Shares of Genesco Inc. (GCO) - Get Genesco Inc. Report , which sells Dockers shoes, jumped 4.5% on Friday after the company confirmed the sale of Lids Sports Group and announced $125 million in share buybacks.
The company entered into a definitive agreement to sell Lids Sports Group for $100 million in cash to Ames Watson Capital LLC, owner of FanzzLids Holdings. FanzzLids is the holding company of Fanzz, a specialty retailer of officially licensed sports apparel. The sale is valued 40% less than what Genesco paid for the Zionsville, Indiana-based headwear retailer in 2004.
According to the Indianapolis Business Journal, Lids accounts for about a quarter of the Genesco's total revenue. Lids' comparable sales dropped 2% in the third quarter while Genesco's rose 4%. Genesco reported a third-quarter profit of $14.4 million, or 74 cents a share, while Lids posted an operating loss of $388,000.
Sports licensing and e-commerce giant Fanatics Inc. will make a minority investment in FanzzLids Holdings to enter into a commercial arrangement. Fanatics operates more than 300 stores, including the e-commerce business for all major professional sports leagues like the NFL, MLB, NBA, NHL, NASCAR, MLS and PGA.
The sale is expected to be finalized by early 2019. Genesco expects approximately $29 million in proceeds of the sale will be used to repurchase common shares.
Genesco is a Nashville-based specialty retailer that sells footwear, headwear, sports apparel and accessories in more than 2,650 retail stores and leased departments throughout the U.S., Canada, the United Kingdom, the Republic of Ireland and Germany. The company sells wholesale footwear brands Journeys, Schuh, and Johnston & Murphy and has a license to make Dockers footwear.
Lids Sports Group operates Lids headwear stores, the Locker Room and other team sports fan shops and single team clubhouse stores.