(Adds shares, details)
Aug 28 (Reuters) - Finish Line Inc said on Monday its board adopted a shareholder rights plan and cut its adjusted profit forecast for fiscal 2018, sending its shares down 23 percent in aftermarket trading.
Sporting goods retailers, including Finish Line, have been struggling amid sluggish spending at brick-and-mortar stores sparking concerns of a price war and waning demand for basketball shoes and sneakers.
“The board believes that it is in the best interests of Finish Line and our shareholders to adopt a shareholder rights plan given the current market conditions and recent share accumulations,” Glenn Lyon, chairman of Finish Line said.
The company said the rights plan, also known as a “poison pill”, will be triggered if a party takes 12.5 percent ownership and will expire on Aug. 28, 2020.
A shareholder rights plan is typically adopted by companies that are trying to stave off hostile takeover bids.
UK-based Sports Direct International Plc, one of Finish Line's top shareholders, raised its stake in the company to 19.9 percent on June 21 from 9.2 percent on May 17, according to a regulatory filing. (bit.ly/2vDObDs)
Finish Line cut its adjusted profit forecast for the fiscal year ending March 3 to 50-60 cents per share from $1.12-$1.23 per share, and said it expects sales and gross margin to remain challenged through the year.
Analysts on average had expected earnings of $1.10 per share, according to Thomson Reuters I/B/E/S.
Finish Line also said it expected second-quarter sales to be $469.4 million, while analysts estimated revenue of $477.2 million. The company attributed the decline to a “promotional” market and “pressure on gross margin from increased markdowns”. (Reporting by Gayathree Ganesan and Uday Sampath Kumar in Bengaluru; Editing by Martina D‘Couto)