Bearpaw Holdings has acquired Flip Flop Shops, a chain of 59 franchised stores specializing in the sale of rubber sandals by brands such as Havaianas and Reef. The acquisition will help the American company, founded in 1986, to create a better seasonal balance with its own brand of sheepskin shoes, which compete with brands such as Ugg, and to get closer to Deckers Brands' business model.
Founded in 2004, Flip Flop Shops started its franchising program four years later. The seller of the chain is Cherokee Global Brands, which recently took over Hi-Tec, the Dutch-based footwear company, which it has started licensing out internationally. It bought Flip Flop Shops in October 2015 for $12 million in cash. At that time, the chain counted 90 stores around the world.
The chain has franchised shops in the U.S., Canada, the Caribbean, the Middle East and South Africa, but it contracted strongly last year, following the shutdown of 20 under-performing locations. Cherokee had to take an impairment charge of $8.4 million in the fourth quarter of last year. The franchising fees collected from the affiliated retailers amounted to a total of $2.1 million in 2017, accounting for only 7 percent of Cherokee's total revenues.
Bearpaw indicates that it wants the chain to expand again before the end of this year. The terms of its acquisition were not disclosed.