Sportswear retailer Finish Line Inc. will close up to a quarter of its 600 name-brand stores, and replace CEO Glenn Lyon, the company said Thursday. President Sam Sato, a Nordstrom veteran of more than 20 years, will replace Lyon, who will remain as executive chairman through the end of the year and then serve as nonexecutive chairman.
The store closures reverse the company’s expansion efforts. The company lowered earnings estimates for the year; including Thursday’s share price loss of 11%, its stock has fallen 33% in the past 12 months.
The company said its troubles stem from supply chain problems that came after it established a new warehouse system, for which it has employed a vendor to make improvements. While Q4 same-store sells fell 5.8%, the company expects a vast improvement in Q1.
Sports apparel is a fiercely competitive space at the moment, with so-called athleisure clothing dominating in many ways. Finish Line appears to be paying the price for forgoing that category to concentrate on running gear and performance wear.
The failure of the company’s new supply system is a disappointment, considering that it was meant to make the company’s system more agile. As of October, the new system couldn’t process orders quickly enough, and stores were left with a dearth of inventory. “The problem was we weren’t getting enough of the best selling or key items,” Sato said on a conference call with analysts Thursday.
The issues have cost the retailer some $32 million in sales, about 8% of its business for the period ended Nov. 28.
Finish Line executives say strong demand for athletic shoes like the Nike Roshe and retro Jordan basketball shoes remains and that repairing its supply chain will once again lift the retailer by next quarter.