Finish Line reached an agreement to open Finish Line-branded athletic footwear shops in more than 450 Macy's department stores in the U.S. as well as one online at macys.com. It will also oversee athletic shoe departments in more than 200 other stores.
The rollout process for the 450+ locations, which will be operated by Finish Line as leased departments, will start in Spring 2013 with completion expected by Fall 2014. For the remaining approximately 225 Macy's stores that carry footwear, Finish Line will manage the athletic footwear assortment and inventory beginning in Spring 2013, without the staffing or branding provided in the leased departments. Athletic shoe assortments selected by Finish Line also will be available on macys.com, beginning Spring 2013.
Finish Line will recognize sales and corresponding profits, less the licensing fee paid to Macy's. Longer term, this agreement is expected to result in additional sales to Finish Line of $250 million to $350 million annually.
On its Q2 conference call with analysts, Glenn Lyon, chairman and CEO, said the partnership with allow the retailer reach Macy's core customer, a demographic that the Finish Line has not targeted in the past.
“This strategic growth initiative clearly generates incremental revenue and earnings opportunity for the Finish Line,” said Lyon. “It is also a resounding vote of confidence by Macy's in our brand, in our vendor relationships and our strategy. Macy's is a premier US retailer whose customer-centric philosophy and omni-channel focus aligned so well with our own makes this win even more satisfying.”
He added that the infrastructure investments Finish Line is making through its omni-channel push will support the integration of the initiative. Said Lyon, “Furthermore, our ability to secure and execute this partnership is illustrative of how these investments create a platform that we can leverage to yield multiple benefits.”
“Finish Line is a widely recognized expert in athletic footwear for men, women, and kids including the best brands, newest technology and most current styles,” said Jeff Gennette, Macy's chief merchandising officer, in a statement. “We believe the enhanced footwear assortment they will bring to our customers at every full-line Macy's store nationwide, as well as on macys.com, complements our rapidly developing offering of activewear merchandise.”
Finish Line told analysts that the timelines for its systems integration plans may be accelerated to support the Macy's rollout and that may impact its capital spending projections for the current fiscal year. One-time start-up costs will also likely be occurred in its fiscal quarter that ends in February 2012 that are not currently included in its full-year guidance.