Poison Pill Shows Finish Line Never Adjusted | IBJ.com

Source: Amid weak results and sliding stock, Finish Line adopts anti-takeover plan | 2017-08-28 | Indianapolis Business Journal | IBJ.com

Earlier this year I wrote an article analyzing Finish Line as it related to the success of Foot Locker. As everyone watching sneaker retail knows right now Foot Locker’s success has also taken a dramatic hit that seemed avoidable. When I wrote the Finish Line articles earlier this year my analysis was based on how Finish Line could work on store closures, merchandising and storytelling to create a better in store experience.

Finish Line Inc. Cl A $FINL | Someone Didn’t Get My Message

At the time I had a complete understanding of Nike’s push into DTC. I also was fully aware of the move adidas made in the market. What hadn’t happened was Nike’s decision to do what both adidas and Under Armour had done years ago on Amazon, open a brand registry on the e-commerce giant. This move completed a DTC approach that has been at the core of the downturn in sneaker retail. Without looking at the DTC push by every brand, I missed a vital component in recognizing why Finish Line would have difficulty turning things around.

What I didn’t miss was this quote from the article above  (if you didn’t click through):

… if Finish Line didn’t adjust they could be headed towards TSA territory. Today their stock tumbled to 13.26 on poor 4th Quarter earnings.

What is my projection for Finish Line? If they can begin to implement the small strategies they will begin to bounce back. The problem is big companies are like boulders rolling downhill. Once the momentum in a direction starts, they push forward to the detriment of their own growth.

If the market decides Foot Locker is the retail outlet of choice for sportswear, Finish Line becomes TSA, just like I’ve explained about Hibbett Sports potential failure. Private companies like City Gear will be next in line.

Finish Line’s board just took what is called a “poison pill”,

In separate press release issued after the market closed, Finish Line said it adopted the shareholder-rights plan, also known as a “poison pill”—a move that appeared aimed at staving off the United Kingdom-based retailer Sports Direct International, which has been aggressively accumulating stock in recent months.

Sports Direct now controls 11.9 million shares representing 29.6 percent of the company, according to an Aug. 21 Securities and Exchange Commission filing. – IBJ.com

As I stated, Finish Line would be headed towards TSA territory, but it appears that it won’t do so considering they could possibly be the victim of a hostile takeover via the purchasing of derivative shares by Sports Direct before they reach a point of bankruptcy.

This is a very complex time and beyond my paygrade in regard to fixing the issue. My advice is typically in regard to marketing and shifting the branding to inspire better customer service and maximize opportunities outside of selling the products of companies undercutting the sales environment through DTC.

I mentioned that Foot Locker already has in its toolbox a private label line to regain some ground in sales lost to Amazon and Nike. Foot Locker also has a more capable online sales platform where they could see growth. Finish Line however hasn’t maximized e-commerce, they don’t have any private labels to promote in lieu of the shifting taste of a fashion driven market, their stores are often far too big and in the wrong locations, and they have a cold branding environment in stores with very little storytelling. All of this is small when you look at the bigger picture which is the fact that in any retail location there are 3-6 sneaker stores and they are all running sales… and there isn’t a single product being released that inspires a rabid, iPhone styled loyalty and desire.

Those blue Finish Line shirts are definitely symbolic; winter is coming and it won’t bring a great holiday season to stave off the inevitable.

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Chris
Chris
Founder, Writer and Webmaster at ARCH & CBP
Chris B. is the founder of ARCH.

The ARCH network is unlike other sneakerhead sites. ARCH is a more informative look into sneaker culture. By presenting information about the business of sportswear through marketing analysis, updates on stock prices and introductions to new brands and styles, the site is easily distinguished from the everyday site only giving you release dates.

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