Finish Line Sells JackRabbit Chain for $0
The Finish Line wound up selling JackRabbit, its unprofitable specialty running business, for a purchase price of “zero,” according to a regulatory filing. The business, which includes 65 stores operating under a number of banners, was sold to CriticalPoint Capital, LLC, the Los Angeles-based private investment firm. The deal was first announced on Jan. 27, and the sale was completed on Feb. 24. As part of the sale agreement, the filing noted that Finish Line had to make a payment of $8.3 million into the JackRabbit business as part of pre-closing restructuring and must make an additional $700,000 payment to CriticalPoint Capital, on or before Sept. 30, 2017.
Total Retail's Take: I guess the headache of the JackRabbit business was enough for Finish Line to give it away for nothing. Finish Line’s most recent SEC filing shows that JackRabbit had revenues of $89.9 million in its year ended Feb., 27, 2016, showed an operating loss of $12 million and a net loss of $7.03 million. The loss included $5.05 million in impairment charges and store closing costs. Finish Line struggled to operate a chain of running specialty stores from a national level, and there were a number of external factors — a softening in the run specialty category; heightened price-driven online competition; an oversaturation in the category; and a fashion shift away from performance running styles — that contributed to JackRabbit's demise. Free of the JackRabbit chain of stores, Finish Line figures to focus on its flagship banner stores and e-commerce sites.
