BEHIND THE NEWS: Founding family tossed from slumping Man Alive

November 19, 2007

Embattled Finish Line Inc. has quietly sent the family that founded and ran its Man Alive chain packing.

The company on Nov. 12 announced the appointment of former Haggar Clothing Co. executive Lou Spagna as president of the struggling 96-store urban apparel chain.

Tucked in the press release was a quote from Finish Line President Glenn Lyon expressing "our appreciation to the Bublick family for the service they have provided."

It was a major overhaul. Gone are Jeff Bublick, 47, Man Alive's president; his brothers Ben, 45, the senior vice president for merchandise and Dan 43 the senior vice president of store operations. Also out are their parents, Mandell and Barbara, who served as consultants.

Man Alive had just 37 locations when Finish Line bought it for $12 million in January 2005. The locally based chain, founded by Mandell and Barbara in 1969, has since nearly tripled in size, with locations scattered across 19 states.

Reached last week, Jeff Bublick expressed pride in what his family built and said he wished his former employer the best.

"We were approaching the end of our employment contract, and Finish Line decided to take the leadership team in a different direction," Bublick wrote in an e-mail response to IBJ questions.

"As one can imagine, maintaining a management team of five highly experienced business executives can be rather costly in the current retail environment."

Indeed, the changes come at a time of considerable tumult for both Finish Line and Man Alive itself.

Finish Line is tangling in court with mall retailer Genesco Inc. over whether it must close the $1.5 billion buyout of the Tennessee firm. It struck the deal in June, before credit markets slid into disarray and before both retailers reported surprisingly weak summer results.

Same-store sales at the 697-store Finish Line chain tumbled 4.5 percent in the 26 weeks that ended Sept. 1. Though samestore sales at Man Alive declined less, just 1.1 percent, its performance was weaker than it appeared because margins also shrank, according to a filing with the Securities and Exchange Commission.

A Finish Line spokeswoman declined to comment to IBJ. However, in a conference call with analysts Sept. 28, company CEO Alan Cohen called the Man Alive business "challenging." He said the chain would not open additional locations "until we see improved momentum in our business and a more clear direction for the street-fashion industry."

All the urban apparel retailers are feeling pressures, some more severely than Man Alive. Pacific Sunwear of California Inc. early this year announced it would close 74 of its demo stores, and recently put the remaining 154 up for sale. It reported that demo's same-store sales in October dropped an alarming 23 percent.

On the Finish Line call, an analyst asked Cohen whether it made sense to close "a chunk" of the Man Alive stores. Cohen called the question "very legitimate" but said, "We think we have got a business there that is ongoing and can be successful."

The new president, Spagna, is a veteran of the urban niche. Before serving as president of the retail division of Dallasbased Haggar, he held executive posts at Merry-Go-Round, Chess King and other chains.

Finish Line recently gave up on another chain that was supposed to reduce its reliance on its core athletic footwear and apparel business. In August, the company said it would take $21 million in charges to shutter its 15-store Paiva chain, which catered to affluent, sports-minded women.

Tough outlook

Finish Line executives are feeling intense pressure to right the ship these days. The company's stock price keeps slipping lower and lower. Shares now trade for a paltry $3.39-off 75 percent from a year earlier.

A fashion shift away from high-end athletic shoes has sapped sales at its Finish Line chain and forced it to stock more casual shoes. It's a segment where it lacks an inherent competitive advantage and one in which many other mall retailers compete.

"We do not believe a turnaround in sales is imminent," BB&T Capital Markets analyst David Turner wrote in a report. He added that Finish Line had "few alternatives to spark" a rebound.

Then there's Finish Line's pending acquisition of Genesco, which owns Journeys, Hat World and other chains.

Finish Line is trying to wiggle out on the grounds that Genesco's fiscal second-quarter loss and its struggles since are "material adverse" events that give the company the right to cancel the deal.

"Had we known that ... the third quarter would look like it looks now, we would not have signed the deal," Robert Walker, an attorney for Finish Line, said in court late last month.
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