The Finish Line Inc. said it was “currently exploring strategic alternatives for JackRabbit, the company’s specialty running store chain,” to boost “shareholder value.” Which could mean a sale of the 70-unit chain.
The decision follows a shift in the sporting good segment as Amazon Inc. continues to steal market share, which has impacted businesses such as the Sport Authority — forcing it into bankruptcy. Meanwhile, brands such as Adidas, Nike and Under Armour have muscled into the segment by opening their own stores — even as Nike and Adidas in particular remain stores performers for Finish Line.
The retailer hired Peter J. Solomon Company LLC as its financial advisor and stressed that “there is no definitive timeline or assurance that this process will result in a sale transaction.” The retailer said it conducted a “comprehensive review” of its business, and “believes its long term growth strategy and profitability improvement plans align with simplifying the business to focus on the Finish Line brand and has decided to evaluate possible alternatives for JackRabbit including a potential sale.”
Finish Line said it “does not intend to provide any further updates on this process unless or until the board has approved a final decision.” Regarding the financial impact, the retailer said it expects to take on a “non-cash goodwill impairment charge” during the third quarter of fiscal year 2017 of about $44 million.
In September, the Finish Line Inc. beat analyst expectations with its fiscal second-quarter sales of $509.4 million as same-store sales rose 5.1 percent. On the analyst call chief executive officer Samuel Sato said its business with Macy’s Inc. business was strong along with robust online sales. The ceo noted that the Adidas business continues to be robust while Nike sales were driven by the Huarache Max air. With Under Armour, sales were fueled by the Curry shoes. The company said it closed five locations during the second quarter, which brings the year-to-date total of closures to 11.
The specialty retailer’s store closures and potential sale of JackRabbit follows a string of closures across the entire retail market over the past two years. Aside from Sports Authority, store closures have included brands such as: Aeropostale; Ann Taylor; Elder-Beerman; Macy’s; The Gap, J.C. Penney; Sears; and Office Depot; among others.
Finish Line currently operates 980 units.