Foot Locker To Expand Its Sneaker Empire In $1.1B Deal

Foot Locker (FL) announced on Monday that it will acquire two shoe store chains in a total deal worth about $1.1 billion in cash.

The purchase will extend its retail base beyond the malls and into Asia as it picks up California-based footwear company WSS for $750 million and Japanese streetwear retailer atmos for $360 million.

WSS has a total of 93 brick-and-mortar stores that are located in California, Texas, Arizona and Nevada, with a primarily Hispanic customer base, while atomos has 49 locations, including 39 stores across Japan, selling special edition footwear in collaboration with popular brands like Nike, CNBC said.

Atmos generated about $175 million in revenue in 2020, when more than 60% was produced through digital sales. The acquisition is expected to be accretive to Foot Locker’s earnings per share in fiscal 2021, the company said.

Richard A. Johnson, chairman and CEO at Foot Locker, said in a statement, “atmos is uniquely positioned through its innovative retail stores, high digital penetration, and distinctive products that have made it a key influencer of youth and sneaker culture.”

“With atmos, we are executing against our expansion initiative in the rapidly growing Asia-Pacific market, establishing a critical entry point in Japan and benefitting from immediate scale. We are thrilled to bring atmos into our portfolio of brands and build on the strong foundation of this differentiated business,” he added.

WSS generated about $425 million in revenue in fiscal 2020, which is also expected to be accretive to the sneaker retailer's earnings per share in fiscal 2021.

“WSS has built a successful, high-growth business by pioneering the neighborhood-based store model, built on community engagement and a full-family offering,” Johnson said. “This acquisition enhances our product mix and provides access to a customer base and store footprint that are both differentiated from and complementary to our current portfolio. "

Foot Locker said that both WSS and atmos will continue to operate under their own names.

Foot Locker has seen its sneaker and athletic gear sales surge during the pandemic, but it is looking to expand outside of malls as it sees foot traffic decline as consumers shift to online shopping.

Both deals were funded through an all-cash transaction, Foot Locker said.

The two transactions are expected to close late in Q3 2021.