The Athletes Foot has been able to do something that few, if any, retailers have been able to do — capitalize financially on its brand name. The retailer and global franchisor of athletic specialty stores last week announced a securitization transaction that in enables the company to convert short-term financing with long-term fixed-rate bonds, freeing up cash to fuel growth.
Historically, most retailers must rely on financing based on their tangible assets, usually inventory. This transaction sees the franchisors brand, backed by franchise revenues, recognized as an asset.
In an exclusive interview with SPORTS EXECUTIVE WEEKLY, Bob Corliss, CEO of The Athletes Foot said, “this is a real endorsement by the investing and banking community, law firms and accounting firms that The Athletes Foot is a strong, stable and growing business.”
Corliss sees the reduction in short-term debt benefiting the company stores by putting more cash in the system. He also sees benefit to the franchisees as TAF puts more cash put to work in more brand-building activities.
The CEO was also quick to point out that this transaction does not signal a shift in TAFs strategy or structure, but was simply a transaction that enabled the company to de-leverage its stores and free up cash for continued growth.
The bonds are rated as investment grade, with Moodys rating them B/aa3, and will be privately placed.
