Obi Anyanwu
Jan 27, 2017
Finish Line to sell JackRabbit to CriticalPoint Capital
Obi Anyanwu
Jan 27, 2017
Finish Line on Thursday announced that it is exiting the JackRabbit business, which is described as “unprofitable” in the press release. The retailer entered into a definitive agreement with affiliates of Los Angeles-based private investment firm CriticalPoint Capital, LLC.
The transaction, which includes 65 retail stores, JackRabbit leasehold interests and lease liabilities, intellectual property and the JackRabbit trademark and name, has been approved by the Finish Line Board of Directors and is expected to close by the end of its fiscal fourth quarter. In addition, the JackRabbit staff will be employed by an affiliate of CriticalPoint Capital.
"As we exit the running specialty business, we dedicate our entire focus to serving our core Finish Line and Finish Line Macy’s customers and driving profitable results that provide return to our shareholders," said Sam Sato, Chief Executive Officer of Finish Line.
Finish Line began exploring a sale for JackRabbit since November 2016. The chain that was formerly known as Running Specialty Group has no history of profitability, according to Buckingham Research Group analyst Scott Krasik, despite operating 70 brick-and-mortar locations including 17 in the US. Krasik added, “Weak secular trends in performance running and a business model that is too small to scale, but too large to manage make JackRabbit a tough sell”
"The JackRabbit team – both in their main offices in Denver and throughout the field – genuinely work hard to serve running and fit enthusiasts within their local communities,” said Sato. “With CriticalPoint retaining those employees, they will continue to deliver a high level of customer service and offer industry leading branded footwear, apparel and accessories.”
The retailer expects to incur a pre-tax charge in the fourth quarter of approximately $33 million to $36 million which includes cash costs of approximately $11 million to $12 million and non-cash charges for the remainder related to the net assets of JackRabbit as well as certain other exit costs.
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