FINL’s Wilhelm on Managing Expenses

FINL's Wilhelm on Managing Expenses
CFO Ed Wilhelm joined the company in March from Borders Group Inc.

For Ed Wilhelm, the key to success in a down economy is putting the numbers to work for you.

The Finish Line Inc. CFO, who arrived at the retailer in March from Borders Group Inc., said his top priority is to create better models for analyzing data, and then to apply that data to build a more efficient company.

In his first few months on the job, Wilhelm has been taking a hard look at the company’s real estate portfolio.

“One of the things I’m helping [to do] is to provide better analytic information to the real estate team so I can arm them when they’re sitting across the table from landlords,” he said.

Over the next 18 months, the retailer will be in the position to renegotiate leases on about 300 stores, CEO Glenn Lyon told investors on Finish Line’s second-quarter conference call.

“Landlords are very motivated today to keep us in place,” Wilhelm said.

But store closings are a reality during the down economy, and Wilhelm said on the call that the retailer plans to close 20 to 25 stores during this fiscal year (higher than previous estimates), while opening four to five new locations.

Outside of reducing occupancy costs, Wilhelm has been leading the charge to trim other expenses as well.

In July, he oversaw the sale of Finish Line’s struggling Man Alive urban store chain to Man Alive LLC, a company controlled by the owners of the Jimmy Jazz retail chain.

The move cost Finish Line $7 million, in addition to other disposition charges, but Wilhelm is confident it will drive growth down the line.

“[Man Alive] was burning through cash.It was reducing the total company profits and taking some time and attention away on the management side,” Wilhelm said. “Now, with that transaction behind us, we can focus all our time and attention and our capital resources on the Finish Line business. There was no downside.”

Will the company — which has spent the last few years dealing with the repercussions of its failed Genesco acquisition — pursue any new buys?

“There’s nothing on the radar screen that we’re thinking about,” Wilhelm said. “Our strategy … is getting that core Finish Line business to an improved level.”

That strategy will include continuing to watch inventory levels closely.

To that end, the company said consolidated merchandise inventories were down 18 percent at the end of the second quarter versus the year-ago period, while inventory on a square-foot basis was down 10 percent.

The CFO also is carefully evaluating Finish Line’s marketing spend.

“We’re a small player in a big mall, competing with everyone in the mall to get that customer into our store,” Wilhelm said, adding that the firm is considering increasing catalog distribution and freshening up its store window presentations.

“Those things all cost money, and we want to evaluate the effectiveness of those spends,” he said.

All told, Wilhelm said he believes that being as efficient as possible now will pay off later.

“We’re going to stay focused on the things we can control, and that will include some prudent investments to drive top-line sales. And when the consumer environment gets better, we’ll be a more profitable company.”

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