Finish Line Q4 2013 Earnings Conference Call Transcript - Thomson StreetEvents

Finish Line Q4 2013 Earnings Conference Call Transcript

21 pages (13539 words) — Published Mar 28, 2013
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Abstract:

Edited Transcript of FINL earnings conference call or presentation 28-Mar-13 12:30pm GMT

  
Brief Excerpt:

...Operator Good morning. My name is Sarah, and I'll be your conference operator today. At this time, I'd like to welcome everyone to the Finish Line Fourth Quarter Fiscal 2013 Earnings Conference 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) At this time, I'd like to introduce the host of today's call, Finish Line Chief Financial Officer Ed Wilhelm. Sir, you may begin your conference. Ed Wilhelm ...

  
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The following is excerpted from the question-and-answer section of the transcript.

(Questions from industry analysts are provided in full, but answers are omitted - download the transcript to see the full question-and-answer session)

Question: Bernard Sosnick - Gilford Securities - Analyst : Good morning, and thank you. With regard to Macy's, CFO Karen Hoguet said she was very excited about the first unit that you're employing, that you are pleased as well with the initial ones. What have you seen as a result, that would make Macy excited and you very pleased?


Question: Bernard Sosnick - Gilford Securities - Analyst : I don't know. I just want to get you to let us know.


Question: Bernard Sosnick - Gilford Securities - Analyst : It does indeed. What have you seen in terms of the kind of products sold versus what you're selling in the stores? companies.


Question: Bernard Sosnick - Gilford Securities - Analyst : Okay. Well, thank you. With regard to e-commerce, you have -- you're seeking a new chief for that business. You had a couple of glitches in the Fall. Could you explain a little bit about e-commerce? What were some of the disappointments? And what do you expect to have corrected?


Question: Bernard Sosnick - Gilford Securities - Analyst : Okay. Could you give us a little bit more color on the impairment charge?


Question: Bernard Sosnick - Gilford Securities - Analyst : Okay. All right. Thank you very much. companies.


Question: Kate McShane - Citigroup - Analyst : Hello, thanks. Good morning. Glenn, I was wondering if you could help us reconcile some of the strength that we've seen in Nike's running business and their sell through to what you are seeing in your running business. I know you highlighted a few Nike styles that were outperforming, but it still seems like there's a disconnect with the strength in the brand and your comp.


Question: Kate McShane - Citigroup - Analyst : Okay. That's really helpful. Thank you. And then, my second question is with regards to, can you give a little bit more detail and rationale around your comment that a larger portion of your CapEx is going to be taken away from remodels to more attractive new store opportunities? Is that for Finish Line and The Running Company, that comment?


Question: Kate McShane - Citigroup - Analyst : Okay. Thanks very much.


Question: John Zolidis - Buckingham Research Group - Analyst : Hello, good morning.


Question: John Zolidis - Buckingham Research Group - Analyst : Yes, can you hear me?


Question: John Zolidis - Buckingham Research Group - Analyst : All right. I apologize for any background noise here. Why don't I start by asking about March trends. You said up 4%. I believe last year, March was up in the low doubles or mid-teens. Maybe you can give us that figure so we have the comparison. What's changed to help the March business get over that difficult hurdle?


Question: John Zolidis - Buckingham Research Group - Analyst : Is it still the same mix of basketball versus running with running down mid-single and basketball very strong, or has running picked up as well? companies.


Question: John Zolidis - Buckingham Research Group - Analyst : Okay. Great. And then, you bought back about 7.5% of the shares outstanding last year. I think you said that the guidance was based on 48 million shares this year. Is there share repurchase built into the guidance?


Question: John Zolidis - Buckingham Research Group - Analyst : Okay. Great. And then one last question and I'll get off. The 20 to 25 new stores, are any of those in outlet centers? That was an idea I think that had been kicked around a few times.


Question: John Zolidis - Buckingham Research Group - Analyst : Okay. Then, that's on the outlets, how to those compare to the core stores?


Question: John Zolidis - Buckingham Research Group - Analyst : Great. Thanks a lot, and good luck.


Question: Paul Tressler - Deutsche Bank - Analyst : Good morning. You gave a forecast for Macy's partnership this year of adding about $130 million to $150 million in sales I believe. Could you just give us some comments around what the growth that's embedded into that figure versus what Macy's kind of legacy business was in sportswear a year ago? And then just some more commentary around what the impact is to occupancy and SG&A specifically from Macy's? Any margin color would be helpful. Thank you.


Question: Paul Tressler - Deutsche Bank - Analyst : Okay. Fair enough. thank you. And then, could you just -- you certainly have spoken about continuing to be the leader in running. But you've also commented about looking to augment the assortment into basketball, perhaps into soft lines as well. Can you just give us an update on that progress? I did notice a Kobe Bryant shoe released this past quarter that you hadn't had before. Just any comments on what you think you can get to over the next few quarters in terms of changing the assortment? Thank you.


Question: Paul Tressler - Deutsche Bank - Analyst : Okay. And quickly, my last question is just on -- you spoke about first half headwinds from a top line standpoint but obviously before comp in March was an acceleration from the previous pace. What should we expect in April and May, just given what you know about the release schedule and the earlier Easter? Should we expect a falloff sequentially? companies.


