JD Sports Fashion PLC (LON:JD.) has splashed out US$681mln to acquire a 167-strong chain of sneaker stores to strengthen its footprint on the West Coast of the United States.
The FTSE 100 sports retailer is paying US$325mln in cash and issue US$356mln of equity to acquire Shoe Palace from its owners, the Mersho family.
The four Mersho brothers will continue to run the chain as a subsidiary of the UK group, with a 20% stake in JD’s wholly owned US holdings company, Genesis.
In the 2019 calendar year, Shoe Palace generated revenues of US$435mln and a profit before tax of US$52mln.
From an initial store in San Jose, California in 1993, the brothers built a strong presence in the West Coast and around the country, with outlets in Hawaii, Nevada, Arizona, New Mexico, Colorado, Texas and Florida.
Wait...what? A new Shoe Palace opened in Salinas today too. If you're nearby today, come through! #SPSalinas pic.twitter.com/veU5RMND55
— ShoePalace.com (@ShoePalace) July 1, 2016
Adding to its existing 800-plus stores and concessions in the US, mostly under the Finish Line banner acquired in 2018, the new addition will increase the group's presence on the West Coast of the US and “strengthen its connection with the Hispanic and Latino consumers, who represent a significant proportion of Shoe Palace's customer base”.
The intention is also that, from next year, the Shoe Palace team and Finish Line teams will “share ideas and best practices as we look to create an unrivalled proposition which connects with all relevant consumers”.
JD executive Chairman Peter Cowgill, who recently nixed talks to acquire troubled UK department store chain Debenhams, 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.”
JD shares rose 4% to 824.8p in early trading, moving back towards the all-time highs set early in the year.