The Finish Line, Inc. experienced a hit in sales in Q3, ended November 28, 2015, resulting from supply chain issues following the implementation of a new system. The company simultaneously announced that President and Board Member Sam Sato will replace Glenn Lyon as CEO.
Finish Line consolidated net sales for Q3 were $382.1 million, a decrease of 3.5% over the prior year period, and comparable store sales decreased 5.8%. The diluted loss per share was $0.49.
Glenn Lyon, chairman and CEO of Finish Line, said, “Our third quarter performance was severely impacted by a disruption in our supply chain, following the implementation of our new warehouse and order management system.”
Lyon went on to say that, beginning in October, the company struggled to get new inventory into stores and to fulfill online orders. The company consequently increased technical and operational resources, including third party experts. This resulted in a pickup in sales trends; fourth quarter-to-date comparable same-store sales for Finish Line, ended January 2, 2016, were up 6.2%.
Lyon added, “We anticipate that we’ll return to a stable operating environment during the first quarter, and we will start leveraging the multiple benefits from our supply chain system enhancements.”
For the fourth quarter ending February 27, 2016, the company expects Finish Line comparable store sales to be up in the low-single to mid-single digit range.
The company also announced that it will close 150 stores, 25% of its total store base, over the next four years, with the goal of improving profitability. These stores produce average annual sales of approximately $1 million, a portion of which the company expects to recapture at nearby locations and through its digital sites.
As the company resets for the coming fiscal year, Sam Sato will succeed Glenn Lyon as chief executive officer of The Finish Line, Inc., effective February 28, 2016.
Lyon, who currently serves as CEO and chairman of the board, will continue on as executive chairman of the board through the end of calendar year 2016 and, at the beginning of 2017, Lyon will move into the role of non-executive chairman of the board.
Bill Carmichael, lead director of the Finish Line board said of Lyon, “His strong business acumen created a vision through the lens of the customer-facing omnichannel world for Finish Line that included growth opportunities like Macy’s and our running specialty business, JackRabbit.”
Sato started his executive retail career at Nordstrom in 1985. He joined Finish Line in March 2007 as executive vice president and chief merchandising officer and in 2014 became president and a company board member.
Lyon said, “With his tremendous strength in crucial customer-facing facets, Sam has earned a highly respected reputation across our business, internally and externally, as well as with our real estate, information technology and brand partners.”