Payless ShoeSource inked a deal to acquire Collective International, a licensing platform that manages the Airwalk, Vision Street Wear, Lamar, Sims, LTD, genetic, Dukes, Rage, Ultra-Wheels and Skate Attack brands. When the deal closes, Collective will become a wholly-owned subsidiary of Payless. The business will still operate as an independent entity with the same team and president and CEO Bruce Pettet at the helm. The purchase price is expected to be approximately $91 million.
“If you look at it, its a great situation for Collective. We now have an owner with the financial strength of Payless, and their commitment to continue to grow and expand the platform we have built over the last three and a half years,” Pettet told Sports Executive Weekly in an exclusive interview. “We will continue to do three things. We will buy brands, we will build equity in those brands, and we will license those brands out to key partners.”
Pettet clarified that, going forward, Airwalk will continue to be the only brand currently under the Collective umbrella selling through Payless doors. “Our other brands are already licensed out to great partners,” Pettet said. “Well continue to build those partnerships, and this deal only gives us the additional backing needed to invest in our plan. We arent going to go out and look at every brand that goes up for sale. We are going to be targeted and focus on brands that fit within our model – brands in the board sports-youth lifestyle, athletic lifestyle, and fashion outdoor.”
Collective currently has licensing agreements with Forzani, The Sports Authority, Payless, and 30 other organizations world-wide. While Airwalk may be the only Collective brand selling in Payless currently, CEO Matt Rubel said that branded footwear made up only about 25% of total footwear sales in 2006, but he feels it could grow to as high as 70% to 80%. The transaction is anticipated to close in the first half of Payless' fiscal 2007. Payless believes the deal will be neutral to 2007 net earnings and accretive to fiscal 2008 net earnings.
