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As a subscriber you can listen to articles at work, in the car, or while you work out. Subscribe NowFinish Line Inc. plans to close as many as 20 of its roughly 700 stores this year, but also hopes to open about 15 stores based on a smaller prototype aimed at generating more sales per square foot.
A day after the Indianapolis retailer reported a $38.6 million loss in its fourth quarter, CEO Alan Cohen told Wall Street analysts this morning that he sees bright spots that include smaller store inventories, higher margins and strong performance by individual brands such as Nike.
“I continue to see momentum,” Cohen said. “I feel our product offerings and product presentation is as good as it’s been in the last several years.”
Finish Line stock shot up 10 percent this morning, to $4.75 a share.
Much of the loss was driven by an $81.5 million charge related to its escape from a merger agreement with Tennessee-based mall retailer Genesco Inc.
Even without the charge, the quarter was tough. Comparable-store sales dropped 6 percent, keeping alive a two-year streak of quarters with declining same-store sales.
Cohen said mall traffic has been slow, and that he expects same-store sales to range from flat to slightly up this year. The Finish Line’s Internet business, on the other hand, has been growing fast.
One of the biggest drags for Finish Line has been its 94-store Man Alive chain. The urban apparel stores have suffered nasty losses for a couple of years. Cohen said improvement is several quarters away as stores transition from a lineup of “hip hop” products to “crossover urban street wear.”
Cohen said the company’s financial position is strong, and he expects a cash balance of more than $50 million to remain after the company completes its Genesco settlement agreement.
“I’m pleased this considerable distraction has now been eliminated,” Cohen said today.
Finish Line bid $1.5 billion in June for the parent company of mall chains Hat World, Lids and Journeys. But the deal turned sour after credit markets seized up, and sales for both companies declined.
To opt out of the deal, Finish Line agreed to pay Genesco $39 million in cash and more than 6.5 million shares of the company. Swiss giant UBS, which offered financing for the deal, agreed to pay the balance of a $175 million settlement.
“I know it’s been difficult, difficult for us, difficult for shareholders,” Cohen said. “Hopefully you can see we’re very, very happy to be focused on the business again.”
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