Genesco Inc. on Friday announced a definitive agreement to sell Lids Sports Group for $100 million in cash to FanzzLids Holdings, a holding company controlled and operated by affiliates of investment firm Ames Watson Capital, that includes Fanzz, a specialty retailer of licensed sports apparel.
Fanatics Inc. will also make a minority investment in FanzzLids Holdings as part of a commercial arrangement with the holding company, according to a company press release.
Genesco has been under pressure from activist investors to unload the struggling retailer.
Lids has been a drag on Genesco, and a group of its investors this year made it clear they weren't going to take it anymore. A simple short-term plan emerged to sell the hat retailer, focus on shoes and grab some needed cash in the process.
Genesco, based in Nashville, sells footwear, headwear, sports apparel and accessories in more than 2,650 retail stores and leased departments throughout the U.S., Canada, the United Kingdom, the Republic of Ireland, and Germany according to the release. One of its most recognized banners in the U.S. is Journeys.
As C.L. King analyst Steve Marotta noted months ago, it would likely be difficult to find a buyer for Lids, which has more than 1,000 locations worldwide. That has turned out to be prescient, considering the company missed Marotta's guess that the highly specialized retailer could bring in some $250 million, a sum well above the actualized FanzzLids deal.
In a concept store unveiled in Times Square earlier this year, Lids did move beyond its walls of hats to include opportunities for customization and fashion items a cut above its usual sports caps.