Athletic apparel retailer Finish Line has unloaded its unprofitable JackRabbit specialty running shoe business to private investment firm CriticalPoint Capital LLC for no money, The Wall Street Journal reports.
Finish Line first announced in January that CriticalPoint would acquire JackRabbit’s 65 retail stores, all JackRabbit leasehold interests and lease liabilities, intellectual property and the JackRabbit trademark and name for a then-undisclosed amount.
JackRabbit staff will be employed by an affiliate of CriticalPoint Capital, according to a press release.
Finish Line is facing stiff competitive in the sportswear space, as well as fallout from self-inflicted wounds from a supply chain overhaul that only led to further logistical problems. That prompted a $15 million investment last year. Meanwhile, the retailer has been treading water as streetwear and athleisure styles, as well as stiff competition from rivals and direct sales from brands like Nike themselves, have undermined its sales.
Finish Line CEO Sam Sato, a Nordstrom veteran of more than 20 years, last year said that athletic shoes and women’s sportswear would be in clearer focus as the company looked to improve sales and customer engagement. He added that in addition to continuing to improve its logistics infrastructure, Finish Line will invest in its loyalty program. Its concessions in Macy’s stores and Macy’s website also are doing well.
Finish Line last year also said it would spend $40 million to remodel its better-performing stores, subsequently announcing plans to close about a quarter of its 600 locations. Its JackRabbit unit has been a drag on the company; selling to CriticalPoint for $0 underscores how eager it was to unload that business.
“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,” Sato said in a statement in January.
Finish Line hardly needed more obstacles in the sportswear space: The 2016 bankruptcy of Sports Authority had the potential to give Finish Line some room to improve its operations, but analysts remain doubtful about its long-term prospects.
“I’d say Finish Line is in the sights of failure,” Lee Peterson, executive vice president, brand, strategy and design at WD Partners, a customer experience expert for global food and retail brands, told Retail Dive last year. “As an example, a while ago, Finish Line’s CEO [Glenn Lyon, replaced in January 2016 by Sato] moved to open a showroom store, but after the ideas went through the executive team, the concept came out the same as the current stores. That’s stagnation.”