Boston, MA 04/30/2014 (wallstreetpr) – DSW Inc. (NYSE:DSW) will purchase 44% stake of Canada’ Town Shoes for cash of ~$62 million. The management of both the companies has approved the deal and expects to close by May 2014.
The Deal
As part of initial investment, DSW is purchasing its 44% stake from Alberta Investment Management Corporation (AIMCo) and will acquire additional shares from other minority stakeholders. DSW will purchase the remaining shares from another partner Callisto Capital (Callisto), a major (50%) stakeholder, after four years at a pre-determined EBITDA multiples. Both DSW and Callisto now own 50:50 partnerships to manage the operation of Town Shoes across Canada.
Why partnership
The partnership will provide an entry option into the Canadian market through Town Shoes’ platform that has a successful market leadership position with well established existing operations in 182 locations across Canada. Moreover, Town Shoes has sales of CAD $291 million in FY2013 by selling its products under the Town Shoes banners, and Shoe Warehouse and The Shoe Company. As a result, DSW also expects the transaction will provide an accretive earnings benefit in 2014.
What next
As of April 15, 2014, DSW operates through 407 DSW stores in 42 states in the U.S., Puerto Rico and the District of Columbia. The Company also offers its branded footwear and retail accessories through online services including e-commerce and mobile website. The partnership will further increase the store numbers with a wide range of products and benefits multiple customers across their distribution network in North America.
DSW Inc. (NYSE:DSW) continues to post double-digit earnings growth and the partnership will further enhance its performance and support to meet adjusted EPS guidance of $1.80 to $1.95 per share in FY2014. DSW also expects sales growth of 6-7% with increasing sales from comparable stores, and are likely to open 35 new stores in 2014.
