D Sports Fashion, a UK-based sports apparel retailer, has entered into an agreement to acquire Finish Line for $558 million. The agreement is subject to Finish Line and JD shareholder approval and is expected to close after June 2018.
A purchase of Finish Line, which operates 930 locations including 375 branded and 188 unbranded concessions in Macy’s department stores, would give JD Sports a significant presence in the U.S. The company already has expanded into France, Spain and South Korea. JD Sports also would build on its relationships with major international CPG brands, including Nike, Adidas and Under Armour.
The Macy’s locations have been solid performers for Finish Line, with the footwear retailer increasing Q4 sales in these concessions 8.5% year-over-year. In contrast, same-store sales at standalone Finish Line locations tumbled 7.9% in the quarter. But with the help of a global brand such as JD Sports, Finish Line may be able to expand its brick-and-mortar footprint globally. Finish Line’s market value has fallen nearly 60% since September 2014, yet JD’s leapt nearly 300% in the same time frame.
Finish Line partnered with Columbus Consulting in 2017 to revamp its inventory management and merchandising processes across all channels. The retailer completed the first half of a two-phase project in October that aimed to upgrade strategic planning, preseason financial planning, in-season forecasting and open-to-buy management solutions. Presently in the second phase, Finish Line is seeking to plan deeper in assortment, better control logistics and profitability, increase visibility across the business and improve its merchandise presentation and assortment across stores.
JD Sports agreed to pay $13.50 per share for Finish Line, a premium of 28% for the footwear retailer’s shareholders compared to the company’s closing price of $10.55 as of March 23, 2018.
Finish Line has been an acquisition target over the past year, with JD Sports rival Sports Direct International entering negotiations to buy the footwear brand in September 2017. Despite initial reports, however, that deal never went beyond the negotiating stage. Although Finish Line will fall under majority control of JD Sports after the acquisition takes place, Sports Direct would actually remain the second-largest shareholder in Finish Line, with a 9.9% stake.
Upon the acquisition’s closing, Finish Line will continue operating under the same executive team. JD will try replacing Finish Line’s branding with its own ahead of a possible rollout across all stores, according to The Telegraph.