Foot Locker spending $1.1 billion to make two retail acquisitions
Foot Locker is looking to grow its footprint beyond malls and accelerate its expansion in Asia (and the premium fashion sneaker market) via two separate transactions.
The company has entered into a deal to acquire U.S.-based athletic footwear and apparel retailer Eurostar Inc., or WSS, for $750 million. The retailer operates 93 off-mall stores in California, Texas, Arizona and Nevada.
In addition, Foot Locker will acquire Text Trading Company, which owns and licenses the Atmos brand, a digitally led, hot streetwear brand based in Japan, for $360 million. The company has 49 stores, with 39 in its home country.
The California-based WSS serves a largely Hispanic consumer base in underserved communities. The retailer generated approximately $425 million in revenue in its fiscal year 2020.
“WSS has built a successful, high-growth business by pioneering the neighborhood-based store model, built on community engagement and a full-family offering,” said Foot Locker president and CEO Richard Johnson. “This acquisition enhances our product mix and provides access to a customer base and store footprint that are both differentiated from and complementary to our current portfolio.”
Atmos’ offerings include premium sneakers and apparel and an exclusive in-house label. It also s knows for collaborating on special editions of footwear with brands such as Nike Inc. The brand generated approximately $175 million of revenue in its fiscal year 2020. More than 60% of which was generated through digital channels.
“atmos is uniquely positioned through its innovative retail stores, high digital penetration, and distinctive products that have made it a key influencer of youth and sneaker culture,” Johnson said. “With atmos, we are executing against our expansion initiative in the rapidly growing Asia-Pacific market, establishing a critical entry point in Japan and benefitting from immediate scale.”
Hidefumi Hommyo, founder of atmos, said, "atmos was founded in 2000 as a small retail store in the back streets of Ura-Harajuku. Our passion for sneaker culture and ability to connect with our customers have been the driving forces of our growth ever since. Importantly, Foot Locker shares this passion, and we are excited to join forces with them to propel atmos into our next phase of growth."
In May, Foot Locker reported a strong first quarter and announced plans to reposition its store fleet to focus on its iconic banners.
[Read More: Foot Locker to eliminate Footaction banner; will close, convert stores]
WSS and Atmos will maintain their own names, operating as new banners in Foot Locker's portfolio. Both transactions be funded with Foot Locker’s available cash.
As of May 1, 2021, the retailer, whose banners include Foot Locker, Champs Sports and Footaction, operated 2,952 stores in 27 countries in North America, Europe, Asia, Australia, and New Zealand. In addition, 131 franchised Foot Locker stores were operating in the Middle East.