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Finish Line Inc. surged the most in more than seven years after beating first-quarter expectations in a weak retail environment, helped by strong sales of Adidas brand shoes.
Sales rose 2.3 percent to $453.5 million in the quarter ended May 28, the Indianapolis-based company said Friday in a statement. Analysts estimated $567.9 million, on average. Profit was 23 cents, excluding some items, topping analysts' 22-cent average projection.
The company also reiterated its annual forecast, signaling confidence despite a challenging consumer environment.
Chief Executive Sam Sato heaped praise on Adidas during on a conference call to discuss the results, saying styles such as Ultra Boost, Superstar, Stan Smith and NMD boosted the retailer's top line. The Adidas plaudits suggest that the German sneaker company is gaining ground on rivals like Nike and Under Armour.
"We continue to experience explosive growth in our Adidas business," Sato said on the call. "The Adi brand itself has a ton of momentum. The excitement around that brand globally is very high, and it's no different in the States."
Defying a global stock-market rout prompted by the U.K.'s vote to leave the European Union, Finish Line shares surged as much as 21 percent to $20.24 in New York, the biggest intraday gain since December 2008. The stock had been down 7.1 percent this year through Thursday.
Sato's comments serve as a reminder that Nike, which accounts for about 70 percent of Finish Line's revenue, is under pressure on multiple fronts. In casual and performance running shoes, Adidas has had a major comeback over the past few quarters.
Its Boost brand, which debuted in 2013 and was aimed at runners, has crossed over to the everyday-fashion market.
"The product pipeline from Adidas is extremely strong," Sato said. "I feel really confident about what they are doing as a brand."
In basketball performance sneakers, Nike has been hampered by the success of Under Armour and its line of Stephen Curry-branded shoes.
Sato said Finish Line's basketball business has been challenging, but Curry's sneakers have been a bright spot. That strength includes Currys for kids, which Sato also described as "explosive."
The basketball woes stem from prices being too high and many styles missing on fashion, he said.
"We are very excited about what the future holds for this iconic platform," Sato said of Curry's signature shoes.
As for Nike, Sato said the world's largest sports brand still had a strong running business, with retro lines such as Presto and Huarache. He also expected innovations coming in its Zoom and Free running brands to sell well.