Being an athlete my entire life, I've seen my share of sporting goods stores. In many of my non-mall experiences, I've had to hunt down items; however, mall-based store chain Finish Line
Finish Line not only claims, "We've got your shoe" but also professes to be "the destination for your sport, your life, and your style." I was sitting in a mall food court recently eating a slice of pizza when a huge window display of retro basketball jerseys caught my eye. My weakness for throwback apparel has become legendary (at least in my mind), so I dashed into the Finish Line store and purchased a long-coveted jersey.
Finish Line just reported decent but slightly mixed results for its second quarter (perhaps those window displays are successfully attracting other shoppers, too). Net sales increased 15% over last year, and same-store sales were up an expected and healthy 6%. However, net income of $0.85 per share was $0.02 below the analysts' consensus estimate of $0.87 per share (but well ahead of last year's earnings of $0.73 per share). Margins were pinched somewhat by marketing costs to increase the company's brand awareness in stores and on the Internet. Same-store sales have increased 10% in the first half of 2004, which is impressive considering that it is on top of an 18% gain last year.
Even though the athletic specialty retailing industry is as rough as battling Ben Wallace for a rebound, Finish Line has differentiated itself from the competition and has carved out a decent niche for itself. Despite my purchase of the jersey from Finish Line, I can honestly say I've never been an impulse buyer at strip center athletic stores such as The Sports Authority
The shares, which are trading at 11 times the 2005 earnings estimate of $2.77 per share, appear to be attractive relative to the company's expected 15% earnings growth rate. With $65.8 million in cash, no debt, and a 0.63% dividend yield, the shares appear to be sprinting through the finish line.
Lace up your sneakers, slip on your jersey, and race over to these Takes:
Fool contributor Phil Wohl spent more than 12 years on Wall Street and has a decent collection of throwback jerseys and sneakers. He does not own shares in any of the companies mentioned.