Question: Paul Tressler - Deutsche Bank - Analyst : All right. Thanks. good luck.


Question: Taposh Bari - Goldman Sachs - Analyst : Hello, good morning guys. So Glenn, I have a question for you. In terms of the feedback that we get from investors, I think a lot of opportunities here particularly with Macy's. But, I'd say the one comment direct continues to be, I guess, a lack of confidence in the execution profile. So you guys obviously have a lot of balls in the air with omni-channel, New Systems, Macy's, Running Company, and of course your organic brick-and-mortar business. So as you look back to 2013 and look forward, I was hoping to pick your brain on what you've learned and how you plan to mitigate that execution risk going forward.


Question: Taposh Bari - Goldman Sachs - Analyst : That's helpful, thanks Glenn. I guess I'll give you an easier question now on my second question, which is, March, just in general so far in 2013, a lot of volatility around retail. You're 4% growth sounds actually really good in the context of what we're hearing so far in March. So, some are talking about weather. You guys obviously have a national retail presence. Can you talk about what you've seen so far this year in terms of volatility? Maybe any diversions you're seeing in terms of region, warm versus cold? companies.


Question: Taposh Bari - Goldman Sachs - Analyst : And I've got one more before I pass it on. And that's, The Running Company, obviously a small business. But the low single digit comp there caught our attention. It's obviously a deceleration from what you'd seen the prior six month period. And I guess the question is, when you see weakness in running in Finish Line's banner, that to me sounds -- that makes sense because there's obviously a shift towards the basketball silhouette. But that Running Company customer is not a fashion customer, right? They're buying to run. So what's going on there?


Question: Taposh Bari - Goldman Sachs - Analyst : Thanks a lot, guys. Good luck.


Question: Eric Tracy - Janney Capital Markets - Analyst : Hello guys, good morning. I guess for Glenn or Sam, just back to the running category dynamic. I guess my question, it's maybe difficult to discern, but your leadership position you mentioned up 54% three years stacked. You mentioned that the three massive platforms out of the leader and Nike. Just the potential that you guys are just sort of a leading indicator for what running is doing versus anything missed execution on your part, meaning it's just a pipeline refresh, just not as great. And so what is your visibility to that and how we can expect the category to potentially re-accelerate as we move to the year?


Question: Eric Tracy - Janney Capital Markets - Analyst : Okay. And then I guess a second in terms of maybe slowing down or actually, it sounds like, moving away from the new prototypes and rolling those out. It sounds like your technologies within the store increase in conversion. So Glenn, as you think about trying to pull that consumer over the lease lines, so beyond just the product and what's in the store, within brick-and-mortar concept, what are the initiatives to try to do that?


Question: Eric Tracy - Janney Capital Markets - Analyst : Yes. Okay. And then just last, I guess in terms of inventories. Talked about continuing to be fresher and work through in 1Q. When can we kind of expect those to be back in line with sales growth and sort of the margin pressure I know is 1Q, does it bleed into Q2 as well?


Question: Eric Tracy - Janney Capital Markets - Analyst : Okay. Okay. Great. Thank you guys. I appreciate it. Best of luck.


Question: Jeff Van Sinderen - B. Riley & Co. - Analyst : Hello. Good morning, and thanks for taking my question. Just as a follow-up, in terms of running, since we seem to be beating a dead horse there.


Question: Jeff Van Sinderen - B. Riley & Co. - Analyst : Bad choice of words. So, I guess my question is this. As you sort of assess that business and you look out a couple of quarters, obviously you spoke to some great new products, innovation releases that are coming out. You referenced three years ago and kind of how it looked like at that point. Overall, how are you planning that business? Are you planning it up or down as far out as you go right now?


Question: Jeff Van Sinderen - B. Riley & Co. - Analyst : Got it. Okay. And then, so let me ask you this. As far as, obviously, you discussed the margin hit and inventory work down and so forth. But, just to clarify, most of the pressure that you're seeing in merchandise margins and some of the excess inventory that you've had to work through with promotions and discounting, is that largely concentrated on running? In other words, is that really the only area where there seems to be an issue?


Question: Jeff Van Sinderen - B. Riley & Co. - Analyst : Okay. Fair enough. So, I guess as you spoke to for Q2, when you report Q1, we should look for inventory throughput to be flattish? Or, how should we think about that?


Question: Jeff Van Sinderen - B. Riley & Co. - Analyst : Okay. Fair enough. Thanks very much, and good luck.


Question: Camilo Lyon - Canaccord Genuity - Analyst : Thanks. So it's good to meet you guys, how are you? And I want to just ask if you're incorporating in your sales assumption for Macy's, if you could split out how you look at sales per foot versus the e-commerce contribution? That would be helpful. companies.


Question: Camilo Lyon - Canaccord Genuity - Analyst : Is it fair to say you're looking at it at a similar sales per foot as your Finish Line stores? Or is it more comparable to what Macy's does on a per foot basis?


