By  on August 10, 2005

NEW YORK — The Finish Line Inc. is entering the women's activewear market with a series of stores that will open in upscale malls in time for the holiday season.

Financial and market sources said the new concept will be an apparel specialty chain that also will include some active footwear.

The new stores will be housed in "A-type" malls, and will average 4,000 square feet, sources said, adding that about a dozen sites have been picked out, with leases either signed or at the latter stages of negotiation.

One real estate management firm, in talks with a shopping mall operator about housing one of the new concept stores, said the upscale mall being considered is home to other high-end apparel and accessories brands such as Gucci, Louis Vuitton, Tiffany, Ralph Lauren, Max Mara, Cartier, Burberry and St. John.

A spokeswoman for Finish Line said, "We do not have any comment at this time."

Brands that will be featured in the concept — the name of which is still a tightly guarded secret — is expected to include Nike, Adidas and Puma. However, Nike, which some analysts view as having a stronger partnership with Finish Line, is expected to have a greater prominence in the concept stores, possibly even showcasing some of its Nike Women's product, the analysts said.

Finish Line Inc. president and chief merchandise officer Glenn Lyon told investors at a CIBC Consumer Growth Conference on July 13 that, in the "last two years, [the firm's] revenues have increased by 54 percent." He added, however, that the competitive landscape in the mall has changed once again, which necessitated a shift in strategies to grow earnings. The retailer has in place a plan that it hopes will deliver "double-digit operating margin through continued 15 to 20 percent growth in earnings," Lyon said.

Kevin Wampler, chief financial officer, told investors that Finish Line is "probably the only one within our retail sector [of] mall-based specialty athletic retailers growing to any significance." The cfo also disclosed that the company wants to continue its leading position in "premium product."

An upscale women's specialty concept fits those plans, analysts said.One reason why some analysts are expecting Nike to play a key role is the contribution of its products to Finish Line's bottom line.

Lyon, at the CIBC conference, said that the "women's business has grown by 75 percent in two years," with Nike being the big contributor to the retailer's success in gaining traction in the category. Nike products also contributed to the growth of Finish Line's men's footwear and kids' businesses.

Finish Line also operates Man Alive, an urban apparel retailer, where 95 percent of the business is in apparel and the balance is in footwear. The company views its core Finish Line nameplate as a footwear retailer that sells apparel. There are 38 Man Alive stores in nine states primarily in the Midwest and mid-Atlantic regions, doing an aggregate of about $30 million in annual sales. The company is planning another 10 to 15 Man Alive stores, according to Lyon during his presentation.

The upscale women's activewear category has few competitors. One competitor that is likely to garner more attention is Lucy Activewear, a specialty chain that recently finalized a deal for $20 million in new funding, including a $10 million minority stake from women's retailer Chico's FAS.

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