single digit footwear comp gain and a 33% sales bounce at its Macy’s business.
“While we continue to work on narrowing our soft goods assortment and aligning our offering with customer demand, our primary focus remains on growing the cornerstones of the company’s foundation—our Finish Line footwear business and our partnership with Macy’s—through enhanced customer engagement,” he said.
In an effort to boost profitability, the company announced that it is in the process of developing a more efficient operating model, which includes an enhanced supply chain. The company also says it is beginning to realize $6 million in annualized savings as a result of streamlining its business, including the shedding of 150 stores.
Finish Line cut its outlook for the remained of the year. The company says it now expects same-store sales in the range of 0-1 percent, a significant cut from its prior guidance of a 3-5 percent jump. The company also lowered its EPS guidance to between $1.24-$1.30, down from $1.50-$1.56.