Question: Camilo Lyon - Canaccord Genuity - Analyst : Got it. Thanks for that. And then just quickly, I'm just curious to see if you could dissect some of the trends on running with respect to price points. Is there more success at the $100 price point in the category? A lot of the products coming out now are delivering more higher priced, Flyknit is $160, I'm just curious to see how the consumer, how your consumers is responding to what seems to be higher priced product that's flowing into the market?


Question: Camilo Lyon - Canaccord Genuity - Analyst : So little resistance on that premium price-point?


Question: Camilo Lyon - Canaccord Genuity - Analyst : Got it. And then just finally, any additional plans for other branded shop-in-shops? I know you guys got some Jordan shop-in-shops I think you were also doing some Adidas ones as well. Any plans to roll more of those out?


Question: Camilo Lyon - Canaccord Genuity - Analyst : You're doing some Under Armour shops as well? What would those look like? Or what would those entail?


Question: Camilo Lyon - Canaccord Genuity - Analyst : Got it. Well, good luck with '13. It sounds like you've got a lot of opportunity in front of you. So good luck with everything.


Question: Sam Poser - Sterne, Agee & Leach, Inc. - Analyst : Good morning. Thank you for taking my question. You talked about the overhead that you have adjusted the overhead cost. Can you give us more specifics on how that's been done? Is my first question. And then, Ed, can you give us some idea with Macy's on how you're thinking the sales by quarter or at least at the beginning about how you're thinking about that in dollars? companies.


Question: Sam Poser - Sterne, Agee & Leach, Inc. - Analyst : Okay. And then --


Question: Sam Poser - Sterne, Agee & Leach, Inc. - Analyst : Is there a way you could give us a percent by quarter? Or something? Just because, it would be greatly helpful if you could.


Question: Sam Poser - Sterne, Agee & Leach, Inc. - Analyst : All right. And then just lastly, are you getting -- with the Macy's concepts, are you A -- I noticed a lot of Reebok running in those Macy's stores. At least it should be in the Macy's store in Jersey City. And I was wondering, was this just part of the test? Or was that an intentional thing? Because their business in running has not been good, and you've had some of the Free's and some other things there. But the question is, is are you getting what you need? Are you going to be able to get what you need for the Macy's stores in total? Or is that still a work in progress, as well?


Question: Sam Poser - Sterne, Agee & Leach, Inc. - Analyst : Thank you. And just real quick lastly. When does the Macy's -- is Macy's Harold square in the first go?


Question: Sam Poser - Sterne, Agee & Leach, Inc. - Analyst : Okay. Thank you very much. Good luck.

Table Of Contents

Finish Line Q2 2014 Earnings Conference Call Summary – 2013-09-27 – $54.00 – Edited Brief of FINL earnings conference call or presentation 27-Sep-13 12:30pm GMT

Finish Line Annual Shareholder Meeting Transcript – 2013-07-18 – $54.00 – Edited Transcript of FINL shareholder or annual meeting 18-Jul-13 1:00pm GMT

Finish Line Q1 2014 Earnings Conference Call Summary – 2013-06-28 – $54.00 – Edited Brief of FINL earnings conference call or presentation 28-Jun-13 12:30pm GMT

Finish Line Q1 2014 Earnings Conference Call Transcript – 2013-06-28 – $54.00 – Edited Transcript of FINL earnings conference call or presentation 28-Jun-13 12:30pm GMT

Finish Line Q4 2013 Earnings Conference Call Summary – 2013-03-28 – $54.00 – Edited Brief of FINL earnings conference call or presentation 28-Mar-13 12:30pm GMT

Finish Line Q3 2013 Earnings Conference Call Summary – 2013-01-04 – $54.00 – Edited Brief of FINL earnings conference call or presentation 4-Jan-13 1:30pm GMT

Finish Line Q3 2013 Earnings Conference Call Transcript – 2013-01-04 – $54.00 – Edited Transcript of FINL earnings conference call or presentation 4-Jan-13 1:30pm GMT

Finish Line Q2 2013 Earnings Conference Call Summary – 2012-09-28 – $54.00 – Edited Brief of FINL earnings conference call or presentation 28-Sep-12 12:30pm GMT

Finish Line Q2 2013 Earnings Conference Call Transcript – 2012-09-28 – $54.00 – Edited Transcript of FINL earnings conference call or presentation 28-Sep-12 12:30pm GMT

Finish Line Q1 2013 Earnings Conference Call Summary – 2012-06-29 – $54.00 – Edited Brief of FINL earnings conference call or presentation 29-Jun-12 12:30pm GMT

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Thomson StreetEvents. "Finish Line Q4 2013 Earnings Conference Call Transcript" Mar 28, 2013. Alacra Store. Oct 01, 2014. <http://www.alacrastore.com/thomson-streetevents-transcripts/Q4-2013-Finish-Line-Earnings-Conference-Call-T5035701>
  
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Thomson StreetEvents. (2013). Finish Line Q4 2013 Earnings Conference Call Transcript Mar 28, 2013. New York, NY: Alacra Store. Retrieved Oct 01, 2014 from <http://www.alacrastore.com/thomson-streetevents-transcripts/Q4-2013-Finish-Line-Earnings-Conference-Call-T5035701>
  
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