Jun 24, 2011
Genesco steps in to UK with $162 mln Schuh buy
Jun 24, 2011
June 24 - U.S. footwear retailer Genesco Inc made a bid for the teen and young adult markets in the UK and Ireland with its $162 million acquisition of Schuh Group Ltd, sending its shares up 12 percent to a lifetime high.
Genesco acquires Schuh
Schuh, a casual and athletic footwear retailer, brings to Genesco its 59 stand-alone stores in the United Kingdom and Republic of Ireland, 16 shop-in-shop stores in teen apparel retail chain Republic and its online store.
"We believe Schuh has the potential to roughly double its store base to 100 to 120 freestanding stores in its current geographic market," Genesco Chief Executive Robert Dennis said on a call with analysts.
Under the deal, Genesco has paid 100 million pounds ($161.9 million) upfront and will make deferred payments of 15 million pounds in three years and 10 million pounds in four years.
Genesco does not plan to rebrand Schuh, but expects to bring Schuh's private label brands to the United States and to leverage their expertise to develop new brands for its main Journeys retail stores.
"Private label hasn't been a big focus for Journeys historically, but given Schuh's success and the combined volume of the two businesses, we see it as a growth opportunity going forward," Dennis said.
While 85 percent of Schuh's product mix is branded, private brands constitute the rest.
Schuh generated sales of about 164 million pounds for its fiscal year ended March 27.
Nashville-based Genesco said the acquisition will add 25-30 cents to its earnings per share in the current fiscal year and 33-38 cents in fiscal 2013.
Genesco was advised by Jefferies & Company and Schuh by Noble Grossart Limited.
Shares rose about 12 percent to $50.48, before trading at $48.79 later in the day on the New York Stock Exchange.
(Reporting by Arpita Mukherjee in Bangalore; Editing by Prem Udayabhanu and Don Sebastian)
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