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Foot Locker Buys CCS Website

As reported by Tiffany Montgomery of Shop Eat Surf.

Foot Locker purchased CCS, dELiA*s direct-to-consumer website for $102 million. CCS is the leading retailer in the United States that sells skateboard footwear, apparel and accessories through catalogs and the Internet with revenues expected to exceed $80 million in 2009. The target customer of CCS is a teenaged boy who actively participates in the sport of skateboarding. CCS, founded in California in 1985, is currently managed by a strong merchant team located in New York City, led by Susan Van Arsdale who will remain with CCS as managing director.

“The impending purchase of CCS is in line with one of our strategic priorities — pursuing the acquisition of athletic footwear and apparel retailers that are compatible with our existing portfolio of businesses,” stated Matthew D. Serra, Chairman and Chief Executive Officer of Foot Locker, Inc.

“We believe that expanding our offerings in the skateboard category will allow us to broaden our appeal to the teenaged male, providing an exciting growth opportunity for our Company. The combination of the highly regarded CCS management team and our well-run Footlocker.com/Eastbay operation is expected to provide significant benefits to both businesses.”

“Our Company’s strong financial position enables us to complete this opportunistic transaction in a timely manner as an all-cash transaction,” continued Mr. Serra. It is expected that the agreed upon acquisition will be accretive to Foot Locker, Inc.’s diluted earnings per share within the first full year of operation.”

Barclays Capital is serving as the exclusive financial advisor to Foot Locker, Inc.

Foot Locker, Inc. is a specialty athletic retailer that operates approximately 3,700 stores in 21 countries in North America, Europe and Australia.

3 Comments

  1. Foot Locker CEO Matthew Serra announced that by the end of June all Champs Stores and 600 Foot Locker Stores will have skate shoes for sale. Foot Locker plans to become the biggest player in the industry, which isn’t too far fetched in light of PacSun’s decision earlier this year to stop carrying skate shoes. Specifically, Champs and Foot Locker plan to carry Nike, addidas, Converse, Zoo York, Eco and Nyx – a new exclusive Nike line.

  2. One of Foot Locker’s key initiatives in 2009 is to expand its skate shoe business, company executives said in a conference call with investors.

    In addition to capitalizing on its recent acquisition of online skate retailer CCS, the company plans to expand the skate category in its brick-and-mortar stores.

    Here are some excerpts from CEO Matthew Serra’s comments as reported by Shop Eat Surf about action sports and skate during the conference call:

    “… We believe that we have a very meaningful opportunity in 2009 to enhance our business by expanding further in the action sports categories.

    “Our purchase of CCS was a significant step in capitalizing on this opportunity. Our fourth quarter profit from CCS was in line with our expectation. … CCS has an opportunity to generate double digit operating profit margins during 2009, in line with those of Footlocker.com.

    “Additionally, we will continue to pursue opportunities to expand our skate business in the bricks and mortar segment of our business.”

    Other interesting notes from the call:

    – While same-store sales declined 7.3 percent in the fourth quarter, the company’s gross margin rate increased 330 basis points because Foot Locker saw the slowdown coming and reduced inventories and cut operating expenses. That meant they did not have to be promotional to chase sales.

    – The company ended the year with inventories 13 percent lower than the same period last year.

    – Tapout is a new apparel line in Foot Locker stores and the company said it is doing well.

    – CCS was accretive to earnings in the fourth quarter.

  3. One of Foot Locker’s key initiatives in 2009 is to expand its skate shoe business, company executives said in a conference call with investors.

    In addition to capitalizing on its recent acquisition of online skate retailer CCS, the company plans to expand the skate category in its brick-and-mortar stores.

    Here are some excerpts from CEO Matthew Serra’s comments as reported by Shop Eat Surf about action sports and skate during the conference call:

    “… We believe that we have a very meaningful opportunity in 2009 to enhance our business by expanding further in the action sports categories.

    “Our purchase of CCS was a significant step in capitalizing on this opportunity. Our fourth quarter profit from CCS was in line with our expectation. … CCS has an opportunity to generate double digit operating profit margins during 2009, in line with those of Footlocker.com.

    “Additionally, we will continue to pursue opportunities to expand our skate business in the bricks and mortar segment of our business.”

    Other interesting notes from the call:

    – While same-store sales declined 7.3 percent in the fourth quarter, the company’s gross margin rate increased 330 basis points because Foot Locker saw the slowdown coming and reduced inventories and cut operating expenses. That meant they did not have to be promotional to chase sales.

    – The company ended the year with inventories 13 percent lower than the same period last year.

    – Tapout is a new apparel line in Foot Locker stores and the company said it is doing well.

    – CCS was accretive to earnings in the fourth quarter.