Genesco Inc. is beefing up its footwear portfolio.
The shoe conglomerate — parent to teen mall staple Journeys and shoe firms Johnston & Murphy and Schuh — has announced the acquisition of New York-based Togast LLC, which specializes in the design, sourcing and sale of licensed footwear.
The deal is expected to close in January at a price of $33.7 million in cash, with an incentive of up to an additional $34 million, if Togast achieves its financial targets over the next four years.
“The acquisition of Togast adds scale to our successful licensed brands platform,” said Genesco chairman, president and CEO Robert Dennis. “The combination of our licensed business with Togast’s strengths furthers our footwear-focused strategy by creating an even more robust platform within Genesco that can serve multiple tiers of distribution.”
Togast serves as the distributor for Levi’s footwear in the United States. As part of the transaction, Genesco will enter into a new footwear license agreement for Levi’s as well as renew and extend its men’s Dockers footwear license.
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The deal also expands the Nashville-headquartered firm’s mix of brands to include footwear licenses for G.H. Bass & Co., ADIO and FUBU, among others.
“We are pleased to broaden our portfolio of licensed footwear brands,” said Genesco Licensed Brands president Andy Gilbert. “We immediately recognized the sourcing capabilities and corresponding synergies with Licensed Brands that we would achieve through the acquisition of Togast.”
Togast owner Tony LoConte added, “In Genesco, we have found a partner whose capabilities are an outstanding match for our business operations. I am looking forward to working with the Genesco team to integrate our businesses and together continue the growth of Genesco’s branded partnerships in the future.”
The move comes a year after Genesco notably offloaded Lids Sports Group to focus on its footwear business. After several years of struggling sales at the division, the athletic headwear business sold for $100 million in cash to FanzzLids Holdings, with sports licensing and e-commerce firm Fanatics Inc. making a minority investment in FanzzLids as part of a commercial arrangement connected with the deal.
In its most recent earnings report, Genesco reported third-quarter profits, on an adjusted basis, of $1.33 per share, trouncing analysts bets of $1.08 and the previous year’s 97 cents. On a reported basis, profits rose 31% to $18.9 million, or $1.31 per share.
Although revenues dropped to $537.3 million from last year’s $539.8 million (analysts had predicted $540.6 million), same-store sales were up 3%. This marks the company’s 10th consecutive quarter of positive comps for its footwear businesses, driven by the strength of Journeys and an improved performance from Schuh.
For fiscal 2020, Genesco now predicts earnings per share to be between $4.10 to $4.40, with expectations near the midpoint of that range, up from the previous guidance of $3.80 to $4.20. It is also preparing for a top leadership change, with SVP and COO Mimi Vaughn appointed as president and CEO, effective Feb. 2 at the start of its fiscal year.
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