By Sebastian Herrera 

This article is being republished as part of our daily reproduction of WSJ.com articles that also appeared in the U.S. print edition of The Wall Street Journal (August 14, 2020).

Sports retailer Fanatics Inc. closed a $350 million investment round, people familiar with the matter said, a sign of investor confidence in the combination of online shopping and official sports merchandise.

With the funding round closing Thursday, Fanatics is now valued at roughly $6.2 billion after raising about $1.5 billion since 2011, these people added.

This Series E round, led by Fidelity Management & Research Co. and Thrive Capital, is expected to be the company's last private funding before it files for an initial public offering, these people said. The timeline for an IPO is unclear.

Other investors in the round include Franklin Templeton Investments and Neuberger Berman Group LLC.

Previous Fanatics investors include Japanese conglomerate SoftBank Group Corp., which led a $1 billion round in 2017 that also included the National Football League and Major League Baseball.

Even with the initial downturn startups faced because of the pandemic, funding has remained steady and the IPO market is rebounding. E-commerce companies have been lifted during the pandemic, with industry analysts largely expecting online shopping habits accelerated by the crisis to continue.

Founded in 1995, Jacksonville, Fla.-based Fanatics has grown through its role as a seller and maker of licensed fan apparel for professional sports leagues and teams. It is the official online retailer of licensed merchandise for the major U.S. sports leagues and more than 150 universities, enabling the company to sell and manufacture sports merchandise not available elsewhere.

Fanatics is a small operation compared with the likes of Amazon.com Inc., which reported revenue of more than $280 billion in 2019. EBay Inc.'s revenue was $10.8 billion. Amazon's power has grown through the pandemic, and retail analysts believe only a few e-commerce firms will last in the long term. Although Fanatics can't compete on size and scale with those companies, it controls the supply chain of fan merchandise for the NFL, the MLB, the National Basketball Association and other major sports leagues and teams.

Even though coronavirus-related shutdowns have kept fans out of stadiums and largely curtailed many sports seasons and reshuffled schedules, online sales at Fanatics have increased by roughly 30% this year compared with last year as more people buy products online, according to the company. Fanatics, however, expects a $20 million dollar hit to its bottom line caused by store closures and an absence of fans at sports venues, people close to the company said.

Fanatics made about $2.5 billion in revenue last year, compared with about $2 billion the year before, these people said. It expects revenue to increase by a low double-digit percentage this year, although the pandemic has made forecasting more uncertain. About 80% of its revenue is through direct-to-consumer sales from Fanatics.com or the more than 300 team and league sites the company operates, the people said.

Through its licensing agreements, most of which run through at least 2030, Fanatics sells jerseys, T-shirts, caps and other merchandise in the U.S. The company also has similar deals abroad with popular teams such as the U.K.'s Chelsea Football Club, and it has about 50 stores inside stadiums throughout the world. It operates five manufacturing facilities in the U.S., which enable it to produce gear on-demand.

When star quarterback Tom Brady earlier this year chose to sign with the Tampa Bay Buccaneers, for example, within hours Fanatics made Mr. Brady's jersey available for purchase on its site, the NFL's site and the Buccaneers' site. This year, Fanatics began to sell exclusive Nike Inc.-branded NFL clothing for fans.

Write to Sebastian Herrera at Sebastian.Herrera@wsj.com

Corrections & Amplifications Most of Fanatics's licensing agreements run through at least 2030. An earlier version of this article incorrectly said they ran until 2030. (Corrected on Aug. 13, 2020)

 

(END) Dow Jones Newswires

August 14, 2020 02:47 ET (06:47 GMT)

Copyright (c) 2020 Dow Jones & Company, Inc.