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What: Genesco
So what: Tennessee-based Genesco has acquired privately held Schuh Group Limited, a specialty retailer of casual and athletic footwear that operates 59 stores in the U.K. and Republic of Ireland, 16 concessions in apparel stores, and one of the largest online shoe websites in the U.K. It paid about 70 million pounds sterling upfront and agreed to contingent deferred payments in 2014 and 2015, totaling 25 million pounds, to retain employees, and cash performance bonuses of up to an additional 25 million pounds if Schuh achieves specific performance targets.
Now what: Excluding merger and integration expenses and compensation expenses attributable to contingent deferred payments, Genesco expects the acquisition to be accretive to EPS this fiscal year. The deal is a low-risk way for the company to expand its current operations from the U.S. and Canada to a European market. Deferring payments based on employee retention and performance bonuses improves the odds that the acquisition will prove successful over the long term.
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