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Finish Line fires up its technology funding

March 25, 2016 11:38 AM
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Athletic shoes and apparel chain retailer Finish Line plans to spend up to $15 million in technology and digital improvements in its next fiscal year.

Chief financial officer Ed Wilhelm told analysts on the fiscal fourth quarter earnings call that the retailer plans to spend between $10-15 million in the coming year “on technology investments with a focus on upgrading our digital platform, our MobileFirst strategy and information security enhancements.” Finish Line, No. 144 in the Internet Retailer 2015 Top 500 Guide, does not break out online sales in its earnings reports.

CEO Sam Sato told analysts he has high hopes for Finish Line’s new digital platform, though he didn’t say when it will launch.

“The upgrade to our platform will provide improved stability and also provide more flexibility for our teams to make changes more frequently and enhance the customer experience,” he said, according to a transcript from Seeking Alpha. “You’ll also see improvement in a more seamless customer experience between desktop and mobile and then, lastly, it will have a much more robust search engine. So all of those benefits will come with the platform upgrade and will certainly help us drive our greater sales in the digital side.”

The front end of the digital experience isn’t the only area the retailer is looking to improve. The Finish Line was plagued by fulfillment issues early in the third quarter of fiscal 2016, issues that appear to have been rectified in time for the holidays. Sato told analysts the company has been continually working to correct those problems.

“We improved our performance significantly in the fourth quarter and are making strides each day to reach peak performance,” he said. “Direct-to-consumer fulfillment rates in the first 24 hours are at 80% of historical norms as inventory accuracy and out-of-stock rates have dramatically improved. This compares to Q3 when fulfillment rates in the first 24 hours dropped to about half of our historical output.”

The start of a new fiscal quarter has brought with it sweeping changes on the executive level at Finish Line.

Last week, the retailer hired AJ Sutera away from department store chain Hudson’s Bay Co. (No. 97 in the  Top 500) to be its chief information and technology officer. Sato told analysts that Sutera, who had been with Hudson’s Bay since 2007, was hired to improve Finish Line’s online shopping site and the behind-the-scenes infrastructure that supports it.

“AJ comes with impressive technology experience, including senior leadership roles in support of Hudson Bay’s omnichannel strategy,” Sato said. “We look forward to his immediate contributions, including leveraging his expertise to impact our supply chain technology, which will enhance the order fulfillment and delivery experience for our customers. He will also lead our efforts to upgrade our foundational digital capabilities.”

Last month, Melissa Greenwell was promoted to chief operating officer from chief human resources officer. Sato also said he plans to hire a new chief supply chain officer soon. “This leader will also focus on improved productivity, capability and quality control to elevate our consumer experience,” he said.

For the fiscal fourth quarter ended Feb. 27, Finish Line reported:

  • Net revenue of $580.3 million, up 5.3% from $551.3 million last year.
  • Year-over-year comparable-store sales increase of 4.6%.
  • Net income of $4.0 million, down 90.1% from $40.4 million last year.

For fiscal 2016, Finish Line reported:

  • Net revenue of $1.889 billion, up 3.7% from $1.821 billion last year.
  • Year-over-year comparable-store sales increase of 1.8%.
  • Net income of $21.8 million, down 72.6% from $79.7 million last year. A Finish Line spokeswoman attributed the drop to "$53 million of pretax charges for asset impairments."
 

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