Foot Locker acquires Japan-based athletic retailer for $360 million
Foot Locker is adding yet another brand to its portfolio, this one a global retailer of athletic footwear, apparel and accessories based in Japan.
Foot Locker has completed the acquisition of Atmos for $360 million, subject to certain customary adjustments. Atmos will maintain its brand name, operating as part of the Foot Locker brand portfolio. Foot Locker says it is committed to building on Atmos's strong foundation to propel the brand into its next phase of growth. Atmos has 49 stores, with 39 in its home country.
Foot Locker expects Atmos to generate low double-digit sales growth annually and low double-digits to mid-teens earnings before interest, taxes, depreciation and amoritization (EBITDA) margins over the next five years and be accretive to earnings per share in fiscal year 2021.
The specialty athletic retailer’s purchase of Atmos follows the September 2021 completion of its acquisition of Eurostar, or WSS, for $750 million in cash. An athletic footwear and apparel retailer that primarily operates on the West Coast, WSS operates 93 off-mall stores in California, Texas, Arizona and Nevada and serves a largely Hispanic consumer base in underserved communities. It generated approximately $425 million in revenue in its fiscal year 2020.
In early August 2021, Foot Locker announced it had signed a deal to acquire WSS as well as the Atmos brand. As previously announced, Foot Locker expects WSS to generate low double-digit sales growth annually and low double-digits to mid-teens EBITDA margins over the next five years and be accretive to EPS in fiscal year 2021. The company anticipates that the acquisitions of WSS and Atmos combined will be accretive to EPS in the range of $0.44 to $0.48 per share in 2022.
"We are delighted to officially welcome Atmos's iconic founder, Hidefumi Hommyo, and the entire Atmos team to the Foot Locker family,” said Richard Johnson, chairman and CEO of Foot Locker. “We deeply value Atmos’s unique brand, innovative, experiential stores, premium offerings, collaborations, and understanding of sneakerhead culture. Atmos expands our global reach in the rapidly growing Asia-Pacific market, establishes a critical entry point in Japan and allows us to benefit from immediate scale. We are excited about the many opportunities we will collectively be able to capture as a result of this partnership as we continue creating significant long-term value for our shareholders, consumers, vendor partners, and employees."
"Today Atmos enters a new era, well-positioned to bring our dynamic and exciting sneakers to more people around the world,” said Hidefumi Hommyo, CEO, chief creative officer for Atmos, “Atmos was founded with a love of sneakers and a passion for innovation, and with Foot Locker as our partner, we have the opportunity to drive global growth while maintaining what makes us unique. We have worked with Foot Locker for years on product collaborations and partnerships, and we are excited about what is ahead as we pursue our shared passion for sneaker culture, streetwear, creativity and self-expression."
Evercore served as financial advisor to Foot Locker, and DLA Piper LLP served as its legal advisor.
Foot Locker Inc. operates a global portfolio of brands including Foot Locker, Kids Foot Locker, Champs Sports, Eastbay, Atmos, WSS, Footaction, and Sidestep. The company operates approximately 3,000 retail stores in 28 countries across North America, Europe, Asia, Australia, and New Zealand, as well as websites and mobile apps.