Finish Line has had a rough year. Like a lot of Retail/Brick and Mortar stores in mall locations that are dropping like flies, there are a number of culprits at play. Foot Locker, however, is thriving in this area. History has a lot to do with Foot Locker’s success. The fact that they have over 3000 stores, a very good merchandising team and a solid e-commerce platform that ties into their brick and mortar via their mobile app and desktop websites is another aspect that they are getting right.
Foot Locker (FL) Q4 2016 Results – Earnings Call Transcript | Let Me Explain One More Time
All of the aspects that Foot Locker is getting right are not being done by other retailers and I expect to see a lot of issues out of private sportswear and apparel companies and continued issues with public stores like Hibbett Sports
No One Paid Attention to Hibbett Sports, Inc. 14% Plunge While Foot Locker Was Flying
Finish Line however tic marks all of the items on my list for turning around the ship if they can get a grasp on a couple of things. Their issues are primarily based on their size of retail space and with an issue that I also see with Hibbett Sports, merchandising. How will Finish Line become the next hot stock? They’ve already started and they have one thing in play that they only need a clever marketing campaign to take advantage of. Let’s get to it.
I don’t have a definite timeframe for the increase of Finish Line’s stock price in relation to their ability to reconnect with the market. This post would have to get to them and they would have to act on the suggestions or they should be working on these things already.
e-commerce
Finish Line like Foot Locker has a very capable platform. They have done a solid job of posting their multi-channel options on the site. Within two clicks you can check out a pair of shoes online and make a decision to ship to your home, or visit a store to actually try on your order, or exchange the shoes. This attention to detail in e-commerce should be serving them very well, but there are some basic issues with the site. Content. The e-commerce is well executed, but you have to scroll about four times before you reach any digital content meant to engage the customer. There is a constant misconception by apparel retail companies that their blogs are not vital components of their sites. Foot Locker has their blog and content under the #approved link on the site. One click and a customer can access the information quickly. What this does is keep a customer who visits on the site longer because their is information beyond just “white shoe, size 9”. If the content was given more importance on the site you turn a visit into a cool moment. Finish Line is also making a major mistake with their social media. They are dropping links and pics without any storytelling. They also fail to spend any time responding to customers. Now take a moment to visit Facebook and look Foot Locker’s page. The content is fresh and interactive. It utilizes athletes and influencers. If Finish Line can pull together their e-commerce experience, they will immediately see benefits.
shipping
This is less about shipping and more about marketing. I have ordered from Foot Locker and Finish Line. Finish Line is hands down the best big retail sneaker company at shipping products in the US. You wouldn’t know that however if I didn’t just say it. Why is Finish Line better? Branded Logo Shipping Boxes. Finish Line takes care of their customers. It doesn’t matter the price of the shoe, when you buy and it’s shipped it arrives in a branded Finish Line box. This is an expense, but it’s an important detail for making sure your kicks arrive in dope shape. This is in complete contrast to Foot Locker.
AHN site Housakicks recently posted the above story about the horrible shipping methods of Foot Locker. This cost cutting is an opportunity for a really cool campaign for Finish Line. If they create a smart campaign about how well they take care of your kicks vs how others do it, they can also tie the content into the site and the immediate impact would be felt by the company within the quarter.
layout and merchandising
There is a reason Foot Locker is doing so well and it has everything to do with their locations and the size of their stores. Foot Locker’s House of Hoops stores are typically their biggest stores. House of Hoops gets extremely hyped shoes and limited releases. It has a built in sell through because the product their typically sells out without any issue. The square footage makes sense. More important the layout and merchandising has funneling throughout the store with storytelling for every section in the shop. Add in Foot Locker’s new museum feature allowing you to listen to an athlete discuss a particular shoe and every part of the store is monetized and marketed in some way. Finish Line stores are often much bigger than other sportswear stores. These large spaces typically have a poor line of site from register to entrance. While their circle tables at the front of the store are often laid out with the correct shoes, the wall art is typically outdated. The wall organization could be better and lacks an eye catching element that allows for a shoe to standout with a narrative. Very often their brand art so thoroughly covers the window that you can’t see their mannequins and you also lose the ability to see the walls very well while walking by. If they made a subtle change in each shoe section and included athlete art, or tablets/monitors featuring sports events (Finish Line tv) the store becomes a more attractive space.
Finish Line like Hibbett Sports has dropped from their high of 31.40 in 2014 to a current share price of 16.29. The stock is now a hold/sell, but the company has a lot that they can do to improve their position. Finish Line has less than 600 stores now. Last year they closed 56 stores and this year another 26 stores will close. Even with these closures the share price dropped from 19 in the 2nd Quarter to the current price.
The store closures aren’t helping with investors and if there isn’t a real attention to detail, the company won’t be the next big stock. Finish Line could find itself in line with TSA, but I think the fixes are easy. My prediction is for a strong 3rd Quarter and a bounce back to the low 20s by Christmas.
this is probably the best article i’ve read on ARCH since the year began. hopefully the guys at finishline will see this and implement the suggested changes you mentioned.
Probably not, but we are working hard to create a smarter community and that’s all that matters right now.