Summary
[...] the chain is working on a three-part strategy for deploying the largesse: reinvesting in the core Finish Line business, returning cash to shareholders through higher dividends and share repurchases, and diversifying its business either with a new retail concept developed in-house or through acquisitions. Cash is king It makes sense for Finish Line to branch out because most of its profitability gains have come from running its business more efficiently and not from an increase in revenue, but there are risks whether or not the company does a deal, said Mark Foster, chief investment officer of Columbus-based Kirr Marbach & Co. The majority of acquisitions don't work in part because managers tend to assume their company's expertise will translate into other areas, Foster said.
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The Next Step
Peddling name-brand athletic shoes and sports apparel comes naturally to The Finish Line Inc. Figuring out what to do with all the cash the core business generates when it gets humming is where things can get tricky.
The 684-store chain based in Indianapolis trimmed its costs during the recession, putting itself in position to capitalize on surging sales of popu...See the full content of this document
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