Foot Locker to Buy German Running Firm

Foot Locker Inc. is expanding its footprint in Europe.
The company said Wednesday it will purchase Runners Point Warenhandelsges, based in Recklinghausen, Germany, for $94 million.
Runners Point operates more than 200 stores under multiple banners, including Runners Point, Sidestep and the online seller Tredex. The firm’s store base extends across Germany, the Netherlands, Austria and Switzerland.
In 2012, the group posted sales of $254 million, according to Runners Point.
The German retailer’s current CEO, Otto Hurler, and CFO Harald Wittig, as well as other members of the senior management team, will remain in their posts after the transaction is complete.
“We are excited to be adding Runners Point, a fast-growing, multi-format and multichannel business, to our already-strong European operations,” Foot Locker Chairman and CEO Ken Hicks said in a statement.
“This acquisition will enhance our position in Germany, the strongest economy in Europe, and also provide us with additional banners to further diversify and expand our European business. We also intend to leverage Tredex’s strong digital capabilities to accelerate growth in our own developing European e-commerce business.”

The depressed purchase price is likely a reflection of lower valuations in a challenged European retail environment, noted analysts, who lauded the acquisition for being a long-term growth driver for Foot Locker.

Sterne Agee analyst Sam Poser observed in a research note Wednesday that Western Europe is a fragmented market with many players in financial troubles. “The acquisition is an acceleration in Foot Locker’s growth in the region,” he added.

Citigroup analyst Kate Mcshane agreed: “Foot Locker is more or less tapped out on U.S. store expansion. Today’s deal creates an exciting new channel of growth. Despite ongoing macro uncertainty, Foot Locker’s European operations have remained profitable, and we think the company should benefit from logistical synergies and a strengthened market share position, while also leveraging its management expertise and that of Runners Point’s senior management, which is staying on board.”

The transaction is subject to review by merger control authorities in Germany.

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