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As a subscriber you can listen to articles at work, in the car, or while you work out. Subscribe NowShares in locally based athletic retailer The Finish Line Inc. jumped Friday morning after the company reported a narrow
loss for the second fiscal quarter, mostly because of the large cost of unloading its unsuccessful Man Alive stores in July.
The company took an $18.4 million charge on its disposal of the 75-store chain, transforming a profit of 21 cents
per share into a loss of 2 cents per share, or $874,000, for the quarter ended Aug. 29. Absent the charge, the results met
Wall Street expectations.
Shares were up about 12 percent in morning trading, to $10.43 each.
Finish
Line CEO Glenn Lyon said on a conference call with Wall Street analysts that the company is encouraged by signs the recession
is ending, but he cautioned that consumer spending could be a lagging indicator.
“Therefore, we maintain
our conservative view,” Lyon said. “A strong balance sheet is a significant competitive advantage in today’s
retail environment that we can leverage to grow sales and profits.”
The company’s balance sheet provides
a good measure of protection: The chain has $143 million in cash and no debt.
And while Finish Line reported a
9.9-percent drop in sales at stores open at least a year—a key retail measure—the numbers have been headed in
a positive direction. Sales in June were down 15.4 percent, sales in August fell 9.2 percent and, so far in September, have
been down only about 6 percent.
Ridding itself of Man Alive heartened investors. Finish Line paid about $12 million
for the chain four years ago and in July had to pay Brooklyn-based Jimmy Jazz about $7 million just to take the chain off
its hands.
Finish Line said it reduced administrative expenses by 9 percent, or $7.5 million, in the most recent
quarter. And it continues to save money by renegotiating leases with landlords; 300 leases are coming up for renewal in the
next 18 months.
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