135 location retailer gets clean slate: New Agency?
Steve’s breakdown: City G.E.A.R. would love to advertise and now that they have the backing of their new owner, that just might happen. Mike Longo is the CEO and will most likely be the lead marketing contact for now.
MEMPHIS, TN: Hibbett Sporting Goods just made a big play that could help strengthen its position in the competitive sporting goods segment
The company said late Monday that it will acquire City Gear, a privately held specialty retailer of premium athletic footwear, apparel and accessories. City Gear operates 135 stores in 15 states.
According to terms of the transaction, Hibbett will pay $88 million in cash at the closing of the deal. There is also the potential for up to $25 million in additional consideration paid over the next two years, subject to certain performance-based targets. Hibbett expects to complete the transaction by early December.
City Gear will operate as a subsidiary of Hibbett Sporting Goods. The company will maintain its current headquarters in Memphis, Tennessee, and will continue to be led by members of City Gear’s senior management team.
“We are pleased and excited to announce this acquisition, which provides substantially greater scale in the athletic specialty market and is an extension of our strategy to provide high demand, branded products to underserved markets,” said Jeff Rosenthal, president and CEO for Hibbett.
“City Gear represents a key brand with the fashion-forward consumer and will allow us to extend our customer base and provide a significant opportunity for growth,” he added. “In addition, Hibbett will provide City Gear the needed infrastructure for future growth, including strong internal systems, omnichannel capabilities, and real estate expertise.”
City Gear is known for its customer service and a compelling merchandise assortment, one that is driven by the “sneaker culture.” For the last fiscal year ended Feb. 4, the retailer reported total revenue of approximately $190 million. For the past three years, same-store sales have averaged in the mid-single digit range.
Meanwhile, Hibbett ended the second quarter of fiscal 2019 with $119.6 million of available cash and cash equivalents, with no bank debt outstanding. The company currently operates more than 1,000 stores primarily located in small and mid-sized communities across the country.
While both companies sell strong, attractive brands that resonate with customers, such as Nike, Jordan, Adidas, Puma, Converse, Fila, and others, there is no “significant” geographic overlap between both companies’ stores. This poses a strong opportunity for future store growth, according to Hibbett.
“We believe that Hibbett provides City Gear the ideal platform to expand upon our successes in serving our loyal customers, and are excited to continue to grow leveraging Hibbett’s capabilities,” said Mike Longo, CEO, City Gear.