Hibbett Sports signs deal to acquire City Gear
Birmingham, Alabama-based sportswear retailer Hibbett Sports, Inc. announced on Monday that it has signed a definitive agreement to acquire privately held premium athletic fashion chain City Gear for $88 million in cash.
The deal, which will see Hibbett take over a retail network comprising 135 stores in 15 US states, also includes the potential for $25 million in additional consideration to be paid over the next two years if certain performance targets are met.
City Gear, which reported around $190 million in revenues last year and same-store sales averaging in the mid-single digit range, will become a subsidiary of Hibbett and will continue to be led by members of its existing senior management team from its current HQ in Memphis, Tennessee.
The specialty retail chain’s brick-and-mortar footprint does not have a significant geographical overlap with that of Hibbett, which sees good potential for future store growth through the acquisition.
The deal also presents an opportunity for Hibbett to gain ground with what the company has described as a more “fashion-forward” consumer, making particular reference to City Gear’s popularity among sneaker heads.
“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,” said Hibbett Sports President and CEO Jeff Rosenthal in a release. “In addition, Hibbett will provide City Gear the needed infrastructure for future growth, including strong internal systems, omni-channel capabilities, and real estate expertise.”
“City Gear is excited to join the Hibbett team and contribute to the winning tradition they have established over the years,” added City Gear CEO Mike Longo. “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.”
Hibbett will finance the initial purchase through available cash and funds from its credit facilities, and predicts that the transaction will be slightly accretive, excluding one-time transaction costs, as of the fourth quarter.
The company expects to complete the transaction by early December 2018, subject to customary closing conditions.
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