Hibbett Sports, Inc. (NASDAQ/GS: HIBB), an athletic specialty
retailer, today announced that it has signed a definitive agreement
to acquire privately held City Gear, a city specialty retailer of
premium athletic footwear, apparel and accessories with 135 stores
in 15 states. Terms of the transaction include consideration of $88
million in cash to be paid at closing and the potential for up to
$25 million in additional consideration paid over the next two
years, subject to certain performance-based targets. City Gear will
operate as a subsidiary of Hibbett Sporting Goods, Inc., from City
Gear’s current headquarters in Memphis, Tennessee, and will
continue to be led by members of City Gear’s senior management
team. One-time transaction costs are expected to be dilutive to
earnings per diluted share by approximately $0.04 to $0.05 in the
third quarter ended November 3, 2018, and by approximately $0.08 to
$0.10 per diluted share in the fourth quarter ended February 2,
2019. Excluding one-time transaction costs, the acquisition is
expected to be slightly accretive in the fourth quarter. For fiscal
year 2020, the transaction is expected to be accretive including
the impact of related one-time expenses.
City Gear, known for superior customer service and a compelling
merchandise assortment, focuses on fashion-forward customers with
lifestyles drawn to and driven by the “sneaker culture.” For the
last fiscal year ended February 4, 2018, City Gear reported total
revenue of approximately $190 million. For the past three years,
same-store sales have averaged in the mid-single digit range.
Geographic overlap with Hibbett’s stores is not significant, and
significant opportunity exists for future store growth.
Mike Longo, Chief Executive Officer of City Gear, stated, “City
Gear is excited to join the Hibbett team and contribute to the
winning tradition they have established over the years. We believe
that Hibbett provides City Gear the ideal platform to expand upon
our successes in serving our loyal customers and are excited to
continue to grow leveraging Hibbett’s capabilities.”
Also commenting on the announcement, Jeff Rosenthal, President
and Chief Executive Officer, stated, “We are pleased and excited to
announce this acquisition, which provides substantially greater
scale in the athletic specialty market and is an extension of our
strategy to provide high demand, branded products to underserved
markets. City Gear represents a key brand with the fashion-forward
consumer and will allow us to extend our customer base and provide
a significant opportunity for growth. In addition, Hibbett will
provide City Gear the needed infrastructure for future growth,
including strong internal systems, omni-channel capabilities, and
real estate expertise.” Rosenthal noted that both companies share
strong, attractive brands that resonate with customers such as
Nike, Jordan, Adidas, Puma, Converse, Fila, and others.
Hibbett expects to complete the transaction by early December
2018, subject to customary closing conditions. The Company will
finance the initial purchase through available cash along with
funds from its credit facilities. At August 4, 2018, the Company
ended the second quarter of Fiscal 2019 with $119.6 million of
available cash and cash equivalents on its consolidated balance
sheet and no bank debt outstanding.
PJ SOLOMON served as financial advisor to Hibbett on this
transaction, while Bass Berry & Sims provided legal advice.
Fifth Third Capital Markets provided financial advice to City Gear
on this transaction, while Wyatt, Tarrant, & Combs provided
legal advice.
Investor Conference Call and SimulcastHibbett Sports,
Inc. will conduct a conference call at 10:00 a.m. ET tomorrow,
Tuesday, October 30, 2018, for the purpose of discussing the
proposed acquisition. The number to call for the live interactive
teleconference is (212) 271-4651. A replay of the conference
call will be available until November 6, 2018, by dialing
(402) 977-9140 and entering the passcode, 21898655.
The Company will also provide an online Web simulcast and
rebroadcast of the conference call. The live broadcast of Hibbett’s
conference call will be available online at www.hibbett.com under
Investor Relations on October 30, 2018, beginning at
10:00 a.m. ET. The online replay will follow shortly
after the call and be available for replay for 30 days. A slide
presentation on the topic of the proposed acquisition will be
available at www.hibbett.com.
