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Shoe Carnival and Snipes Expand Through Acquisitions

A pair of new acquisitions have hit the footwear retail market. Shoe Carnival has acquired privately held, family-owned footwear retailer Shoe Station for $67 million, while German sneaker and streetwear retailer Snipes is furthering its American footprint by purchasing U.S. sneaker chain Jimmy Jazz.

The Shoe Station acquisition, which is the first in Shoe Carnival’s history, comes on the heels of the latter’s best quarter ever, with net sales of $356.3 million and net income of $46.8 million.

Under the deal, Shoe Carnival will operate Shoe Station’s 21 stores across Alabama, Florida, Georgia, Mississippi and Louisiana. With the addition of a new brand and new retail locations to the Shoe Carnival portfolio, the retailer wants to build out a complementary retail platform to serve a broader customer base across both urban and suburban demographics.

Shoe Station’s current president and CEO, G. Brent Barkin, will become the company’s senior vice president, new business development and integration, reporting to Shoe Carnival CEO and president Mark Worden. Barkin will continue to lead Shoe Station while focusing on new business growth opportunities for the combined company.

“Shoe Carnival brings infrastructure and financial backing to significantly accelerate our Shoe Station brand growth,” Barkin said in a statement. “Taken together, the two brands create a winning customer value proposition. We are delighted to become part of Shoe Carnival, and I cannot wait to partner with Mark and his talented team to unlock more exciting opportunities to come.”

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The transaction is expected to provide significant short-term benefits for Shoe Carnival, which expects Shoe Station will be immediately accretive to its diluted net income per share in fiscal 2022, contributing approximately $100 million in incremental net sales, with operating income exceeding 10 percent on a normalized basis. After the deal closes, Shoe Carnival will have more than $100 million in cash on hand, consistent with cash reserves from the same period in fiscal 2020.

With the addition of Shoe Station, Shoe Carnival expects to operate more than 400 stores by the end of 2022, with plans for double-digit new store growth in the coming years.

“Brent and his team share our values and vision for the future of family footwear retail,” Worden said. “Together, we are ready to create a multi-billion-dollar company, defined and driven by traits that made us industry leaders today. We look forward to building on our joint success as we continue our growth trajectory and driving significant long-term value for all of our stakeholders.”

Jefferies served as financial advisor to Shoe Carnival throughout the transaction, while KPMG LLP served as the retailer’s due diligence advisor. Faegre Drinker Biddle & Reath LLP served as its legal advisor.

Snipes triples US store footprint

While the Shoe Station acquisition furthers Shoe Carnival’s ambitions to expand into new U.S. regions, Snipes is seeking a more global presence with the Jimmy Jazz deal. In fact, the transaction will approximately triple Snipes’ U.S door count from just over 100 stores to nearly 270, making it the company’s biggest acquisition to date. Worldwide, the expansion will grow Snipes’ total global store network from approximately 450 stores to more than 600 stores.

The financial terms of the deal were not disclosed.

Headquartered in Secaucus, N.J., Jimmy Jazz operates nearly 170 stores across the East Coast, Southeast and Midwest, giving Snipes access to more regions throughout the U.S. Snipes first entered the U.S. market in May 2019 with the acquisition of KicksUSA and its 63 stores along the East Coast. Two months later, the company, headquartered in Cologne, Germany, acquired Detroit-based Mr. Alan’s Men’s Bootery and its 31 stores.

“Despite the pandemic, Snipes continues to grow,” Snipes founding CEO Sven Voth said in a statement. “Our ‘community first’ concept will keep our focus on our core customer. We are very excited to deepen our commitment to the communities we serve by partnering with Jimmy Jazz.”

The inside of a Jimmy Jazz store.
The inside of a Jimmy Jazz store. Courtesy of Jimmy Jazz

Snipes aims to differentiate itself through deep roots in hip-hop culture and a community-centric alignment based on supporting, empowering and celebrating street culture. These are all characteristics that mirror Jimmy Jazz, which offers consumers premier lifestyle, streetwear and footwear brands including Nike, Jordan, Adidas, Polo Footwear, Levi’s, and Decibel.

“In Snipes, we’ve gained a strong, global partner who shares our passion and who will appropriately continue our legacy as well as our investment in our teams and stores,” Jimmy Khezrie, owner of Jimmy Jazz, said in a statement.

Footwear players continue to change hands in 2021

The shoe business has seen a number of acquisitions this year, with Authentic Brands Group (ABG) scooping up Reebok over the summer for $2.46 billion. Foot Locker spent more than $1 billion reeling in not one, but two retailers—Southwestern U.S.-based WSS and Japan’s Atmos—in an effort to significantly expand its customer base and product assortment.

Over in the U.K., JD Sports Fashion has been on a massive spending spree since last December when it acquired U.S.-based Shoe Palace for $325 million. The athleticwear and footwear retailer then spent another $495 million to buy athletic apparel and streetwear retailer DLTR, before nabbing a 60 percent stake in Polish fashion footwear and apparel seller Marketing Investment Group S.A.

Most recently, in October, JD Sports secured an 80 percent stake in premium footwear retailer Cosmos Sport, which operates 57 stores in Greece and three in Cyprus. The financial terms of the deal were not disclosed, but it is apparent that JD sees significant growth opportunity across different footwear categories, and international markets.

The acquisitions stretch beyond athletic footwear brands as well. Luxury footwear brand Sergio Rossi was acquired by Shanghai-based Fosun Fashion Group in June. Saadia Group, which is looking to build out a brand house of its own, bought luxury label Aquatalia for a reported $23 million in September.

And the biggest deal of them all came in February, when LVMH-backed private equity firm L Catterton purchased a majority stake in Birkenstock. While the official deal did not disclose the financial terms, analysts close to the parties involved reported that the cork-centric German label went for $4.85 billion—illustrating the continuing popularity and cultural relevance of the Birkenstock brand today.