Finish Line Blames Tech for Bad Sale Results

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Finish Line Blames Tech for Bad Sale Results

By Jamie Grill-Goodman - 01/11/2016
The Finish Line went live with a new warehouse and order management system in September and now the company has said its performance issues are due to supply chain problems in its third quarter 2016.

"[In] October, we began experiencing issues with the flow of fresh inventory into our stores, as well as significantly reduced ability to fulfill online orders as the new system was unable to process freight at the volumes necessary to support our sales plans," said Chairman and CEO Glenn Lyon.

Outbound shipments were down 25% for the quarter compared to the same period a year ago, leading to new inventory below last year's third quarter by an average of $41 million or 14%.

"This lack of inventory had a significant impact on our ability to convert traffic into sales," said Lyon.

Third quarter traffic was flat compared to last year. At the same time, digital sales were flat after being up 23% in the first half of the year due to a lack of new products available on the company's website.

In addition, the sports apparel company experienced processing issues for online orders, which led to cancellation rates that were 50% higher than normal.
The company estimates the total impact of the issues was approximately $32 million in lost sales and a loss of approximately $0.42 per share.

"We responded quickly to the supply chain disruption, increasing technical and operational resources including third-party experts to correct the issues with our system and improve our operating capability," said Lyon.

The company expects continued negative impact in the fourth quarter, but anticipates a stable environment during the first quarter after.

"We will continue to invest in additional resources as required until the supply chain system is stable and operating effectively," said Lyon.

"We remain confident that the investments we have made to improve our supply chain will allow us to aggressively transform our company, especially when it comes to better serving our customers."