December 24, 2013, 11:09 AM

The web grows 8% for Finish Line in Q3

Finish Line put up a growth rate of 8% online in the third quarter, but expects to end 2013 with web sales up 15%. E-commerce now represents about 14% of all sales.

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It was a decent third quarter online for The Finish Line Inc., but the athletic shoes, apparel and accessories retail chain sees faster growth ahead for its e-commerce channel.

Over the next several years, Finish Line, No. 151 in the 2013 Internet Retailer Top 500 is aiming for the day when the web will account for about 20% of all sales compared with about 14% in 2013, chief financial officer Edward Wilhelm told Wall Street analysts on the third quarter earnings call. “Our long-term plans assume that the digital business will be over 20% of total Finish Line brand sales and have operating margins in the mid-teens, and we still very much believe those are very achievable,” Wilhelm told analysts.

Historically Finish Line hasn’t broken out e-commerce metrics, but the retailer is beginning to release more information. For the third quarter ended Nov. 30 Finish Line reported:

  • E-commerce sales grew 8.1% and represented about 14% of all sales. Based on those percentages Internet Retailer estimates e-commerce sales grew to $51 million compared with just over $47 million in the third quarter of 2012.
  • Total sales increased 22.9% to $364.5 million from $296.6 million.
  • Comparable-store sales increased 7.1%.
  • Net income of $2.3 million compared with a net loss of $107,000 in the prior year.

Finish Line didn’t break out e-commerce metrics for the first nine months but did report:

  • Total sales increased 15% to $1.15 billion from $1.00 billion.
  • Net income of $33.9 million, a decrease of 8.6% from $37.1 million in the prior year.

Finish Line CEO Glenn Lyon says the increase in total sales was driven by the successful launch of more “mini-stores” in Macy’s Inc. stores nationwide and by more customers using the mobile Internet to shop both in stores and online. “We currently have Finish Line-branded shops in 181 Macy's location,” Lyon told analysts. “We are pleased with the overall results we are seeing through our Macy's partnership and continue to refine our marketing initiatives, product assortment and service levels to reflect what we are learning.”

Today about one-fourth of all products that Finish Line sells in stores begins with a search online at FinishLine.com, Lyon said. “25% of the visitors to FinishLine.com are researching product to buy offline and this has led to a spike in store locator mobile traffic, especially on weekends,” Lyon told analysts. “These figures are even more pronounced within members of our loyalty program, where 87% are more likely to go in-store to purchase after receiving an e-mail. Clearly, the customer is utilizing technology to become better informed prior to purchase, with online research ultimately leading to increased store traffic as well.”

For the year Finish Line expects its e-commerce sales to grow by about 15% compared with comparable store sales growth of 3% to 4%. The retailer didn’t break out more specific metrics.

The growth online, Lyon told analysts, is coming from an increasing number of digitally connected customers, especially shoppers with more mobile devices and access to the wireless Internet. “Our total performance is being fueled by effective digital initiatives that create increasingly more personalized consumer engagements through desktop computers, mobile phones, tablets and social media.” Lyon said.

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