US athletic speciality retailer Hibbett Sports has signed an agreement to acquire City Gear, the privately held retailer of premium athletic footwear, apparel and accessories.
Following the deal, City Gear will operate as a subsidiary of Hibbett Sporting Goods from its current headquarters in Memphis, Tennessee, and will continue to be led by members of City Gear’s senior management team.
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Terms of the transaction include consideration of US$88m in cash to be paid at closing and the potential for up to a further $25m over the next two years, subject to certain performance-based targets.
City Gear, which operates 135 stores in 15 states, focuses on fashion-forward customers. For the last fiscal year ended 4 February 2018, the company reported total revenue of around $190m. For the past three years, same-store sales have averaged in the mid-single digit range.
“City Gear is excited to join the Hibbett team and contribute to the winning tradition they have established over the years,” said 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 expects to complete the transaction by early December 2018, subject to customary closing conditions. The company will finance the initial purchase through available cash along with funds from its credit facilities. At 4 August 2018, the company ended the second quarter with $119.6m of available cash and cash equivalents on its consolidated balance sheet and no bank debt outstanding.
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By GlobalData“We are pleased and excited to announce this acquisition, which provides substantially greater scale in the athletic speciality market and is an extension of our strategy to provide high demand, branded products to under-served markets,” added Hibbett CEO Jeff Rosenthal. “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.
“In addition, Hibbett will provide City Gear the needed infrastructure for future growth, including strong internal systems, omni-channel capabilities, and real estate expertise.”
