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Published
Dec 15, 2020
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JD Sports buys Shoe Palace in the US to build West Coast strength

Published
Dec 15, 2020

JD Sports has hit the acquisition trail again. Its on-again, off-again purchase of the UK’s Footasylum may still hang in the balance, but it seems to be doing better across the Atlantic. It said Tuesday that its US company Genesis Holdings has bought 100% of Shoe Palace Corporation and the members' interests in the connected youth-focused Nice Kicks business.


Shoe Palace x Joe Cool collection



It said the buy will “will significantly increase the group's presence on the West Coast and strengthen its connection with the Hispanic and Latino consumers, who represent a significant proportion of Shoe Palace's customer base”.

Based in San Jose, California, Shoe Palace was established in 1993 by the Mersho family and currently has 167 stores, most of them under the Shoe Palace banner. More than half of the stores are in California, although it has an established retail presence in Texas, Nevada, Arizona, Florida, Colorado, New Mexico and Hawaii. There’s also a webstore.

Last year, Shoe Palace generated revenues of $435 million under the ongoing management of four brothers from the Mersho family. It also saw pre-tax profit of $52 million.

The headline figure that the company is paying for the business is $325 million, of which $100 million has been deferred and will be paid on various dates over the next 12 months.

But while JD’s US holding company is buying complete control of Shoe Palace, the Mersho Brothers have also been issued with equity in that company and this will give them about 20% of the enlarged group in the US. The equity is valued at around $356 million, which effectively more than doubles the price JD is paying.

JD said the purchase complements its “ongoing positive developments” from the existing Finish Line and JD chains in America, which includes the recent opening of JD's flagship store in Times Square, New York.

The Mersho Brothers will continue to manage the Shoe Palace business although the intention is that, from 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”.

Peter Cowgill, Executive Chairman of JD Sports Fashion Plc, said: “The Shoe Palace team are ambitious, have great energy and pride themselves on their consumer connection and we welcome them to the group. 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.”

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