Glenn S. Lyon, the new head at The Finish Line Inc., has plenty to tackle. Traffic is down at Finish Line stores, sales have slowed and competitors are slashing prices.
But the home-grown retailer has at least one major advantage: Lyon, the ‘s president, inherited one of the strongest balance sheets in the business, including zero debt, when he took the reins from former chief Alan H. Cohen Dec. 1. Leading Finish Line is Lyon’s dream job. It really sunk in when he played in a golf tournament in a foursome that included Michael Jordan and Bill Clinton. Lyon, 58, recently chatted with IBJ about the chain’s prospects. The following is an edited version of that interview.
IBJ: How do you like the new gig?
LYON: This is the most exciting time of my career. I love the company and the people I work with.
IBJ: Must be a rough time to be taking over?
LYON: I’ve been through challenging times before, but this is extraordinary for everyone in retail, for everyone in business. It’s very hard to get the customers to buy. But it’s also nice to have no debt. People who are leveraged will be under a lot of pressure, which could create opportunities for us.
IBJ: In a conference call, you said it’s the worst you’ve seen in 35 years in retail. What makes this downturn different?
LYON: In the past, I’ve worked through issues with product assortment and recessionary-type periods. This isn’t the customers us don’t like what we’re offering; this is customers saying they don’t want to spend money right now. It’s the macro effect that’s more challenging to predict. We’ve seen traffic drop from middle to high single digits. Converting enough of those customers to offset the lower traffic is a huge challenge.
IBJ: You guys have resisted some of the big discounting other chains have launched. Are people still buying athletic gear more than other products?
LYON: Usually, deep discounting is created when stores have inventory they need to get rid of. We’ve taken care of our inventory. We’re out opportunistically working with vendors to get products with better value. But we have to be careful with the mix. We need to stay premium.
IBJ: Looking more long term: How will you continue to grow the company at a time when your main Finish Line brand is reaching saturation (about 700 stores) and prospects for Man Alive (an urban apparel concept with about 100 stores) are grim?
LYON: To get Finish Line to its max, organic growth will have limitations. As conditions improve, we believe some sort of merger or acquisitions will be part of our future.
IBJ: Your predecessor pursued the purchase of Tennessee-based Genesco Inc. as a means to acquire new, growing store concepts. (After financing for the $1.5 billion deal fell apart, investors worried Finish Line still would be obligated to buy the company, and its shares plummeted; Finish Line ultimately got out of the deal.) Do you see acquisitions like it, or would you aim a little smaller?
LYON: We still look at the Genesco deal as a strategically appropriate plan. But the formulas changed when bond markets crashed and the retail environment became a problem.
IBJ: Would you look again at linking up with Genesco?
LYON: No, I’m not saying that. We’ll look for opportunities–but not in the immediate future.
IBJ: You said in the conference call that performance at Man Alive has been "unacceptable." How much longer will you hold on to that concept if it doesn’t improve?
LYON: There isn’t a definitive date, but we have expectations for improvement in different aspects of the business within the next 12 months.
IBJ: Over the years, you’ve also looked at growing new concepts, such as Paiva (a chain focusing on upscale, athletic women). Does that work continue?
LYON: Startups and acquisitions are always part of our strategic plan here. But for now I want to focus on the business we have, on the fundamentals.
IBJ: How does your philosophy on Finish Line differ from your predecessor’s?
LYON: We’re different people, and it’s as much about management style as anything. But in terms of running the business, he and I shared all of our views. A lot of the vision for the company was a collaboration. I don’t get to blame the previous CEO; I was part of a decision process for most of what’s going on today.
IBJ: Your last CEO post was at locally based Paul Harris Stores (which filed for bankruptcy in February 2001, about a year after Lyon took over). What do you take from that experience?
LYON: I’d say the importance of managing your balance sheet, especially during hard times, is what I took from that experience.
IBJ: But now you’re in your dream job?
LYON: It sure is. I’m in the industry I love, at a company I love, and a city I love.