The lid has been lifted on Genesco’s plans to sell its unprofitable Lids Sports Group.
FanzzLids Holdings, which is controlled and operated by affiliates of Ames Watson Capital, has agreed to buy Lids for $100 million in cash.
The sports apparel and hat company, which makes jerseys and baseball caps, among other things for major league sports teams, has been struggling to meet sales quotas in recent years.
But Robert Dennis, Genesco’s president, chairman and chief executive officer, said the sale might help turn things around.
“Under new ownership, the very talented team at Lids will continue to have the opportunity to realize the potential in this business,” Dennis said in a statement.
Genesco will use net proceeds from the sale, estimated to be around $29 million, to buy back stock and pivot focus to its more lucrative footwear brands.
Dennis admitted the company was still looking for a buyer to purchase the “challenging” Lids business during Genesco’s third-quarter conference call earlier this month. The earnings results showed Lids’ same-store sales continued in “negative territory” from a year earlier.
“Lids, particularly the hat business, continues to struggle from a lack of store traffic,” Dennis said on the call.
“Headwear is currently between trends, which we believe is the major driver of the lower traffic,” he added; that includes less consumer interest in sports gear.
Meanwhile, Genesco’s footwear brands, including Journeys and Johnston & Murphy, both delivered “exceptional comp performances” throughout 2018.
The Lids transaction is expected to be complete by the end of Genesco’s fiscal year.
Genesco’s stock closed up 1.92 percent to $42.93 at the end of Friday’s trading session.