The Footway Group, the increasingly international Swedish online shoe retailer that recently agreed to merge with Sportamore, wants to create a leading platform for e-commerce in sports and fashion by also acquiring an online retailer of streetwear and sneakers, Californian Roots, or Caliroots for short.
Caliroots has been undergoing a corporate restructuring process since April 23. The discussions have already started between the two parties about the planned takeover, which would be financed through cash, according to a press release. The due diligence phase has been launched, with a goal to complete the transaction in the second half of 2020.
Most of Caliroots’ business is online, but the company also has a flagship store in Stockholm. The company and its subsidiaries operate three different brands, Caliroots, Hollywood and Soto Store, focusing on streetwear and skate products, with a presence in the Nordic region and the rest of Europe. Caliroots sells high-end brands like Yeezy, Heron Preston, Helmut Lang, Needles and Neighborhood alongside sought-after skate and streetwear brands like Stüssy, Pleasures, Butter and Polar as well as staples like Carhartt, Dickies and Levi’s, in addition to its house brands.
Footway, which was founded in Sweden in 2010, has a profitable online sales platform for footwear. The range comprises more than 600 external brands and over 30,000 shoe models. Footway is currently available in 24 markets. To enable rapid growth, Footway works with global structures, making use of crowd-sourcing and a high degree of automation. Footway currently has 37 employees with offices in Stockholm and a central warehouse in Helsingborg.
In 2019, before its merger with Sportamore, which has about the same size, Footway had revenues 991 million Swedish kronor (€94.5m-$107.4m), representing an annual growth of 30.4 percent. The operating profit (Ebit) for the full year amounted to SEK 14.8 million (€1.4m-$1.6m).
“We are always interested in new opportunities and are constantly working to find strong brands for our platform,” said Daniel Mühlbach, chief executive of Footway, in a press release. “Since its inception in 2003, Caliroots has successfully built strong brands that would fit well into Footway’s new e-commerce platform in sports and fashion. The e-commerce market for fashion is undergoing consolidation and we want to be a driving force in this process,” he concluded.
According to Habit, the Swedish fashion trade news service, Caliroots was in acute liquidity shortage and lacked opportunities to pay its debts at the start of the reorganization period in late April. Its liabilities with a number of suppliers amount to around SEK 50 million (4.8m-$5.4m) and there are also overdraft credits of SEK 43 million and liabilities to group companies of SEK 45 million.
In February, Footway announced a public takeover offer for Sportamore, a Swedish online retailer specializing in sporting goods, which is due to be completed during the current quarter.
Footway reports that it has enjoyed a stable increase in new customers, adding 130,000 of them during the first quarter of this year. The number of visitors increased to 11.0 million from 10.7 million in the same period a year ago. However, the quarterly revenues were down to SEK 165.9 million (€15.8m-$18.0m) from SEK 187.0 million because of a warm winter and the effect of Covid-19 on consumer demand. The operating results showed a loss of SEK 7.5 million (€0.7m-$0.8m), up from a loss of SEK 5.2 million a year earlier, including an increased obsolescence provision of SEK -5.3 million. The company added that it had made “major improvements” in its operations outside the Nordic markets, with positive effects from the first part of the second quarter.