U.K. retail giant acquires Shoe Palace in $325 million deal

JD Sports Fashion PLC has expanded its U.S. footprint by adding added California-based Shoe Palace Corp. to its portfolio. 

The British sportswear company, which bought The Finish Line, has acquired family-owned and operated Shoe Palace for $325 million. Under the terms of the agreement, $100 million has been deferred and will be paid on various dates during the next 12 months. The deal also gives Shoe Palace’s founding Mersho family equity equivalent to 20% of JD Sports’ U.S. operations, worth $356 million.

Shoe Palace has 167 stores, with more than half in California. JD Sports said the acquisition will significantly increase the group's presence on the West Coast and strengthen its connection with Hispanic and Latino consumers, who represent a significant proportion of Shoe Palace's customer base.

“The Shoe Palace team are ambitious, have great energy and pride themselves on their consumer connection and we welcome them to the group,” said Peter Cowgill, executive chairman, JD Sports. “We are confident that our combined fascias will provide us with the flexibility and expertise to fulfil our mutual ambition of becoming a prime customer destination for sneakers and lifestyle apparel in the United States."

Shoe Palace is operated by four brothers from the Mersho family, who will continue to manage the business, but, starting next year, “the JD Finish Line and Shoe Palace teams will begin to share ideas and best practices as we look to create an unrivalled proposition which connects with all relevant consumers,” JD Sports said. (Since acquiring Finish Line, the British retailer has been converting select Finish Line locations into JD Sports. It also opened a 15,000-sq.-ft. flagship in New York City’s Times Square in the fall.)

Shoe Palace generated revenues of $435 million in 2019, with a profit before tax of $52 million.

"We could not imagine a better way to continue to build on the legacy of our family business,” said George Mersho, CEO of Shoe Palace. “Through this combination with JD and Finish Line in the U.S., we have gained a strong global partner. We look forward to being part of the JD family and continuing to serve our customers and communities for many years to come."