Hibbett Sports, headquartered in Birmingham, Alabama, is a
leading athletic-inspired fashion retailer with more than 1,000
stores, primarily located in small and mid-sized communities across
the country. Founded in 1945, Hibbett stores have a rich history of
convenient locations, personalized customer service and access to
apparel, equipment and coveted footwear from top brands like Nike,
Jordan, Adidas, and Under Armour. Consumers can browse styles, find
new releases, shop looks and make purchases online or in their
nearest store by visiting www.hibbett.com. Follow us
@HibbettSports.
A WARNING ABOUT FORWARD-LOOKING STATEMENTS:Certain statements
contained herein are “forward-looking statements” that are subject
to the safe harbor provisions of the Private Securities Litigation
Reform Act of 1995. Forward-looking statements address future
events, developments or results and typically use words such as
“believe,” “anticipate,” “expect,” “intend,” “plan,” “forecast,”
“guidance,” “outlook,” “estimate,” “may,” “could,” “possible,”
“potential” or other similar words, phrases or expressions. These
forward-looking statements are based on information currently
available to management. Various risks, uncertainties and other
factors, many of which are outside of our control, could cause
actual future events, developments and results to vary
significantly from those anticipated in such statements. The
forward-looking statements in this communication are based on our
current beliefs and assumptions about our operations and certain
plans, activities or events which we expect will or may occur in
the future and relate to, among other things, the proposed
acquisition of City Gear, the financing of the proposed
transaction, the benefits, results, effects and timing of the
proposed transaction, future financial and operating results of the
combined company, and the combined company’s plans, objectives,
expectations (financial or otherwise) and intentions. There can be
no assurances that we will realize these expectations or that our
beliefs and assumptions will prove correct, and therefore investors
and stockholders should not place undue reliance on such
statements.
Risks and uncertainties related to the proposed acquisition of
City Gear include, among others: the risk that any regulatory
approvals required for the acquisition are not obtained on the
proposed terms and schedule or are obtained subject to conditions
that are not anticipated; the risk that the financing required to
fund the transaction becomes unavailable; the risk that the
conditions to the closing of the transaction are not satisfied;
potential adverse reactions or changes to business or employee
relationships, including those resulting from the announcement or
completion of the acquisition; uncertainties as to the timing of
the consummation of the transaction; competitive responses to the
proposed acquisition; costs and difficulties related to the
integration of City Gear’s business and operations with our
business and operations; the inability to obtain, or delays in
obtaining, the cost savings and synergies contemplated by the
acquisition; uncertainty of the expected financial performance of
the combined company following completion of the proposed
transaction; the calculations of, and factors that may impact the
calculations of, the acquisition price in connection with the
proposed transaction and the allocation of such acquisition price
to the net assets acquired in accordance with applicable accounting
rules and methodologies; unexpected costs, charges or expenses
resulting from the acquisition; the potential for litigation or
governmental investigations relating to the acquisition; the
inability to retain key personnel; any changes in general economic
and/or industry specific conditions; and the effect of new laws,
tariffs and governmental regulations on the combined company. The
foregoing list of risks and uncertainties is not exhaustive.
Consequently, investors and stockholders should carefully consider
the foregoing factors and the other risks and uncertainties
described in our reports filed from time to time with the
Securities and Exchange Commission (SEC), including the “Risk
Factors,” “Business” and “MD&A” sections in our Annual Report
on Form 10-K filed on March 30, 2018, and in our Quarterly Reports
on Form 10-Q filed on June 13, 2018 and September 13, 2018, and in
other reports filed by us with the SEC, which are available at the
SEC’s website www.sec.gov.
Please read our “Risk Factors” and other cautionary statements
contained in these filings. Our forward-looking statements speak
only as of the date hereof, and we undertake no obligation to
update or revise any forward-looking statements, even if experience
or future changes make it clear that expected outcomes or events
expressed or implied in such statements will not be realized,
except as may be required by law. As a result of these risks and
uncertainties, actual outcomes or events could vary significantly
from those anticipated herein, and our business could be materially
adversely affected.
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version on businesswire.com: https://www.businesswire.com/news/home/20181029005729/en/
Hibbett Sports, Inc.Scott J. Bowman, 205-942-4292Senior Vice
President & Chief Financial Officer
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