Foot Locker, Inc. announced it has entered into a definitive agreement to acquire Eurostar, Inc. (WSS), a U.S.-based athletic footwear and apparel retailer, which primarily operates on the West Coast, for $750 million. The transaction will be funded with the company’s available cash.
WSS is primarily focused on the Hispanic consumer demographic operating a fleet of 93 off-mall stores in key markets across California, Texas, Arizona, and Nevada. Foot Locker said WSS’ community-driven business benefits from deep relationships with customers with approximately 80 percent of its sales coming from customers who are members of its loyalty program.
Through this transaction, Foot Locker said it would benefit from the retailer’s differentiated market position, complementary customer base and real estate portfolio. WSS’s assortment of classic styles will diversify FootLocker’s product assortment enabling it to serve a broader range of customers across price points.
WSS generated approximately $425 million in revenue in its fiscal year 2020 and a three-year revenue CAGR of approximately 15 percent. The acquisition is expected to be accretive to Foot Locker’s earnings per share in fiscal year 2021.
Richard A. Johnson, chairman and CEO, Foot Locker, Inc. said, “WSS has built a successful, high-growth business by pioneering the neighborhood-based store model, built on community engagement and a full-family offering. 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. We are thrilled to welcome WSS’s customers into the Foot Locker family, as well as join forces with their talented team. Looking ahead, we see significant opportunities to expand this business, including by accelerating WSS’s store growth into new geographies in North America.”
Eric Alon, founder and executive chairman, WSS, said, “Since WSS’s inception 37 years ago, we have focused on meeting the needs of underserved communities while elevating our neighborhoods, one step at a time. Through our WSS Cares! initiative and the support of Foot Locker, our mission to positively impact the communities we serve will continue. We are extremely proud to be a part of Foot Locker as they share our commitment to community.”
Rick Mina, CEO, WSS, said, “Our team is excited about being a part of the Foot Locker family. The talents, resources, and rich history of a leading athletic specialty footwear and apparel retailer will make WSS a better and stronger business. This is a historic day for the future of WSS.”
Johnson continued, “Adding to this transaction with WSS which more strongly positions our portfolio in North America, we also announced an acquisition today that will enable us to accelerate our expansion in the Asia-Pacific region. We remain focused on our strategy of profitably driving growth by addressing key white spaces in our industry. With our ongoing investments in the business, we are confident in our ability to continue creating value for our shareholders, consumers, vendor partners, and other stakeholders.”
Additional Transaction Information
WSS will maintain its name, operating as a new banner in Foot Locker’s portfolio. The transaction is expected to close late in the third quarter of 2021, subject to the expiration or termination of the applicable waiting period under the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended, and the satisfaction of customary closing conditions. Additional details about the acquisition are contained in a presentation available on FootLocker’s Investor Relations page on the company’s website.
Evercore is serving as financial advisor to Foot Locker and Skadden, Arps, Slate, Meagher & Flom LLP is serving as its legal advisor. RW Baird is serving as financial advisor to WSS and Manatt, Phelps and Phillips, LLP is serving as its legal advisor.
Photo courtesy WSS
