(By Mani) Macy's (NYSE: M) announced a partnership with The Finish Line, Inc. (NASDAQ: FINL) under which Finish Line-branded athletic footwear shops will be opened in more than 450 U.S. based Macy's department and online at macys.com beginning in Spring 2013.
Shares of both Macy's and Finish Line opened higher by 2 percent on the news.
On the specifics, the 450 plus locations within Macy's will be operated by Finish Line as leased departments. The rollout of these Shops will begin in Spring 2013 and is anticipated to be completed by the fall of 2014.
At the remaining Macy's stores that carry footwear (roughly 225 locations), Finish Line will manage the athletic footwear assortment and inventory beginning in Spring 2013, without the staffing or branding provided in the leased departments.
Athletic shoe assortments selected by Finish Line also will be available on macys.com beginning in Spring 2013. Finish Line will also be Macy's exclusive partner for men's, women's and kids athletic footwear and Macy's will be the exclusive host for Finish Line-branded in-store shops. Longer term, this agreement is expected to result in additional sales to Finish Line of $250 million to $350 million a year.
The development is a positive for Macy's as athletic shoes falls under the fastgrowing category, and would garner more youth traffic at Macy's stores. It also provides broader assortment and allows Macy's to reap the benefit of the store within the store concept.
"In our view, the partnership is a positive for M shares. Given the recent excitement surrounding the ‘store within a store concept' at competitors, we believe M has made a sound strategic decision to partner with a leading footwear retailer which will provide a broader and specialized assortment within this category," Deutsche Bank analyst Charles Grom wrote in a note to clients.
Moreover, the deal would add "newness" to Macy's footwear offering through a much broader assortment of the fastgrowing athletic footwear category than Macy's or any department store would likely have attained on its own. Indianapolis-based, Finish Line has 638 stores in malls across the U.S. and employs more than 11,000 associates who help customers every day connect with their sport, their life and their style.
Finish Line also reported better-than-expected second-quarter results and raised the high end of its fiscal 2013 earnings outlook.
Macy's, with corporate offices in Cincinnati and New York, is one of the nation's premier retailers, with fiscal 2011 sales of $26.4 billion. The company operates about 840 department stores in 45 states, the District of Columbia, Guam and Puerto Rico under the names of Macy's and Bloomingdale's, as well as the macys.com and bloomingdales.com websites. The company also operates 10 Bloomingdale's Outlet stores.