Finish Line Inc. (NASDAQ:FINL) reported a breakeven third quarter before the bell on Friday,
Keeping a few chickens,
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868, January 4th when analysts had been looking for the company to earn 10 cents per share. The company was challenged in the quarter by a poor consumer response to a new ecommerce site launched in mid November. The company was also negatively affected by a shift in consumer preference towards basketball shoes where competitor Foot Locker,
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Lose the Freshman 15 pounds, Inc. (NYSE:FL) is more focused. The company also reduced guidance for the fourth quarter and the fiscal year. Finish Line now expects to earn between $1.47 and $1.51 per share for the year,
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The concern for Finish Line is whether or not the company has a handle on the trends in different product categories. Management believes that basketball will be strong for the foreseeable future. However the company was behind on the shift from running to basketball. I do not think that everyone following the industry believes running is really slowing long term and that the mix will continue to shift towards basketball. Nike Inc. (NYSE:NKE) did not seem to be affected in its most recent quarter by a slowdown in running. Nike said on its last conference call "nearly every category was up,
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Acquistare per 100% autentico Nike Roshe Run Uomini Antracite Volt Quilted Vendite online, Basketball and Men’s Training". As we move into the spring running season it will be interesting to see what happens to the mix between running and basketball. It is also important that Finish Line along with the brands improve product offerings in running. Women’s sales are very dependent on running and if running is declining women’s does not have the gains in basketball to offset it.

The misstep on the new website is concerning that the company would make such a critical error going into the holiday season. The new website was only online for 3 weeks,
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The biggest catalyst for Finish Line is the roll out of Macy’s,
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En Ligne Store Discount Store, Inc. (NYSE:M) partnership. This partnership will allow Finish Line to operate athletic shoe stores in 450 Macy’s stores. Finish Line will also manage athletic shoes in Macy’s other stores and its products will be available on Macy’s website. Macy’s will benefit from increased traffic into its stores as its expanded athletic shoe offerings will likely drive a new demographic into Macy’s stores. The roll out of this partnership will start this spring and not be completed until around fall of 2014. However Finish Line expects this to be accretive to earnings next fiscal year and it will add $250 to $350 million to revenues once the roll out is complete. This is approximately a 20% increase to current revenue.

(click to enlarge)

When you look at the valuation of Finish Line to its peers it appears fairly valued. While its EV/EBITDA ratio and forward P/E are lower than Foot Locker,
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Life stories through a new lens, they have almost the same PEG ratio and Foot Locker has a higher dividend yield. These athletic retailers focused on shoes appear to be a better value than general sporting goods retailers like Hibbett Sports,
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Siders Articles, the same as Foot Locker,
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(click to enlarge)

Finish Line’s stock has been defined by a steep downtrend for a few months now and it does not appear that there is any reason for this trend to reverse. This is quite different from the chart of Foot Locker,
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Acheter Pas Cher Authentique Nike Roshe Run loup gris Carton vert Factory Outlet En Ligne Store Économiser Jusqu’à 60%, which I believe is finding support at around $31.50. Foot Locker did recently break bellow a long term uptrend,
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Fashions for Boys in the 1990s, but it appears to be more of a short term pull back than a longer term decline. Finish Line problems appear to be execution problems within the company. Furthermore a shift from running to basketball would benefit Foot Locker more even if Finish Line makes a strong push in basketball. Foot Locker will also benefit from poor execution at Finish Line like the failed launch of the redesigned website. One option for investors would be shorting Finish Line while taking a long position in Foot Locker. Should current trends continue Finish Line and Foot Locker’s valuation will begin move apart.

(click to enlarge)

Source: Missed Execution At Finish Line

Disclosure: I have no positions in any stocks mentioned,
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What’s True and What’s Not, and no plans to initiate any positions within the next 72 hours. I wrote this article myself,
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Online Auténtico Mujeres Free Run 4.0 V2 Sigilo reflectante Plata Volt Nike Guardar Off50% -70%, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article. (More.)

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