THE FINISH LINE SELLS JACKRABBIT BRAND
Athletic retailer The Finish Line has announced a plan to exit the unprofitable JackRabbit business (formerly Running Specialty Group). The company has entered into a definitive agreement with affiliates of CriticalPoint Capital, LLC, a Los Angeles based private investment firm. The company’s Board of Directors has approved this transaction which is expected to close by the end of its fiscal fourth quarter, subject to customary closing conditions.
Under the terms of the definitive agreement, affiliates of CriticalPoint Capital will become the owner of JackRabbit as specified in the purchase agreement which includes 65 retail stores currently operating under several banners, all JackRabbit leasehold interests and lease liabilities, intellectual property and the JackRabbit trademark and name. JackRabbit staff will be employed by an affiliate of CriticalPoint Capital.
With exiting the JackRabbit business, Finish Line expects to incur a pre-tax charge in the fourth quarter of approximately $33 million to $36 million which includes cash costs of approximately $11 million to $12 million and non-cash charges for the remainder related to the net assets of JackRabbit as well as certain other exit costs. The costs to exit the JackRabbit business and the resulting tax benefits will be reported in discontinued operations.
“As we exit the running specialty business, we dedicate our entire focus to serving our core Finish Line and Finish Line Macy’s customers and driving profitable results that provide return to our shareholders,” said Sam Sato, chief executive officer of Finish Line. “The JackRabbit team – both in their main offices in Denver and throughout the field – genuinely work hard to serve running and fit enthusiasts within their local communities. With CriticalPoint retaining those employees, they will continue to deliver a high level of customer service and offer industry leading branded footwear, apparel and accessories.”
