(Sports Business) Hibbett Sports is getting into the acquisition game.
The Birmingham, Alabama based athletic specialty retailer announced that it has signed a definitive agreement to acquire Memphis, Tenn.-based City Gear, a regional specialty retailer of athletic footwear, apparel and accessories.
Hibbett agreed to a pay $88 million in cash at closing and the potential for up to $25 million in additional consideration paid over the next two years to snap up the company with 135 stores in 15 states.
City Gear will operate as a subsidiary of Hibbett Sporting Goods, maintaining its Memphis headquarters and will also continue to be led by existing members of its senior management team, Hibbett said in statement.
For the last fiscal year ended Feb. 4, privately-held City Gear reported total revenue of $190 million and, for the past three years, its same-store sales have averaged in the mid-single digit range.
We are pleased and excited to announce this acquisition, which provides substantially greater scale in the athletic specialty market and is an extension of our strategy to provide high demand, branded products to underserved markets,” said Hibbett president and 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.”
Hibbett management also noted that geographic overlap with its stores and City Gears is “not significant” but that “significant opportunity” exists for future store growth for both firms, which both stock Nike, Jordan, Adidas, Puma, Converse and Fila.
“City Gear is excited to join the Hibbett team and contribute to the winning tradition they have established over the years,” said 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 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.