The Finish Line is racing for athletic footwear sales. The company sells performance and casual footwear and apparel through a pair of retail divisions: nearly 640 Finish Line stores in more than 45 states and Specialty Running Group, with about 20 stores. Its stores are bigger than competitors' and offer a wider array of clothing, accessories, and other merchandise, including jackets, backpacks, sunglasses, and watches. Finish Line offers big brand names (such as adidas, NIKE, and Timberland) and also markets its own private-label line of T-shirts, socks, and other basics. In a bid to raise sales and profits, Finish Line has been right-sizing its retail network and bolstering its e-commerce operation.
The retailer, which has been beset by declining sales during recent years, has closed more stores than it opened in both fiscal 2010 and 2011, resulting in an overall decrease in retail square footage. In 2012, however, Finish Line opened four new Finish Line stores and one Running Specialty store, spending millions to also remodel 17 existing Finish Line stores, upgrade its Finish Line digital business, and build a new website for its Running Specialty operation. As its brick-and-mortar operation is streamlined, Finish Line is focusing more on its e-commerce business. The company formed a team to lead www.FinishLine.com's advertising, design, and content development. The team also created a mobile store, so customers can shop from their smartphones and other devices, and it has stepped up social media efforts to reach shoppers. The company considers www.FinishLine.com to be its most visible store, attracting about 180,000 visitors daily.
Finish Line logged double-digit net sales increases (more than 11%) in 2012 compared to 2011, primarily as a result of a 9% rise in same-store sales and the fiscal year's additional seven selling days (which gave the retailer an extra $30.5 million). The company's net income saw a noteworthy 23% boost in 2012 vs. 2011, thanks to net sales increase, but necessary operating costs to grow its business chipped away at Finish Line's gains. Offsetting the company's revenue traction were costs associated with marketing initiatives to drive traffic to both its digital sites and stores, variable costs associated with keeping up with sales increases (related to fulfillment, freight, and payroll in conjunction with the 50% increase in digital sales and store sales increase), and expenses related to its Running Specialty stores. Finish Line invested heavily in 2012 and plans to do the same in 2013. Capital expenditures rose due to the construction of four new Finish Line stores and one Running Specialty store, remodeling activities for 17 existing Finish Line stores, digital enhancements for the Finish Line website, building a Running Specialty website, and a slew of corporate technology upgrades. The retailer plans to pick up the pace of investments in 2013 at the tune of up to $90 million.
Mergers and Acquisitions
In a move that revised its retailing strategy, Finish Line in late 2011 acquired a chain of 18 running shoe specialty stores in eight states for $8 million. The chain operates under several banners, including Greater Boston Running Co., Texas Running Co., and New York Running Co., among others. Located in seven states and the District of Columbia, the stores were renamed The Running Company and formed Finish Line's second retail division, Specialty Running Group (SRG). In early 2012 Gart Capital Partners invested $10 million in SRG. Gart and Finish Line have ambitious growth plans for the smaller retail business. Finish Line said the deal helps it grow outside its core namesake store business. It is retaining the chain's localized store banners and intends to add new outlets. Prior to the shoe specialty acquisition, Finish Line sold its Man Alive business, which offered hip-hop-inspired apparel, to focus on its core Finish Line chain and ride out the recession. Man Alive, which also operated stores under the Decibel banner, had a retail presence in about 20 states; it was purchased by Jimmy Khezrie, the founder of the Brooklyn, New York-based Jimmy Jazz stores. Prior to its decision to sell Man Alive, Finish Line had been working to revive the chain by closing unprofitable locations, renaming others as Decibel, and replacing its urban-inspired brands (such as Rocawear and Sean Jean) with more mainstream apparel lines.
Sales and Marketing
The retailer's namesake stores average some 5,400 sq. ft.; its Running Specialty stores average 3,000 sq. ft. Finish Line also operates e-commerce sites at www.finishline.com and www.run.com, a domain it purchased in 2011 to serve as the website for its Running Specialty holding. Footwear accounts for 86% of Finish Line's net sales. While Finish Line purchases products from some 120 suppliers, NIKE products (some sold exclusively at Finish Line) generate about 64% of total sales. About 84% of the retailer's merchandise is purchased from its five largest suppliers. Apparel and accessories (also referred to as softgoods) account for about 14%.
Finish Line's founders -- Alan Cohen, David Klapper, and Larry Sablosky -- own 41% of the company's shares. Chairman and CEO Glenn Lyon holds a 15% interest.