JD Sports has bought California-based Shoe Palace for $681 million as the London-listed leisurewear retailer looks to expand its footprint in the US.
This will be JD Sports' second US acquisition. The company entered the market in 2018 with its $560 million purchase of apparel company The Finish Line. JD Sports opened a new flagship store in New York's Times Square in October.
The company's other recent acquisitions include Livestock, a Canadian apparel company bought in July, and UK menswear company Pretty Green, which JD Sports bought for £400 million (around $535 million) in 2019. It is also looking to buy UK rival Footasylum, pending regulatory approval.
Last month, JD Sports saw its share price fall when it entered talks to acquire Debenhams after the UK department store filed for bankruptcy protection, but later dropped out of the negotiations. After announcing the Shoe Palace deal on Tuesday, JD Sports' share price was up by as much as 7% on the previous closing.
The company will pay $325 million in cash and issue a 20% stake in its new US subsidiary, worth $356 million, to four brothers from the Mersho family, which founded Shoe Palace in 1993. The brothers will continue to operate the company, which runs 167 stores across the US, half of which are in California. Shoe Palace generated $435 million in revenue and a pre-tax profit of $52 million for the year ending Dec. 31, 2019.