Back-To-School Season Won't Save Finish Line

Things are rough right now for athletic retailers, and a rush from back-to-school shopping is unlikely to save them.

Sports industry analyst Matt Powell of NPD Group previously told Benzinga that this back-to-school season was the most promotional he has seen in 20 years.

Finish Line Inc (NASDAQ: FINL) shares plummeted nearly 20 percent on Tuesday after reporting dismal preliminary second-quarter results and slashed third-quarter guidance.

The share price drop was similar to the one competitor Foot Locker, Inc. (NYSE: FL) saw, after reporting a weary second quarter of their own two weeks ago.

Given the challenging outlook for the industry, Bank of America analyst Robert Ohmes cut F2018 EPS estimates in more than half, from $1.05 to 50 cents. The F2019 EPS was also brought down from 65 cents to $1.20.

Nike Inc (NYSE: NKE) fall from grace is certainly troubling for Finish Line, the brand accounted for a stunning 71 percent of store revenues in 2016. Ohmes does not see Nike returning to healthy growth for at least 12 months and also highlighted weakness in the Jordan brand. When Nike does return to growth, it likely may be due to its improved focus on direct to consumer buying, rather than through its traditional retail partners. 

“We see risk that Finish Line’s comps will remain negative through 2017 and into 2018,” said Ohmes.

Bank of America reiterated an Underperform rating on Finish Line while lowered its price objective from $10 to $8.

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