The large American footwear retailer and wholesaler is acquiring Hat World, a leading US retailer of licensed and branded headwear. Described as a move that will provide a “tremendous fit” between the two organizations from a strategic, financial, operational and cultural standpoint, the diversification will contribute immediately to Genesco’s profitability as of this year. In particular Hat World is expected to benefit from Genesco’s understanding of specialty retailing in niche markets for teenagers and young adults, which has been demonstrated by its successes with the Journeys and Underground Station footwear retail chains.
Genesco is paying a total price of $165 million in cash and through assumption of debt to take over Hat World, which had sales of about $198 million in the year ended last Jan. 31. On a comparable store basis, its sales have been rising for the last 27 consecutive months, scoring increases of 15 and 17 percent in the last two 12-month periods, respectively. Genesco will keep Hat World’s present management in place under the leadership of Robert J. Dennis, chairman and CEO. Former head of McKinsey & Company’s North American retail practice division, Dennis worked previously for a large American automotive retailer with annual sales of $4.5 billion.
Hat World currently operates a total of 481 stores across the USA under the Hat World, Lids, Hat Zone and Cap Factory banners. It also operates the www.hatworld.com website. Genesco, which has negotiated new credit facilities of $175 million with Bank of America, sees a potential for the addition of 400-500 more stores.