Fashion is fickle, and sooner or later, even the best operators mess up. It's happened to Nordstrom
Finish Line had built itself up to this point primarily through selling core athletic footwear -- the stuff that Nike
A look at Finish Line's results reveals exactly that. Sales were down 1%, and comps were down more than 7%, with an 8% decline in footwear comp sales. Although the company didn't divulge details like store traffic or average tickets, I wouldn't be surprised if both were lower.
From the top down, things just got worse. Gross margins slipped slightly, but operating income was down substantially. What's more, inventories rose 11% sequentially and 6% year over year on a per-square-foot basis. That's not good.
On the plus side, Finish Line has no debt, a recent history of decent returns on equity, and shares that aren't too expensive. Then again, factor in poor performance and the rumors that Nike might stop supplying Finish Line's Man Alive concept with upper-end merchandise, and you can see why the shares would be down.
If shoppers' tastes return to more traditional athletic motifs -- or if Finish Line can start stocking more of what's popular today -- this chain might become a turnaround idea.
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Fool contributor Stephen Simpson has no financial interest in any stocks mentioned (that means he's neither long nor short the shares).