IBJNews

Analysts react positively to Finish Line purchase

Back to TopCommentsE-mailPrintBookmark and Share

Analysts who follow The Finish Line Inc. are praising the Indianapolis-based athletics retailer for its acquisition of an 18-store specialty running chain announced Thursday morning.

The stores operate under banners including the Greater Boston Running Company, New York Running Company and Texas Running Company, and are in Connecticut, Florida, Maryland, Massachusetts, New Jersey, New York and Texas, as well as the District of Columbia.

Altogether, the stores have annual revenue of $19 million.

Yearly sales for the stores are just a bit more than what Finish Line typically earns in a quarter—$16.4 million in the fiscal three months ended May 28.

Analysts have suspected that Finish Line, which is flush with cash, would make an acquisition in an effort to make up for past expansion missteps.

In 2005, the company paid $12 million to buy hip-hop outfitter Man Alive. Finish Line expanded Man Alive's store base to almost 100 outlets before unloading the perennial money-loser in 2009.

In 2006, Finish Line launched an active women’s concept called Paiva and opened 15 stores before closing the concept a year later.

That same year, Finish Line aimed for the fences with a highly leveraged $1.5 billion bid to acquire Tennessee-based Genesco Inc., the parent of Journeys and Hat World. Finish Line later had to pay handsomely—about $40 million in cash and 6.5 million of its shares—to call off the deal after credit markets seized up and sales for both companies declined.

The purchase of the running stores puts to rest fears that Finish Line would repeat the past by over-reaching for a larger, pricier deal, New York-based investment analyst Jefferies & Co. Inc. said in a Thursday morning report.

“The potential synergies and scale prospects are obvious, making this an interesting and logical path,” the firm said. “Moreover, we see this as structurally attractive given the growing interest in running/healthy living activities and a local service-oriented retail model.”

With the core Finish Line chain near maturity within U.S. malls, management appears to be targeting fragmented specialty sectors as its next growth target, Jefferies & Co. said.

Finish Line’s Chairman and CEO Glenn Lyon acknowledged as much in a Thursday morning press release.

“This acquisition is an important step in our strategic plan to drive growth outside of our core Finish Line business,” Lyon said in a written statement. “We plan to expand the number of stores and develop this chain’s first e-commerce capability, as well as pursue other potential acquisitions in the specialty running business.”

Birmingham, Ala.-based investment firm Sterne Agee & Leach Inc. also supported the purchase.

“Unlike previous acquisitions, this acquisition keeps Finish Line focused on their core competency of footwear,” the firm said. “The acquisition will provide Finish Line with intelligence on future new trends in the running business.”

The 18-store chain was founded by competitive runner Gene Mitchell in 1996, and the stores are operated by a group of individual owners.

Finish Line’s acquisition didn't attract much attention on Wall Street. Company shares were trading at $20.14 at noon, 4 cents over their opening price.

Finish Line operates about 650 stores across the country.

 

ADVERTISEMENT

Post a comment to this story

COMMENTS POLICY
We reserve the right to remove any post that we feel is obscene, profane, vulgar, racist, sexually explicit, abusive, or hateful.
 
You are legally responsible for what you post and your anonymity is not guaranteed.
 
Posts that insult, defame, threaten, harass or abuse other readers or people mentioned in IBJ editorial content are also subject to removal. Please respect the privacy of individuals and refrain from posting personal information.
 
No solicitations, spamming or advertisements are allowed. Readers may post links to other informational websites that are relevant to the topic at hand, but please do not link to objectionable material.
 
We may remove messages that are unrelated to the topic, encourage illegal activity, use all capital letters or are unreadable.
 

Messages that are flagged by readers as objectionable will be reviewed and may or may not be removed. Please do not flag a post simply because you disagree with it.

Sponsored by
ADVERTISEMENT

facebook - twitter on Facebook & Twitter

Follow on TwitterFollow IBJ on Facebook:
Follow on TwitterFollow IBJ's Tweets on these topics:
 
Subscribe to IBJ
  1. Really, taking someone managing the regulation of Alcohol and making himthe President of an IVY Tech regional campus. Does he have an education background?

  2. Jan, great rant. Now how about you review the report and offer rebuttal of the memo. This might be more conducive to civil discourse than a wild rant with no supporting facts. Perhaps some links to support your assertions would be helpful

  3. I've lived in Indianapolis my whole and been to the track 3 times. Once for a Brickyard, once last year on a practice day for Indy 500, and once when I was a high school student to pick up trash for community service. In the past 11 years, I would say while the IMS is a great venue, there are some upgrades that would show that it's changing with the times, just like the city is. First, take out the bleachers and put in individual seats. Kentucky Motor Speedway has individual seats and they look cool. Fix up the restrooms. Add wi-fi. Like others have suggested, look at bringing in concerts leading up to events. Don't just stick with the country music genre. Pop music would work well too I believe. This will attract more young celebrities to the Indy 500 like the kind that go to the Kentucky Derby. Work with Indy Go to increase the frequency of the bus route to the track during high end events. That way people have other options than worrying about where to park and paying for parking. Then after all of this, look at getting night lights. I think the aforementioned strategies are more necessary than night racing at this point in time.

  4. Talking about congestion ANYWHERE in Indianapolis is absolutely laughable. Sure you may have to wait in 5 minutes of traffic to travel down BR avenue during *peak* times. But that is absolutely nothing compared to actual big cities. Indy is way too suburban to have actual congestion problems. So please, never bring up "congestion" as an excuse to avoid development in Indianapolis. If anything, we could use a little more.

  5. Oh wait. Never mind.

ADVERTISEMENT