Shares of Finish Line (NASDAQ: FINL) plummeted nearly 20 percent Friday, after the company reported earnings that missed estimates along with poor profit margins that were impacted by price cuts.
The stock reached as low as $12.63 for the day, a price not seen since August 2010.
In the fourth quarter, Finish Line "made the decision to get more aggressive on pricing to be competitive and clear slow moving product," Chief Executive Sam Sato said in a statement Friday. "Our fourth quarter earnings performance represented a disappointing finish to a challenging year financially for our company."
On Friday, the Indianapolis-based retailer reported adjusted quarterly earnings of 50 cents per share, missing a Thomson Reuters consensus estimate of 70 cents.
Finish Line comparable sales — a metric closely watched for retail stocks by Wall Street — decreased 4.5 percent for the quarter, a drop greater than analysts expected, according to FactSet.
"Despite the gloomy numbers, there was one bright spot for Finish Line: its sales within Macy's (NYSE: M) stores increased by 35 percent over this quarter," GlobalData Retail analyst Neil Saunders wrote in a report. "Given Macy's general troubles with customer traffic over the past few months, this is an impressive performance that shows the shop-in-shops Finish Line has opened are apparently working."
But Finish Line can't become too dependent on this part of its business alone, Saunders warned.
Global investment firm Jefferies issued a report to clients Friday morning, lowering its price target on the stock to $19 per share from $25. "We see better days ahead for Finish Line," equity analyst Randal Konik wrote in the note.
The retailer might see headwinds in the first half of 2017, but the second half of the year should bring stronger same-store-sales, Konik added. Jefferies maintains a buy rating on the stock.
On Friday, Finish Line reported its sales for the fourth quarter ended Feb. 25 were $557.5 million, slightly topping a Reuters estimate of $547.8 million, though down 0.4 percent from the same period one year ago.
With Friday's losses, shares of Finish Line are down more than 31 percent for the year and are down around 32 percent over the past 12 months.
Finish Line 10-year performance
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