Hibbett Sports announced that it has signed a definitive agreement to acquire privately held City Gear, a city specialty retailer of premium athletic footwear, apparel and accessories with 135 stores in 15 states. Terms of the transaction include consideration of $88 million in cash to be paid at closing and the potential for up to $25 million in additional consideration paid over the next two years, subject to certain performance-based targets. City Gear will operate as a subsidiary of Hibbett Sporting Goods, Inc., from City Gear's current headquarters in Memphis, Tennessee, and will continue to be led by members of City Gear's senior management team. One-time transaction costs are expected to be dilutive to earnings per diluted share by approximately $0.04 to $0.05 in the third quarter ended November 3, 2018, and by approximately $0.08 to $0.10 per diluted share in the fourth quarter ended February 2, 2019. Excluding one-time transaction costs, the acquisition is expected to be slightly accretive in the fourth quarter. For fiscal year 2020, the transaction is expected to be accretive including the impact of related one-time expenses. City Gear, known for superior customer service and a compelling merchandise assortment, focuses on fashion-forward customers with lifestyles drawn to and driven by the "sneaker culture." For the last fiscal year ended February 4, 2018, City Gear reported total revenue of approximately $190 million. For the past three years, same-store sales have averaged in the mid-single digit range. Geographic overlap with Hibbett's stores is not significant, and significant opportunity exists for future store growth.
