Another day, another retailer shedding an underperforming chain.
Today it is
, which announced this morning that it is cutting its ties with Man Alive -- a move that sent shares soaring 10% to $7.57 in morning trading.
Investors were turning a blind eye, however, to the company's first-quarter forecast of a loss of a penny on sales of $267.2 million. Analysts expect a profit of a penny. The company is set to report results on Thursday.
Finish Line expects same-store sales to decline 3.9% for its namesake stores and to plunge 39.1% at Man Alive.
It would seem then, empirically, that ridding itself of Man Alive would be a great idea -- especially after recording a $13.2 million loss from the chain in 2008.
Finish Line will pay $7 million in cash to Man Alive Acquisition, to take certain Man Alive assets and liabilities. Man Alive is controlled by Jimmy Jazz stores owner and operator Jimmy Khezrie. The agreement includes Man Alive's 75 retail stores under the Man Alive and Decibel names, as well as their trademarks and tradenames.
Leasehold interests and lease liabilities are also included in the deal, along with intellectual property.
As part of the agreement, Finish Line will pay up to $5 million to Khezrie at closing, with the rest of the payments being made in 12 monthly installments. The first payment will be made on the first day of the first month after the transaction's completion.
The deal, which was approved by Finish Line's board, is targeted to close early next month.
Copyright 2009 TheStreet.com Inc. All rights reserved. This material may not be published, broadcast, rewritten, or redistributed. AP contributed to this report.