Nov 15, 2016
Finish Line to explore alternatives for JackRabbit, including sale
Nov 15, 2016
Sportswear retailer Finish Line Inc said on Tuesday it would explore strategic alternatives, including a sale, for its JackRabbit chain of stores that sell specialty running gear.
However, Finish Line's shares fell as much as 3.8 percent on doubts about whether the company could sell the chain at a time when sporting goods companies are struggling stay afloat.
"We are unsure that Finish Line will be able to sell JackRabbit," Buckingham Research Group analyst Scott Krasik wrote in a note.
With no history of profitability, 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, Krasik said.
JackRabbit, previously known as Running Specialty Group, is a chain of 70 stores in 17 U.S. states selling running gear under brands such as Brooks, ASICS and Hoka One One.
Finish Line's move, which has been widely speculated for months, comes as brick-and-mortar sporting goods stores are struggling to compete with the lower prices and ease of shopping at online retailers, especially Amazon.com Inc.
Weak sales and mounting losses have already led to a spate of bankruptcies among sporting goods companies this year, including retailers Sports Authority and Sports Chalet.
More than 20 million square feet of sporting goods retail space has been lost until July and those that remain have been consolidating, according to industry research group NPD.
Wolverine World Wide Inc (WWW.N) said last month that sales at its performance running gear business, Saucony, had been hit by "extreme weakness in the running specialty channel".
Finish Line said on Tuesday that it expected to record a $44 million non-cash goodwill impairment charge in the third quarter of fiscal year ending Feb. 27 related to JackRabbit.
Finish Line's shares, which have risen 27 percent this year, were down 2.7 percent at $22.34 in afternoon trading.
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