Indianapolis-based The Finish Line Inc. (Nasdaq: FINL) has announced plans to close up to 150 stores. In its quarterly earnings report, the company also detailed changes for top executives. Late next month, President Sam Sato will replace Glenn Lyon as chief executive officer. The sports apparel retailer is reporting a fiscal third quarter loss of $21.8 million, compared to net income of $2.6 million during the same period in 2014.
The locations represent one-quarter of its bricks-and-mortar portfolio. Closures are expected to take place over the next four years and Lyon says it will invest more into its high-profile and successful locations.
The Finish Line says the steep quarterly drop can be primarily attributed to supply chain disruptions that caused $32 million in lost sales. The company says a new warehouse and order management system caused the issues. "Specifically, in October, we began experiencing issues flowing fresh inventory into our stores as well as fulfilling online orders as the new system was unable to process freight at volumes necessary to support our sales plans. We worked quickly to address the disruption in our system and improve our operating capabilities, increasing technical and operational resources including third party experts. We have achieved a pickup in sales trends as the quantity and quality of our inventory improved in recent weeks," said Lyon. He anticipates operations will return to normal during the first quarter.
Lyon will remain with the company as executive chairman of the board through the end of the year, then transition to non-executive chairman in 2017. Finish Line says it is making strides in its search for a new chief technology officer. Additionally, the board has launched a search for a new executive to lead supply chain operations and a new retail-focused director.
The company has slightly raised its sales outlook for the fiscal year that ends next month and fourth quarter outlook was boosted in the low-single to mid-single" digit range. The Finish Line currently employs more than 14,000 and have over 1,000 branded locations, mainly in the U.S.
During an investor conference call this morning, Lyon discussed initial changes designed to get the company back on track.