The company confirmed in November that it was exploring strategic alternatives for the running store chain following months of speculation.
“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,” Finish Line CEO Sam Sato said in a release today.
Sato added that JackRabbit’s new owners plans to retain the company’s employees — both in JackRabbit’s main offices in Denver and throughout its 65 retail stores. (JackRabbit staff will be employed by an affiliate of CriticalPoint Capital.)
In March 2015, Finish Line purchased New York based specialty chain JackRabbit and folded it into its Running Specialty Group division, rebranding the entire division of 70 stores under the JackRabbit name.
Finish Line’s move comes at a time when several retailers are feeling the pressure of shifting consumer sentiment, sluggish retail spending and macroeconomic volatility.
After producing sales and profit results that surpassed expectations for three consecutive quarters in 2016, the company’s most recent quarter, Q3, proved to be a disappointment.
Revenues increased 3 percent year-over-year, to $371.7 million, but fell significantly below market watchers’ estimates for revenues of $411.3 million. Comparable store sales increased 0.7 percent, a substantial miss against estimates for a comp gain of 8.3 percent.
The firm also widened its reported net losses, to $40.4 million, or 26 cents per diluted share, from $21.8 million, or 44 cents per diluted share. Non-GAAP diluted loss per share were 24 cents, missing analysts’ expectations for diluted losses per share of 18 cents.
With exiting the JackRabbit business, Finish Line expects to incur a pretax charge in the fourth quarter of $33 million to $36 million. The company also expects to realize a cash tax benefit of $29 million to $31 million, which includes the benefit associated with the goodwill impairment charge of$44 million recorded during Finish Line’s third quarter.